Best Food Superstores: Improving Profit Margins

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Table of Contents

Executive Summary
Background
Statement of Problem
Situation Analysis
SWOT Analysis
Analysis of Alternatives
Recommendation
Implementation or Action Plan
References

Executive Summary

The “Best Food Superstores” has grown from a single grocery store to a leading superstore. These superstores offer the best selection, value and quality services. Mainly dealing in food substances, the stores have recorded sales above $42.5 million. The “Best Food Superstores” has risen to become a multibillion-dollar retailer and cooperation.

It is now regarded as one of the largest food retailers in the world. The “superstores” employ approximately 57, 000 associates in more than 335 different stores, manufacturing –plants, offices and distribution centres. Despite the prosperities the business is enjoying in the food market, there are several challenges that limit its profit margins. Among the limiting factors is the cost incurred by the business to offset energy bills (Miner, 2008).

Background

The “Superstores” low energy plan begun in the year 2000 when the management of the stores coined a new project which brought together representatives from different stores. This also included:- sister divisions, leading suppliers of the superstores ventilation as well as the heating and cooling equipment managers.

The aim of the project was to come up with a list of implementation techniques and ideas on indoor environment, quality air, energy conservation and efficiency. The project’s mission was to ensure that the criteria put in place by the “superstores” would lead to energy costs reduction and improved profit margins. Furthermore, it was intended to enhance the stores’ competitiveness (Kerin, 2010).

Statement of Problem

Average families visit these superstores approximately three times a week. As the families purchase food staffs, they are not bothered by the amount it costs the stores to maintain the butter, fruits, beef, ice cream and grocery containers at the ideal temperatures.

Behind these shelves of chilled meat, fresh produces and refrigerated coolers are the electric bills. These bills are a representation of one of the most significant costs in the food industry. Now that food superstores operate at profit margins that are miniscule, savings on such electric bills can easily translate into remarkable improvements in the long run.

In a typical food store, money saving techniques and the implementation of a new energy equipment can ensure that the profits from the stores are increased over a given period of time. The energy saving equipments includes individual systems such as building controls, lights and freezer cases. The management of the “Best Food Superstores” settled for a different approach in dealing with this energy issue.

The business designed a plan that would ensure that the “superstores” utilized less energy while at the same time, are environmental friendly. The organization hoped that by cutting down on energy costs, it would significantly increase the stores competitiveness and improve its profit margins (Kerin, 2010).

Situation Analysis

The “superstores” were designed in such a way that the installed prototype consumed approximately 25 percent less electricity compared to other designs in the business. To highlight this, the store adopted a new brand, “ The Low Energy Superstore”. The use of ‘LESS’ to reduce the store’s energy consumptions translated to an annual savings approximated at about 8, 000, 000 kWh. The review and designs managed to successfully deliver a 30 percent energy saving.

The retail superstores that installed natural light systems registered a significant increase in sales as this ensured that people no longer lingered and visited the stores more often than the customers in the traditional establishments. In such stores, lights were designed to focus on the stores’ products rather than the floors and ceilings. In addition, there were subtle designed features which enabled the customers to distinguish the departments easily resulting to a less stressful environment (Miner, 2008).

SWOT Analysis

The SWOT analysis of the plan is as follows; its strength is that the concept of the plan was to result in a significant cut on costs while at the same time enhance sales. The management was in full support of the projected thus it received full backing from all departments.

The weakness of this plan was that the implementation had to take into consideration the impact of the project to the adjoining residential neighborhoods in terms of the noise from the shoppers and delivery trucks, as well as storm water runoff. The opportunities before the plan were the already well established patterns that ensured easy access to the site. The main threat of the designed plan was that some of the senior management did not fully trust that the plan will be effective (Kerin, 2010).

Analysis of Alternatives

In addition to the use of ‘LESS’, the “superstores” could, as well, make use of fewer space heaters. Furthermore, waste heat coming from refrigerators can be utilized to provide direct heating to the store and preheat hot water domestically. During winter, burners lit using natural gas may be used to supplement the free sources of heat.

The savings should not only be concentrated on the inside of the store but also the outside. The ‘lot Stop’ and ‘parking lots’ are other areas outside the stores where the designs could also be applied. The lighting on the parking lots and the streets may be designed in such a way that less watts of about 150 watt bulbs could be used instead of the normal 400 watt bulbs (Kerin, 2010).

Recommendation

The design should not just cover the conservation of energy but also, waste material. The material from the renovation and construction of the stores, especially during the plan implementation period, can be put into other use instead of being disposed. Such measures include the use of strawboard substrate in place of particle board.

Implementation or Action Plan

The “Best Food Superstores” design enabled the firm to operate comfortably with the innovations geared towards saving on its energy consumption. The design introduced equipments like; natural lightings such as sky lights, the use of anti-fogging glass on cooler cases, rain water management and water conservation indoors. These innovations, put together, created a conducive and pleasant environment for consumers to shop. In the long run, the stores saved money. Based on its results, the plan was easily approved by the local authority.

This innovation increased the stores’ capital costs while cutting down on the operation costs. After the plan, the design became a standard procedure for the new stores.

The features included in the ‘LESS’ such as the automatic dimmers and skylights, reduced reliance fluorescents, cooler doors that were energy efficient and chillers, were implemented during renovations and construction of new structures in the business (Kerin, 2010).

The adapted, ‘LESS’, technology ensured that the business was cost effective. This was after offsetting the initial installation costs. The design was implemented in all the chain superstores globally and has remained as the sole the trade mark of “Best Food Superstores”.

References

Kerin, R. (2010). Marketing. New York, NY: McGraw-Hill

Miner, B. (2008). Food Stores: State Market Index. New York, NY: MarketResearch.com

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