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Executive Summary
Organized retail had hit a boom during the past decade but at the twilight of
the decade most of the ambitious plans of the retail czars to penetrate into
the hinterland of the Indian economy had to be dwindled (stalwarts like
Spencer’s Retail had closed down around 250 shops) primarily due to the
financial tsunami and also due to lack of customer attrition from their
unorganized sector’s peers. Many of the retailers have had their fingers burnt
owing to the nuances of shop lifting( Shoppers Stop had its bottom line slip
into the red). In this paper we would present a unique blend of man power
and technology which would help to significantly lower the cost structure of
the retailers hence provide their goods at lower prices, mitigate the levels of
shop lifting and compete with the archaic kirana stores ubiquitously.
With financing in place The Real E-Shoppe would be able to start and
maintain its operations through a period of one year. Through its
innovative, low cost structure the store would cater the needs of the
“AAM ADMI” who can aspire but have to think twice before stepping
into a world class shopping mall for buying their daily ration. With
success of its first store The Real E-Shoppe would foray into other
untested waters and even into the hinterland of the Indian economy. It
aspires to open more than 100 by the end of the first eight years of
flagging its operations off.
Columns 1, 4, 7= Total sales; columns 2, 5, 8= operating margin;
columns 3, 6, 9= net profit
2.Company Summary
2.1 Goals
The Real E-Shoppe would one day be one of India’s foremost retail
chains. It would foray into the hinterland of India and make a sizable
presence there. Owing to its low cost structure and innovative
approach it would be able to sustain its stores in the hinterland of India
which many of the current retail czars have failed to.
2.2 History
The history is yet to be created.
2.4 Strategy
The Real E-Shoppe uses a strategy of total market service. Our
promise is in our location and the products we sell, the people we
attract, and the atmosphere we create.
We present a store that is pleasant to shop with and has probably the
cheapest products across all segments of food and FMCG products. It
provides such innovative services which were never seen before in the
entire retail industry. It guarantees the least enervating; the easiest,
the fastest and the most enigmatic shopping experience any shopper
has ever come across.
Strategic Assumptions:
1. Every person with income limitations or on fixed incomes is a
potential customer.
2. Marketing to these segments of the population will lead to an
expansion in overall market growth.
2.5 Objective
1. To attain operating profit within 2nd year of flagging off operations.
2. To attain a healthy net profit within the 3 years of flagging off
operations.
3. To make The Real E-Shoppe amongst the foremost food, FMCG and
mobile phone retailing brands in the country.
4. To have the lowest cost structure in the entire retailing industry and
to involve people from the unorganized sector in running the
operations of the store.
2.6 Mission
The Real E-Shoppe would provide a variety of food, FMCG items and
mobile phones at prices lower than its MRP without going into the
“SPECIAL OFFERS” as ubiquitously popularized by modern retail.
Employees of the store(s) will also be treated in a professional manner
with a rewarding work environment and fair compensation. The Real E-
Shoppe wants each customer to feel as though he/she has gotten Fifth
Avenue treatment at a discount retailing store.
3.2 Services
The services would be unique in nature. Once a customer steps into
the store he/she would be handed over a token which is inscribed upon
with a customer code. Once he wishes to purchase any product he would
just have to enter the code(written on the token) in the Mobile Warehouse
Automation device and punch in the bar code this information would in
turn go to a central information database and when he is done shopping
he can directly go to the counter where he can say so. The instruction
would be passed on to the inventory manger who in turn would pack the
goods and the customer can go for the payment once his purchased
goods have arrived which would be informed to him via a electronic
screen. Once he has come to the shop for the first time he would be
provided with a customer ID which he can use in all his further
transactions. Once he has been a regular customer for a period of six
month he can avail 0% interest credit facility and special discounts would
be provided to them who buys the entire months ration from the shop.
4. Market Analysis
Indian retail industry is approximately worth US$365 billion and only
5-6% of this has been tapped by the organized retail segment. So,
this presents us with ample opportunity up for grabs. India is
currently positioned as the leading destination for retail investment.
