Essay: Setting up a retail store

GENERAL DESCRIPTION

MISSION OF SINGH DEPARTMENTAL STORE:

“We help people trade practically anything on earth. We will continue to enhance the trading experiences of all-collectors, dealers, unique item seekers, bargain hunters, opportunity sellers, etc.

VISION OF SINGH DEPARTMENTAL STORE:

The vision of my store is “NEW PRODUCTS, NEW INNOVATION AND HUGE CUSTOMERS”.

GOALS AND OBJECTIVES OF SINGH DEPARTMENTAL STORE:

Every organization has specific objectives when it is set up. Objectives are necessary for any organizations because it provides the direction to the companies or organizations. The objectives of our store are:

1. To capture the market share.
2. To become the world’s no. 1 retailer in the coming years.
3. To develop good customer relationship and maintain it.
4. Repeat and referral sales.
5. Profitable business with expansion.
6. To generate employment opportunities in the region.

BUSINESS PHILOSOPHY:

Every organization has set up with a well-built plan. Plan is such a document which gives a clear picture about what is going to take place in the future. Every business or organizations need a well-defined plan in order to know the direction. Our retail store also has a plan which provides us the direction and activities to be performed by everyone.

The philosophy of the business tells us about the formation and operations of the organization, nature and purpose of the organizations. This subject is very important from the view point of business and management as it links business ethics and political economy. Philosophy, ethics and economic theory greatly influences the business philosophy.

The philosophy of SINGH DEPARTMENTAL STORE is to serve the customers so that they become our loyal customers of our store.

DESCRIPTION OF THE INDUSTRY:

As you know that our store is a departmental store (SINGH DEPARTMENTAL STORES) and it is one of the categories of retail format. So it is clear that it is a retail industry. Retail industry is the booming industry nowadays and it gained importance in a very short span of time. It is ranked as the fifth largest industry in an economy. It is one of the fastest growing industries in the world with organized and unorganized sectors. It was started as an unorganized industry but it is now moving to organized due to the changes in the tastes and preferences of the customers. The retail industry grows at the rate of 25-30% annually due to the increase in the market demand. This industry is a one of the promising industries for investment. It accounts for nearly 10% of GDP and 8% of employment opportunities.

List of retailers that have come with new retail formats:

Retailer	Current format	New formats, experimenting with
Shopper’s stop	Department store	Quassi mall
Ebony	Department store	Quassi mall, small retail outlets, adding food retail.
Crossword	Large book store	Corner shops
Piramyd	Department store	Quassi mall, food retail.
Pantaloons	Own brand store	Hyper market
Subhiksha	Supermarket	Considering moving to self-service
Viton	Super market	Suburban discount store.
Food world	Food super market	Hyper market, food world express
Globus	Department store	Small fashion stores.
Bombay bazaar		Aggregation of kiranas
E-food mart		Aggregation of kiranas
Metro		Cash and carry
S Kumar’s		Discount store

Description of the retail store:

The retail store which I have chosen is to set-up is a departmental store. It is the store where all type of products is available for the customers from grocery to personal use products. In my store the customers will have a lot of varieties to choose from. The customers will get the product as per their need and in any quantity. The customers will not be cheated on the basis of quality and they will also be provided a huge discount so that the customer would be delighted in coming to our store. The customer would not wait too long for the billing purpose because at every stall we have placed counters for billing purposes. The much advanced technologies have been installed in the departmental store. The merchandise management is superb in my departmental store. Customers would not have to wait for the particular product.

The SINGH DEPARTMENTAL STORE will also provide the facility of online transactions. This facility will be for those customers who have a very busy schedule and don’t want to waste their time in standing at the queues for a long time.

Our store would be the first store in the BIHAR region to adopt the RFID (RADIO FREQUENCY IDENTIFICATION DEVICE) technology. This technology will help us to know the level of inventory in the stores and will help us to know when to order and how much to order.

