Analysis of the FOODplus Supermarkets’ Annual Data Survey

This report provides an analysis of the FOODplus supermarkets’ annual data survey, including insights on gross profit, wastage, online sales, and sales variables. It also suggests measures to optimize the company’s profits and sustainability.

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ANALYSIS OF THE FOODPLUS SUPERMARKETS’ ANNUAL DATA SURVEY
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Memorandum
To: Paul Anderson
From: Emma Thomson
Subject: Analysis of the FOODplus supermarkets’ annual data survey
Executive summary
FOODplus is an Australian leading supermarket that owns 750 stores. Its supermarkets are
distributed all over Australia with firm having been in operation for 27 years. The company’s
operations are managed at the stores level where a store manager is appointed to make the
day to day decisions concerning a supermarket’s activities. Despite this, the broader company
planning and direction occurs at the Head office which is situated in Melbourne.
Currently I work as a business analysist and is one of the members of the research and
analysist department that is situated in the head office. Having been asked by the General
Manager Paul Anderson ta take an analysis of the company’s previous data, this report is
thereby to give a feedback of the tasks that were undertook as well as elaborate on the
findings.
So as to allow for an efficient and effective analysis of the information a sample of 150 stores
was selected from the available 750 from which the data analysis was done and conclusions
drawn. The average gross profit for each of the FOODplus stores is $ 1.0268 million with the
value having a deviation of $ 0.7430 million. most of the stores though make a gross profit
which falls below the average value. Also, the data indicates that the variation in the store’s
profitability is very large with the data giving a difference of $ 3.1394 million between the
most profitable and the, least profitable. From the managers reward policy its evident that all
the managers whose stores made a gross profit of over $ 1.408 million will qualify for a
performance bonus.
Being that the stores opened on Sunday do make more profit compared to those that close on
the same day, it is advisable that the supermarkets operate throughout the week so as to
optimise the company’s profits. In addition, the firm’s intention to make use of internet to
increase sales is effectively picking up with up to 68% of the stores having satisfactorily set
up an online sales store.

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In conclusion, so as to optimise the value of sales the managers should increase the revenue
allocated to the advertisements as this is one of the factors that is responsible the changes in
the sale values.
1. An overall view of gross profit
a. Overall gross profit summary
On average each store of FOODplus chain made a profit of $ 1.0268 million. The
profit though varies with a value of $ 0.7430cmillion either above or below the
average profit per store. The chain store with the minimum profit recorded a gross
profit is $ 0.0198 million. This shows that out of the sampled 150 stores no single
store recorded a gross loss during the financial period (Hornren 2011). The store
which recorded the highest profit made a value of $ 3.1592 million. In conclusion
even though the stores made gross profits overall, there was still a large different
between the profitability of the stores with a different of $ 3.1394 million being
experienced between the most profitable and the least profitable store.
b. Range of gross profit to be awarded a bonus
In line with the FOODplus’ policy of awarding the top 45 managers with a bonus,
from the sampled data it’s evident that managers whose stores recorded a gross
profit of between $ 1.408 and $ 3.159 million will qualify for a bonus from the
store’s central administration (Armstrong 2015).
c. Stores with unusual gross profit
When statistical visual tools are applied to break down the gross profit data, all the
stores’ profit level seems to be within the expected level. There is no single store
which has projected gross profits which might be considered an unusual
occurrence.
Normally in statistical terms unusual observations are signs of unusual activity
which might be extremely beneficial or dangerous to the sustainability of a store
(Dalkir 2013). An example of such a case will be intensive embezzlement of a
store resources or poor marketing strategy that if not corrected in time might lead
to the downfall of a store.
2. Descriptive measures and insights

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a. Daily business operations
The FOODplus individual stores are run by the individual store managers who are
in charge of the daily operations of the stores. This way it’s upon the manager to
decide whether a store will be opened every day of the week or closed on the
Sundays. Taking the data collected in the previous year, the gross profits will be
evaluated for each of the store to determine the effectiveness of opening a store on
a Sunday. The sum of the gross profit for the stores that closed on Sunday is $
52.0354 million this is lower than the $ 101.9843 million that was realised by
stores that opened on Sundays. In addition, each of the stores than opened on
Sunday made an average profit of $ 1.0966 million which is also higher compared
to the $ 0.9129 million realised by the stores that closed on Sunday. As a way of
increasing the stores profitability the central management should, make it
mandatory to operate the stores every day of the week.
b. Creation of online store channel
From the sample data, 41.18% of the stores with an online store channel are
located in the malls. This number is followed by 30.39% which is the stores
located in the Strips (Steel & Angwin 2013). Stores operating in the Country have
the lowest percentage (28.43%) when it comes to setting up of online store
channels. Hence it can be concluded that malls are leading when it comes to
online trading.
c. Wastage
Overall, out of the 150 stores that have been sampled 46 keep high levels of
wastage, 81 medium level while only 23 stores maintain low levels of wastages.
Comparing the high wastage by state, the state of Queensland and South Australis
are the leading when it comes to the level of wastage kept by their stores. 11
stores in each of the two states are maintaining high level of wastage (CIPS Study
Materials 2012). The state of New South Wales and Victoria also have relative
high number of their stores keeping high level of wastage with other remaining
states having their stores operating more efficiently.
3. Sales is one of the main variables of concern when analysing business performance.
This is due to its direct influence when it comes to enhancing the profitability of the
firm (Shenoy & Zabelle 2016). For the managers to make informed decisions there is
need to identify some of the variables that explain the variation in the sales.

