grocery store operations
TRANSCRIPT
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Presented by iPOSSIBLE INC.
Zahra Bajhiran, Jill Chi, Laura Feja, Jason Oakley, and Kyle Thoresen1
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OVERVIEW RCFSs Operation
Opportunities Existing Floor Layout
Objectives
Customer Survey and Observations Department Earning Power
Operational Improvement Opportunities
Possible Floor Plan Alternatives Recommended Floor Plan
New Floor Plan Sales Projection
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RCFS BACKGROUND
Specialty grocery store located in OrangeCounty
Open since 2004
Medium size: ~27,000 square feet
Shopping area: ~16,000 square feet
Annual growth rate of 10% since opening
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RCFS STRATEGY AND FOCUS
Providing specialty grocery items to servediverse O.C. immigrant population
Both stores located in affluent neighborhoods
Minimum advertizing, relies on word of mouth Lowering labor needed by sub-contracting
food island and pastry
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RCFS STRENGTHS
Loyal niche customers (Persians)
Ability to attract other ethnicities in additionto Persians
Provides variety of merchandise from
different countries Bakery
International food court and dining area
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FACTS
RCFS Industry
Weekly sales ~$500,000 $333,535
Size (shopping area) ~16,000 ft2 0.637 x 46,000 =
29,302 ft2
Customer Count perDay
3,000 1,725
Customer ticket
(based on weekly sales)
$23.84 $27.61
Sales/ft2 (shopping area) ~$31 $11.39
Source: www.fmi.org
http://www.fmi.org/http://www.fmi.org/ -
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RCFS OPPORTUNITIES
Problem areas:
Cycle time is high due to trafficcongestions
Customer flow is imbalanced
Sales per customer less than industryaverage
Center store challenge
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EXISTING LAYOUT
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RCFS OBJECTIVES
Reduce the cycle time by removingbottlenecks
Improve the flow, Free more space
Increase sales per customer
Direct customers to the center of the store
Achieving objectives results in the increase ofcustomer satisfaction and ultimately sales
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STORE SALES VERSUS AREA
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0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
% Total Store Sales
% Total Store Area
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CUSTOMER SURVEY
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CUSTOMER OBSERVATION
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CUSTOMER SURVEY
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CUSTOMER OBSERVATION
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EARNING POWER
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Sdept.(1 + Pdept.)
Afloor
EP = 10,000
EP = Earning Power
Sdept. = % of total store sales
Pdept. = Profit Margin (%)
Afloor= Floor Area Department Occupies
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EARNING POWER
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Relative "Earning power" of RCFS departments2
Department1 % of Sales Est. Floor Area (ft2) Est. Profit Margin (%) Earning Power3
Meat 9.0% 633 45% 100
Produce 20.1% 2,475 33% 52
Hot food Area 17.0% 2,573 30% 42
Dairy 6.8% 967 17% 40
Remaining Aisles4 27.2% 4,858 25% 34Frozen (Aisle 7) 2.0% 418 37% 32
Taxable items (Aisle 5/6) 3.9% 1,486 35% 17
Bread 1.0% 809 22% 7
Miscelaneous 13.0% - - -
Checkout (cash reg.) - 1,455 - -
Eating Area - 627 - -
Total Floor Area 100.0% 16,300 31% 391) Not all departments included AVG
2) Sales and margin are estimates (Lopez, 2010)
3) Normalized to largest "earning power" - meat dept.
4) Aisles 1 - 4, 8 (Profit Margin estimated)
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OPERATIONAL IMPROVEMENTOPPORTUNITIES
1) Increase Sales per Customer
- Cross merchandising: encourage sales of
related products- Strategic product placement: use endcaps
more effectively
- Advertizing/ promotions
- free space helps
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2) Reducing Cycle time: process faster- Add registers in hot foods dept.
- Navigational Aids
- Scanners at checkout must recognizeinternational bar codes
- 20% of the items require manual input
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Reducing cycle time is crucial
Customer Flow
Store Sales
This barrier will rise if
cycle time reduced
RCFS probably in this
vicinity during busiest
times?