PRODUCTS AND SERVICES

The products and services of SINGH DEPARTMENTAL STORES are such that everyone who will come to our store will be satisfied. There would be a vast product line in our store so that the needs of each customer will be fulfilled in order to satisfy the customers.

The products and services should be such that each and aver segment gets covered. The merchandise of the store has been decided keeping in view the three important concepts of product mix, i.e., product length, product width and product depth. Now before describing about the merchandise mix of the store I would like to describe the above three concepts.

1. Product length: It refers to the variety of products available under a particular product line.
2. Product width: It refers to the different product line the company carries.
3. Product depth: It refers to the total number of items in the product line.

Now have a look on the merchandise of SINGH DEPARTMENTAL STORE:

1. Automotive products.
2. Electronics products.
3. Non-edible groceries.
4. Packaged beverages.
5. General merchandise.
6. Homemade food items.
7. Cold dispensed beverages.
8. Candy.
9. Bakery products.
10. Fluid milk products.
11. Frozen foods
12. Health and beauty care products.
13. Perishable groceries.
14. Alcoholic products.
15. Animal foods.
16. Intimate apparel.
17. College apparel.
18. Teen apparel.
19. Marine Corps apparel.
20. Sports apparels.
21. Motorcycle apparels.
22. Kids gymnastics apparels.
23. Fitness apparel.
24. Furniture.
25. Glass products, like tea set, etc.

MARKETING PLAN

The total size of the market is about 2.5 lakhs which includes 1 lakh woman and man respectively and 2000 kids and near about 48000 teenagers.

Currently the demand of such type of stores is increasing on a very large scale. In present target market there is a great need of such type of retail stores as it would increase the standard of their living.

Retail market has experienced various trends till now. The most important trend that took place is that the growth of the organized retail sector is more than the growth of the GDP.

1. Organized retail sector will grow by 20% of retailing.
2. Growing retail formats.
3. The hyper market would be the most encouraging format in the coming years.

The opportunities of the store are as follows:

• Outstanding shopping experience which leads to the increase in the reputation of the business.
• Rise in the online retailing.
• Establish the departmental store with quality food and efficient customer care.

CHALLENGES FACED BY THE RETAIL INDUSTRY:

The various challenges faced by SINGH DEPARTMENTAL STORE are as follows:

• The tax structure in India favors small retail business
• Lack of adequate infrastructure facilities
• Dissimilarity in consumer groups
• Restrictions in Foreign Direct Investment
• Shortage of retail study options
• Shortage of trained manpower
• Low retail management skill

OPERATIONAL PLAN

LOCATION OF THE STORE:

SINGH DEPARTMENTAL STORE will be located at center of BIHAR region so that it is easily reached by everyone in that region. If we look for the center of Bihar region then MODEL TOWN, GANDHI AVENUE, will be best suited for our store.

LAYOUT OF SINGH DEPARTMENTAL STORE:

Inner side of the store………….

Outer side of the store………………….

This is the inner and outer layout of my SINGH DEPARTMENTAL STORE.

KEY SUPPLIER OF MY STORE:

To capture the market share every organization has to take care of its supply chain management in order to avoid the delay in the shortage of the merchandise. The suppliers who dedicated themselves with my stores are as follows:

1. Gurucharan Singh and sons.
2. Pentagon rubber.
3. Prolink communications and security solutions pvt. Ltd.
4. Swastika seating collections.
5. Alankrit.
6. S.K.Electricals.
7. Duke furniture.
8. Universal textile industries.

STORE MANAGEMENT:

The store is an important aspect of the retail business. Purchase decisions and the perception and image of the store are made here. From the management point of view, operations of the store are a major element of the cost. As a consequence, the store is a critical asset of the retail business and it is imperative that the operations are managed well to achieve and sustain customer satisfaction and be cost effective.

Processes, people and tasks need to be defined by the management to ensure the smooth flow of operations. The store operations manual is a document that lists the tasks, the responsibilities and the time period in which these tasks is to be performed. A well-prepared operations manual or blueprint is the starting point of efficient store operations.

