An Overview of Gross Profit, Wastage Management and Online Sale Initiate in FOODplus

The report analyzed the survey of 150 supermarkets in the FOODplus chain from 8 states in Australia. The report focuses on gross profit, wastage management efficiency, and overall scenario of online sales initiative. The price escalation during last 12 months is also an important part of the report for future scope in price management. Lastly, the sample size of the survey has been critically analyzed, and future recommendations have been suggested.

To: Paul Anderson
Subject: Annual survey report of FOODplus performance
The report analyzed the survey of 150 supermarkets in the FOODplus chain from 8 states in
Australia. The report focuses on gross profit, wastage management efficiency, and overall
scenario of online sales initiative. The price escalation during last 12 months is also an important
part of the report for future scope in price management. Lastly, the sample size of the survey has
been critically analyzed, and future recommendations have been suggested.
From: Emma Thomson
Date:
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An Overview of Gross Profit, Wastage Management and
Online Sale Initiate in FOODplus
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Executive Summary
The current article assesses the FOODplus (2018) report for understanding the range in
development of advertisement, effect of the professionals having professional work on Sundays
and global business via the medium of internet. Some of the factors found to be imperative in
this report are Sunday operations, promotional costs, online sale volume and the efficiency of
management of waste.
According to ISO 9004:2018(en), the additive business standard is the phenomenon of escalating
the quality of the organizations for improving the business model’s holistic performance
(SHEPS, 2018; Palmes, 2018, pg. 48-49). The report includes various facets that are forged
based on a layer approach by scrutinizing sales revenues, effect on external elements on rise in
food costs, and completion oriented challenges encountered by FOODplus.
A major aspect of the FOODplus Report, 2018 is that it has covered the future prospects
pertaining to the supermarket industrial growth. It involves sales and revenues in online and
offline sectors. The cornerstone of the report is data of two years from the service providers of
supermarket and the industrial workforces, accumulated through interviews, surveys and by
other methods. In addition, evaluation of the business is based on data of two years for profit
computation, analyzing the trends of sales online and tenure of partnership with the brand of
FOODplus, competitors and trading hours and demographic facts related to the managers, and
availability of the parking area within the supermarket region.
The procedures involved in advertisement and the costs entailed in the business development
have been described thoroughly in this report. It further encompasses the FOODplus’s
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background of standard prices for the food baskets and enables the understanding of features
working behind the price rise. This report also gives a glimpse into the management of wastes in
every supermarket area, and Australian states. An analogical study on states has been provided
that analyzes that compares the performance on waste management practices.
The report has documented the efficiency in waste management for escalating the profit margins
with the reduction and management of non-sold inventories. This analysis conducted by the
states is heavily based on three segments of waste control. Victoria and New South Wales have
been given special attention for examining the waste management in these states.
The report has been deduced with an analysis on the significance of the study’s sample size that
covers management apprehension pertaining to the suitability of 150 business stores for
providing the definite picture of the overall scenario. Supermarkets from Queensland, Tasmania
and Western Australia have also been reviewed and the study was conducted to on the business
models to predict the configuration of the emergent leader in the market within the chain of
supply. Insights into the future strategies and investment have been provided to forecast future
growth and opportunities.
The questions covered in this report are as follow;
 What has been the parameter for managers in order to accomplish the annual bonus
level regarding this Australian business?
 How can Sunday businesses influence the gross level of profit of the supermarket is a
positive fashion? Is it an imperative step to survive in the competitive market?
 What has been the definite picture of the sales online?
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 What has been the scenario of the business stores for the initiation of online
businesses and how it has been dispensed across the market in Australia?
 How the advertisement cost can induce increased revenues for sale and whether the
facilities of parking wield an impact on the earned revenues?
 How the Australian states are fragmented over the management performance for non-
sold items?
 Has there been a price rise of standardized food basket, 2018 when compared and
contrasted to 2017?
 Are the study findings valid and the substantiations with examination of size of the
sample?
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Table of Contents
1. Gross Profit Assessment...........................................................................................................6
2. Report on Descriptive Measures..............................................................................................7
3. Important Variables in Sales Forecasting.................................................................................9
4. Some Basic Estimates..............................................................................................................9
5. FOODplus Industry Performance...........................................................................................10
6. Review of Methodology of Sampling....................................................................................10
Conclusion.....................................................................................................................................11
Recommendation...........................................................................................................................13
References......................................................................................................................................14
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1. Gross Profit Assessment
a. The average gross profit on an annual basis was $ 1.03 million approximately.