With stalwarts in retail like Wal-Mart and Tesco landing into the
Indian shores and around US$ 17 billion worth investment taking
place even vindicates the claim even further. With average age of
Indian population at 25 years is going to further enhance the
shopping experience for the gizmo fanatic youth. A shopping
revolution is ushering in India where, a large population between
20-34 age groups in the urban regions is boosting demand by 11.1
percent in 2004-05 to an Rs 23,308 purchasing power. This has
resulted in huge international retail investment and a more liberal
FDI. The mobile phone retailing segment is a very attractive selling
proposition with average usage of mobile phones around 1.2 years
the customers visits the stores for buying the handsets once every
year.
4.Operating Strategies
6.2Personnel
As we are a start up so we would always have the constraint of
funds. Here we plan to take up an innovative approach to hire our
personnel. Since our stores would be smaller in size we plan to hire
our personnel. In the first year since the number of stores would be
one hence its promoters would assume the responsibility of
inventory manager and store manager respectively. All the
strategies given underneath are for 2nd year onwards for the
recruitment of the above-mentioned posts.
i) Cashier: We plan to hire cashier who is 10+2 passed and are
scouting for jobs. They would first be given 3 months of
internship whereby they would be paid a fraction of the salary
they would receive later. We plan to use the printed media to
advertise the job openings in our company.
ii) Inventory manager & Store manager: We plan to recruit
fresher(s) with minimum of bachelor’s degree in commerce
for this job. Hence we would visit campuses of degree
colleges which would permit our scale of pay.
iii) Security guards: Would be sourced from various security
agencies.
iv) Workers: Would be sourced from the huge pool of people
available locally.
6.2Administrative Strategies
Each store would be headed by a store manager. With the
responsibility of overseeing the activities of the store including
decoration, accounting and keeping track of the core processes
of the store. Under the store manager would be a having the
inventory manager and cashier as direct reporters. The
inventory manager and cashier would in turn report the
dynamics of the inventory and the total transactions via paper
or plastic money. The manager would have the obligation of
reporting the daily stores transactions to the promoter(s) who
would head the organization. The inventory manager would
have the IT infrastructure to keep track of the inventory
dynamics continually. The promoters would be responsible to
design the graphics pertaining to the promotional activity of the
store(s).
Year 2:
The positive figures indicate the cash inflow and negative figures cash
outflow
Year 3, 4& 5:
Annualized cash flow statement
Columns 1, 2 = Year 3; Columns 3, 4=Year 4; Columns 5, 6 =
Year 5
9. Income Statement(Projections)
Year 1(Monthly income statement):
Year 3, 4& 5:
Annualized income statement:
Year 2:
Items Assets Liability
Debt from
Banks ------------ Rs. 800000/-
Bills Payable ----------- Rs.400000/-
Bills receivable Rs. 600000/- ---------------
Furniture Rs. 400000/- ---------------
Interest cost --------------- Rs. 64000/-
Inventory Rs.400000/- --------------
Profit/Loss -Rs.100000/- ---------------
Cash in hand Rs. 500000/- ---------------
Depreciation -Rs.24000/- ----------------
Equity Rs.5000000/- ---------------
Total Rs.67760000/- Rs. 1264000/-
Year 3:
Items Assets Liability
Debt from
Banks ------------ Rs. 600000/-
Bills Payable ----------- Rs.1000000/-
Bills receivable Rs. 700000/- ---------------
Furniture Rs. 800000/- ---------------
Interest cost --------------- Rs. 56000/-
Inventory Rs.400000/- --------------
Profit/Loss -Rs.100000/- ---------------
Cash in hand Rs. 800000/- ---------------
Depreciation -Rs.36000/- ----------------
Equity Rs.5000000/- ---------------
Total Rs.75640000/- Rs. 1264000/-
11. Funds Required
The company would be leasing properties second year onwards to
fuel its expansion plans and building its logistics network to
establish a cheap and efficient delivery model. The company would
also use certain portion of its funds towards brand building and
marketing exercises.