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Using the data collected over the period advertisements are responsible for up to
70.59 % of the variations in sales. On the other hand, the number of staff explains at
least 54.17 % of the sales value’s variations. Car spaces and hours of trading have
little impact on sales with the two responsible for 31.99% and 0.68% of the sales
variations.
It is therefore evident that a lot of focus should be put in the advertisements as it is
one of the major areas that have a huge impact on the amount of sales made.
4. Basic estimates
a. Average online sale
The strive by FOODplus stores to increase its sales revenue by setting up online
sales platform seems to be on the verge of success. Out of the 150 samples data at
least 102 stores have successfully set up an online store. This means that up to
68% of the FOODplus stores can be concluded to have an operating online store.
On average each of the individual stores operating an online platform generates $
0.363 million from online sales.
b. Maintaining low wastage
The wastage level that a store maintains is vital when it comes to optimising
profitability. For this reason, the central management have made a policy that each
of its stores should strive to maintain low wastage level. Using the available data,
it is possible to obtain an insight information as to how effective the store
managers have been when it comes to implementing this policy (Kieso, et al.,
2007). Out of all the supermarkets under FOODplus stores, only 15.33% are
maintaining low wastage levels. This seems to be a poor position since 84% of the
stores are yet to effectively put the policy in place.
Victoria and New South Wales are the two dominant states when it comes to the
operations of FOODplus. In this region 17.14% of the stores are maintaining low
wastage levels. Even though this is a slight improvement from the overall position
its can still be categorised as a poor position keeping in mind the losses that arise
due to maintenance of high wastage levels.
5. Industry performance
a. Hypothesis testing
The Australian competition and consumer commission (ACCC) is responsible for
advising the chain store on the pricing criteria that assist the firm be in line with
the country’s inflation rate. For the last 12 months the prices increase has been set

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at a value less than $ 6.85. By analysing the sampled data for the past 12 months,
there is no sufficient evident to support that the price increase in the FOODplus
products is either $ 6.85 or less (Jaynes 2007). For this reason, it can be concluded
that the chain stores have not been able to comply with the requirements of the
ACCC.
b. Opening of the supermarkets on Sunday
As a sustainability measure of the FOODplus stores, there is need for the firm to
ensure that at least 70% of its supermarkets are operating all the days of the week.
Looking at the data for the past 12 months it can be concluded that the number of
supermarkets that currently operate throughout the week is less than the 70%
suggested proportion. This is a threat to the sustainability of the chain stress and
therefore need the intervention of the central management to rectify.
6. Sampling methods for the Annual survey
a.
i. For the sampled data to represent the actual population effectively, it is
vital that it meets the minimum number. For this case the sample should be
188. Being that only 150 stores were selected it is possible for some of the
states to be either overrepresented or underrepresented.
ii. It’s possible that the FOODplus began its operations 27 years ago yet this
information is not captured in the data. For the purpose of analysis, a
sample is normally taken to represent the actual population. That, way not
all the data that are available in the actual population will be reflected in
the sample. This may have caused the anomaly experienced since the
stores which began their operations 27 years ago might have been left out
of the sampled data.
b. In future survey, for the sample data to represent the population accurately it is
important that the sample size be at least 30% of the total population of the study.
A more precise sampling technique should entail grouping the stores by state
before picking a sample from each state independently. This way
overrepresentation or underrepresentation of a particular state will not be
experienced.
Conclusion

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To ensure sustainability of the FOODplus stores, it’s advisable that the management of the
firm ensures a minimum of 70% of the stores are operated through out the week. This way
the stores will be in a pole position to offend competition from other firms.
Considering the importance of sampling in generalising information as well as saving on time
and cost of analysis, it’s vital that proper steps are taken to ensure that the sample size used is
significance. this can also be done by using an efficient sampling system as well as
calculating a proper sample size prior to conducting the study.
FOODplus chain stores also need to implement the management position of maintain low
wastage level so as to optimise the gross profit across the country.
Sincerely
Emma Thomson

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References
Armstrong, M 2015, Armstrong's handbook of reward management practice: improving
performance through rewar,. 5th ed,London; Philadelphia.
CIPS Study Materials 2012, Inventory and Logistics Operations, Profex Publishing.
Dalkir, K 2013, Knowledge management in theory and practice, Routledge.
Horngren, C 2011, Accounting. 9th Edition ed, Upper Saddle River New Jersey, Prentice
Hall.
Jaynes, E 2007, Probability theory : the logic of science, Cambridge, Cambridge Univ.
Press.
Kieso, D, Warfield, T & Weygandt, J 2007, Intermediate Accounting, 8th Canadian ed,
Canada.
Shenoy, R & Zabelle, T 2016, ‘New Era of Project Delivery – Project as Production System’,
Journal of Project Production Management, Vol. 1, pp. 13–24.
Steel, E & Angwin, J 2013. ‘On the Web's Cutting Edge, Anonymity in Name Only’, The
Wall Street Journal.