However, there has been a variation within the gross profit annual margin that shot up to
$ 0.74 million. The profit of the stores on the annual basis has been $ 0.02 million in
2018, while $ 3.16 million was the profit in the maximum range. The range of $ 0.44 to $
1.54 million has been the gross annual profit margin for fifty percent of the middle level
supermarkets. Fifty percent of the stores in supermarket earned up to $ 0.97 million as the
gross profit on annual based. The highest twenty five percent of the fifty percent earned
in the range of $ 1.54 million to $ 3.16 million.
b. Managers of the 45 supermarkets were among the highest level of 6% profitably
productive supermarkets in the population of 750 stores. Their stores were found to earn
more than $ 2.23 million as the gross profit in last twelve months. These managers
fulfilled the eligibility to have the FOODplus’s bonus extension.
c. As per the statistical dialect, unconventional observations made on the samples are
known as the outliners. In the gross profit analysis, no outliner was observed and also
there has been no exceptional gross profit case in the past twelve months, and gross profit
earned in last twelve months varied between $0.02 million to $ 3.16 million.
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2. Report on Descriptive Measures
a. Sunday businesses and opened stores have been a profitable business step. In 2018,
ninety three supermarkets had been kept open and the resultant averaged gross profit in
the annual term was $ 1.10 million, where total profit was $101.98 million. The minimum
range of annual profits was $ 0.05 million that shot up to $ 2.88 million for the lead
stores. The average gross profit annual based for the business stores shut on the Sundays
was $ 0.91 million approximately. It further varied within the range of $ 0.02 million and
$ 3.16 million therefore, it can be deduced that fifty percent of supermarket that remained
closed on the Sundays gathered more than $ 0.89 million profits and the rest that
proceeded with the Sunday business earned higher than $ 1.07 million as an annual profit.
But, there is no evidence that stores open on Sundays are earning significantly more than
those stores that are closed on Sundays.
b. Analysis of the initiatives in online sales in the supermarket malls identified that the
business via the internet medium was functioning in forty two malls. Furthermore, 102
out of 150 numbers of supermarkets have resorted to the sales online. However, statistical
observation on the differences between online and offline sales did not been reveal any
significant evidence that Malls are the leading online promoting channels.
c. Intra state comparison yielded that Tasmania’s waste management was the worst
performing, accommodating 60% of the supermarkets in Tasmania holding an exorbitant
percentage of the non-sold products. FOODplus stores of the Queensland and South
Australia also maintained unsold items at 40.74 % and 50% of their total waste
management. The entire scenario exhibited that 30.67% supermarkets have been
maintaining excessive quantity of unsold items. Interstate comparison for high waste
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management reflected that 11 supermarkets in Queensland and South Australia each are
in the high waste level category among total 46 high level of unsold product
supermarkets in the sample.
3. Important Variables in Sales Forecasting
Stores’ figure of sales was presumed to have been correlated with the four non-dependent
factors. The cost involved in advertisement, parking facilities, number of store employees and
complete trading hours were alleged associated elements. However, two factors emerged to be
immensely significant for stores’ sales. Primarily, the crucial predictor was the cost factor
involved in advertisement, and secondly the workers’ strength in the stores. The annual sale
increases due to the additional input of $ 1000 as advertisement cost was estimated to be $ 0.04
million approximately. It was expected that the annual sale average would rise by an
approximate $ 0.06 million per year for a single additional employee in a store. It is important to
note that the estimated effects presume that rest of the other inputs remains constant.
4. Some Basic Estimates
a. The annual revenue from sales online was estimated to be $ 0.36 million from a total of
102 supermarkets those have resorted to FOODplus initiative. The highest revenue
generated from sale online was $ 1.46 million for 2018, while the top fifty percent
supermarkets earned $ 0.33 million approximately. The annual revenue for any of the
FOODplus stores was estimated to be in the range of $ 0.28 million to $ 0.44 million in
2018.
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b. Low management of wastage was observed in twenty three stores of the overall chain
that comprised 15.33% of the business stores. The percentage estimated from low
wastages in the FOOD plus stores was within the range of 9.57% to 21.10%. Similarly,
the estimations for Victoria and New South Wales were found to be between 3.18% and
29.08% and 5.9% and 29.99% respectively. The accuracy rate is 95% for the estimates
provided.
5. FOODplus Industry Performance
a. A comparative analysis of the prices for a standardized basket of food revealed that
there has been an increase of $ 7 for each basket in 2018 from 2017. The guidelines set
by Australian Competition and Consumer Commission (ACCC) for the maximum cost
increase has been $ 6.85. The average price for standard food basket was found to be $
171.81 that rose to 178.85 in 2018. The analysis on this scenario implied that there has
been price rise in 2018. However, the rise is significantly within the guidelines set by
ACCC of $ 6.5 of maximum increase in price of a standard food basket.
b. Results of the investigation found imperative evidence that showed fewer than 70% of
the stores were kept open on the Sundays in 2018. In fact, ninety three out of one fifty
supermarkets were kept open on the Sundays in the sample. However, this particular fact
could not evident to present 95% of probability that the stores that were open on Sundays
had been lesser than 70%. Further, this inference had no sufficient evidence to yield 99%
factual probability.