OPERATIONAL IMPROVEMENTOPPORTUNITIES
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3) Reconfigure store layout to:
Increase free space
Improve customer flow
Increase customer satisfaction
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Focus: Produce section
OPERATIONAL IMPROVEMENTOPPORTUNITIES
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ALTERNATIVE 1
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ALTERNATIVE 2
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ALTERNATIVE 3
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RECOMMENDED LAYOUT
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SALES PROJECTION
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(Aeffect VcustomerBf Sopp. ) + Tcustomer
Store Sales Increase (%) = Tcustomer100
1
Sopp. = Sales Increase Opportunity
Aeffect = Store Area EffectVcustomer= Customer Flow FactorBf = Store Busy Factor
Tcustomer=Average Customer Ticket
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SALES PROJECTION
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(Aeffect VcustomerBf Sopp. ) + Tcustomer
Store Sales Increase (%) =
Sopp. = Sales Increase Opportunity = 30 - 23.80 = $6.20
Aeffect = Store Area Effect = 0.50Vcustomer= Customer Flow Factor = 1.3Bf = Store Busy Factor = 0.50
Tcustomer=Average Customer Ticket = $23.80
Tcustomer100
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Customer Flow Factor (current plan)
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Current Plan
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Dept. Length (in) Width (in) Area (ft2)
1 Cheese 272 230 434
2 Hot foods 352 532 1,3003 Cake 420 197 575
4 Eating area 420 215 627
5 Aisle 7/8 60 916 382
6 Aisle 6/7 60 924 385
7 Aisle 5/6 49 963 328
8 Aisle 4/5 49 963 328
9 Aisle 3/4 49 963 328
10 Aisle 2/3 49 963 328
11 Aisle 1/2 49 856 291
12 Cash Reg. 767 203 1,081
13 Meat 1 440 120 367
14 Meat 2 304 75 158
15 Produce 1 1,160 75 604
16 Produce 2 187 90 117
17 Produce 3 117 45 37
18 Produce 4 85 112 66
19 Sangak 255 165 292
20 Misc. Items - - 241 ==> Assume 3% of total floor area
21 Total Entity Area - - 8,268
22 Total Floor Space 139 118 16,317
23 Total Free Space - - 8,049
24 % free space - - 49.3%
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Customer Flow Factor (recommended plan)
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Recommended Plan
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Dept. Length (in) Width (in) Area (ft^2)
1 Cheese 65 428 193
2 Hot foods 352 532 1,300
3 Cake 420 197 575
4 Eating area 420 215 627
5 Aisle 7/8 60 916 382
6 Aisle 6/7 60 924 385
7 Aisle 5/6 49 963 328
8 Aisle 4/5 49 963 328
9 Aisle 3/4 49 963 328
10 Aisle 2/3 49 832 283
11 Aisle 1/2 - - - ==> deleted island
12 Cash Reg. 767 203 1,081
13 Meat 1 440 120 367
14 Meat 2 52 375 135 ==> spices/wine go with meats
15 Produce 1 1,200 75 625
16 Produce 2 52 364 131 ==> seven 52" square pallets
17 Sangak 255 165 29218 Misc. Items - - 294 ==> Assume 4% of total floor area
19 Total Entity Area - - 7,655
20 Object Area Gain/Loss - - -614
21 Total Floor Space 139 118 16,317
22 Total Free Space - - 8,662
23 % free space - - 53.1%
Free space increase =
8,662 / 8,0491 = 7.6%
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SALES PROJECTION
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(0.50 x 1.3 x 0.50 x 6.20) + 23.80
Store Sales Increase (%) = 23.80100
1
= 8.5%
Sopp. = Sales Increase Opportunity = 30 - 23.80 = $6.20
Aeffect = Store Area Effect = 0.50Vcustomer= Customer Flow Factor = 1.3Bf = Store Busy Factor = 0.50
Tcustomer=Average Customer Ticket = $23.80
1.076 too conservative
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GOT GROCERIES?
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