The chief aspects of store operations include store administration and management of the premises, managing inventory, display and receipts. Customer service and managing promotions, events, alliances and partnerships are also integral to operations.

SINGH DEPARTMENTAL STORE is such a store in which the size of the store is very large and it is not an easy task to go to each and every corner of the store whether everything is perfect or not. So keeping in view the problem which was coming in front of the progress of the store, we decided to allot one individual to each corner. Due to this the employment opportunities will also be generated which will also be useful from the social point of view.

CREDIT POLICY:

The credit policy of SINGH DEPARTMENTAL STORE is very simple, in the sense that the credit terms are very easy to adopt. The suppliers agreed to adopt the credit policy as was decided by the management. The credit policy will be such that the merchandise will be purchased in a single lot and half of the amount for the merchandise purchased will be paid to the supplier at the same time and the remaining installments in six equal installments keeping in view the remaining amount.

MERCHANDISE MANAGEMENT:

As I already told that we are using the RFID technology in our stores which will help us to know about the level of stock at our stores. Every individual is given a special training regarding how to use the technology. The suppliers are being given the information beforehand about the shortage of the stock.

Financial estimates and projections

There are basically three questions to be answered in a project appraisal exercise:

1. Can we produce the goods or services?
2. Can we sell the goods or services?
3. Can we earn a satisfactory return on the investment made in the project?

Cost of project:

The cost of project represents the total of all items of outlay associated with a project which are supported by long-term funds. It is the sum of the outlays of on the following:

A. Land and site development.

B. Buildings and civil works.

C. Plant and machinery.

D. Technical know-how and engineering fees.

E. Expenses on foreign technicians and training of Indian technicians abroad.

F. Miscellaneous fixed assets.

G. Preliminary and capital issue expenses.

H. Pre-operative expenses.

I. Margin money for working capital.

J. Initial cash losses.

Means of finance:

To meet the cost of the project the following means of finances are available:

1. Share capital.
2. Term loans.
3. Debenture capital.
4. Deferred credit.
5. Incentive sources.
6. Miscellaneous sources.

Key considerations in determining the specific means of finance:

To go for a specific means of finance there should be two things that should be borne in mind:

1. Norms of regulatory bodies and financial institutions.
2. Key business considerations, namely, cost, risk, control and flexibility.

The cost of setting up SINGH DEPARTMENTAL STORE is estimated at Rs. 121 crores as follows:

Rs. (in crores)

Land and site development	10
Building	15
Plant and machinery	62
Miscellaneous fixed assets	04
Prepaid expenses	02
Pre-operative expenses(including interest during construction)	11.5
Contingency margin	08
Working capital margin	08.5

Total 121

The proposed means of finance for the SINGH DEPARTMENTAL STORE are as follows:

	Rs. (in crores)
Bank loan	50
Term loans	60
State government’s special incentive loan(repayable in 6 installments after 12 years)	11
Total	121

Below is the schedule of the cash outflows and inflows that occurred during the process of the SINGH DEPARTMENTAL STORE

Interest on term loans:

Rs. (in crores)

Year	Loan o/s atThe beginning	Loan o/s at the end of the 1st half year	Loan o/s at the end of the 2nd half year	Interest for the 1st half year	Interest for the 2nd half year	Total interest for the term loan
1	60	60	60	3.60	3.60	7.20
2	60	60	56.25	3.60	3.60	7.20
3	56.25	52.5	48.75	3.38	3.15	6.53
4	48.75	45	41.25	2.93	2.70	5.63
5	41.25	37.5	33.75	2.48	2.25	4.73
6	33.75	30	26.25	2.03	1.80	3.83
7	26.25	22.5	18.75	1.58	1.35	2.93
8	18.75	15	11.25	1.13	0.90	2.03
9	11.25	7.5	3.75	0.68	0.45	1.13
10	3.75	0	0	0.23	0.00	0.23