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6. Review of Methodology of Sampling
a. The suitability of state-wise presentation in 150 supermarkets sample size has been
examined. 16 stores were from the Western Australia, 27 from Queensland and 5 stores
were from Tasmania. The presentations from three states were estimated to be: 5.73% to
15.61% from WA, 1185% TO 24.15% for Queensland, and 0.46 % to 6.21% related to
Tasmania. The variation in percentages displays the disparity in estimations, though;
there is no evidence that representation from Queensland is significantly higher.
Representation from Tasmania is significantly low, whereas, enough stores are there in
the sample from West Australia.
Detection of outlier for association years with FOODplus showed that any of its store’s
business activity that lasted for 24 years and more was an unconventional observation.
Therefore, there is a probability that the sample debarred such observations. There have
been no business stores that shared business relations with FOODplus exceeding 24
years in the sample.
b. The appropriateness of the sample size is investigated through two means. Firstly, the
margin for gross profit was estimated to be in the range of $ 120,000 that produced the
sample size of 148 stores (lesser than the present sample). The high wastage stores
proportion was within the 6% and induced 227 stores as the sample size. Therefore,
escalation in size of the samples can be presumed to be a productive research project for
future.
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Conclusion
The management of supermarkets in the FOODplus chain necessitates focusing on sales online
in each store of the market. The FMCG market competitions compel the 70% of supermarkets to
remain opened on the Sundays. One more significant factor to augment profit was to maintain
non-sold products. Stores in New South Wales, Queensland and Victoria need effective waste
management with the aim of reducing the operation costs and enhance the gross profits (Scalco,
Pigatto, and Souza 2017, p.777-789) Food price increase in 2018 for food basket was in the
range provided by ACCC, and the management of FOODplus must abide by the growth pattern
in prices of food. The survey for the sample has been conducted with supermarkets selected on a
random basis. Moreover, there has been no equitable supermarkets’ representation from the
Australians states. The gross profits for future could be estimated from the 150 stores sample
size. However, estimation of wastage for 6% for the overall FOODplus chain, the size of sample
must be enhanced to a minimum 227.
Important findings of the report are as follow:
i. The Australian Fast moving consumer goods (FMCG) are characterized by private
innovations. The 150 stores of supermarkets formed the sample for this study.
ii. The gross profit was $ 1.03 approximately in 2018. No exceptional profit was
reported for any FOODplus store.
iii. Managers of the superstores that earned annual gross profit of $ 2.23 million and
above were eligible for bonus scheme offered by companies.
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iv. Sunday businesses for 67.74% supermarket stores are profitable, and the average
annual gross profits for supermarket stores have been $ 1.10 million, while other
stores made $ 0.89 million.
v. Queensland was the worst performing in term of wastes management and New South
Wales and Victoria stored followed to be the next. Supermarkets in Northern
Australia and the capital had highest productivity in management of unsold items.
vi. Advertisement costs and workforce strength are important predictors for the revenues
generated in the sales. Trading hours and parking region did not have impact on this
revenue.
vii. The food price in standardized basket has escalated in 2018 from the price in 2017.
The rise has been within the guidelines set by ACCC.
Recommendation
From the above discussion, it can be concluded that it is crucial for wastage reduction and
escalate sales online for business development (Perey et al. 2018, p.631-642). This current report
enables the entrepreneurs to review their business decisions, wherein detailed research is
desirable for assessing the sales and profits impacted by the independent factors. In order to
conduct that research, two years and above would be needed for removing biases in sampling.
The management should give emphasis on online sales (Hair et al. 2015). Special encouragement
should be provided for keeping stores open on Sundays. Queensland, South Australia, and
Tasmania stores should be guided and assisted for better waste management. Stores should look
to focus on their employee strength and advertisement cost to increase their annual sales.
Competitors in the market are enhancing their management skills. FOODplus chain should look
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forward to a fierce completion from them, and should equip stores with efficient employees with
enhanced infrastructure (Gilchrist 2016, p. 195-215).
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References
Gilchrist, A., 2016. Introducing Industry 4.0. In Industry 4.0 (pp. 195-215). Apress, Berkeley,
CA.
Hair Jr, J.F., Wolfinbarger, M., Money, A.H., Samouel, P. and Page, M.J., 2015. Essentials of
business research methods. Routledge.
Palmes, P., 2018. Sustaining Success. Quality Progress, 51(4), pp.48-49.
Perey, R., Benn, S., Agarwal, R. and Edwards, M., 2018. The place of waste: Changing business
value for the circular economy. Business Strategy and the Environment, 27(5), pp.631-642.
Scalco, A.R., Pigatto, G.A.S. and Souza, R., 2017. Commercialization channels of organic
products in Brazil: analysis at the first level of the production chain. Gestão & Produção, 24(4),
pp.777-789.
SHEPS, I., Organizational Quality–Guidance to achieve Sustained Success. The New ISO 9004:
2018. ASIGURAREA CALITÃÞII–QUALITY ASSURANCE.
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