Analysis of Performance of FOODplus Supermarket

This report provides an analysis of the selected performance parameters of FOODplus Supermarket using statistical techniques. The report covers insights on annual gross profit, wastage breakdown, sales variation, online sales revenue, and more.

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EXECUTIVE SUMMARY
Taking into cognisance the sample data of 150 FOODplus supermarkets, the average gross
profit on an annual basis is computed at $ 1.027 million. The underlying deviation in gross
profit for the sample supermarkets is quite high which is captured by the high value of range
besides other measures of dispersion. For being eligible for the annual bonus, the concerned
store manager should ensure that the annual gross profit must be atleast $ 3.135 million. The
outliers refer to those values which are either too large or too small and such values are
absent for the gross profit variable. The sample data highlights the generation of a higher
average annual profit for FOODplus supermarkets that are open on Sunday in comparison to
those which are not open. Also, the online store related leadership is possessed by
supermarkets based in strips where the online store presence rate is better than mall based
supermarkets. Analysing the category of wastage, it is fair to conclude that more than 50%
fall in the medium category and lowest proportion falling in low waste category. This clearly
reflects the scope of improvement in this regards.
In explaining the variation in sales, the most influential factor has emerged as expenses on
advertising. Besides, the number of staff also has emerged as a significant variable but the
underlying influence and ability in explanation of sales variation is lesser for staff number
than advertising expenses. Taking the sample data into consideration, the estimation of online
sales revenue per store on an annual basis is expected to fall between ($0.30, $0.42) million.
Also, of the 750 supermarkets owned by FOODplus, the proportion of supermarkets falling
under low wastage category is expected to fall between (9.57%, 21.10%). The average
increase in standard food basket across the 750 supermarkets does not seem to cross the
inflation and hence is in confirmation with ACCC policies. It also can be concluded that
population proportion of FOODplus supermarkets working on Sunday is lesser than 70%.
The assertion with regards to the misrepresentation of certain specific states is correct.
Further, the current sample size of 150 supermarkets is not found to be sufficient for the
proportion of high wastage store determination with a margin of error of 6%.

Title: ANALYSIS OF PERFORMANCE OF FOODplus SUPERMARKET
Introduction
FOODplus is a leading supermarket chain in Australia which from the humble beginning
made 27 years ago has now grown into a chain comprising of 750 national supermarkets. The
general manager of the company is Paul Anderson who has provided some useful data from
the annual survey for statistical analysis. Further, through a memorandum, the general
manager has raised certain specific queries which need to be addressed in the capacity of a
business analyst named Emma Thomas. In the wake of the above background, the primary
objective of this report is to carry out an analysis of the selected performance parameters
using the sample data comprised from 150 supermarkets. The use of statistical techniques in
addressing the questions involves the use of both inferential and descriptive techniques
depending on the precise requirement.
Analysis & Conclusion
The relevant discussion in regards to the FOODplus supermarkets is carried out below.
(1) The annual gross profit summary is presented below.
(a) Considering the given sample of FOODplus supermarkets, it becomes evident that mean
gross profit on an annual basis has been derived as $ 1.027 million. This is slightly more than
the corresponding median value at $ 0.972 million. The difference between the median and
mean gross profit may be attributed to asymmetric distribution of annual gross profit. The
measures of dispersion in context of gross profit highlight that variation is evident to be on
the higher side. This is particularly supports from the high range of sample gross profits.
Also, the presence of positive skew in the gross profit variable is expected owing to presence
of certain supermarkets having gross profits significantly higher than the computed average
value.
b) It is noteworthy that the managers of only the 45 top stores as per gross profit are given
bonuses from the total of 750 FOODplus supermarkets. The given data highlights that the
supermarkets that fall within the top 0.06 percentile would be eligible for the bonus. Based on
the given sample data, it is apparent that annual gross profit corresponding to 99.94 percentile
is $3.135 million and therefore this would be the cut-off.
c) In statistical terms, “unusual” indicates to values which tend to be exceptionally high or
low and hence the corresponding probability of their occurrence is typically quite less (lower
than 5%). The sample data gross profit is infact skewed with the presence of very high gross
profit supermarkets. However, none of these could be termed as outlier in statistical terms.
(2) (a) To estimate whether the supermarkets should keep open on Sunday or not, the annual
average gross profit of the two groups of supermarkets may be compared where one opens on
Sunday and the other remains close on Sunday. Average annual gross profit for the ones that

remain working on Sunday is computed at $1.097 million which is higher than the group of
supermarkets that do not open on Sunday and have corresponding value of $0.913 million.
Thus, it makes economic sense for the FOODplus supermarkets to work on Sunday thereby
contributing to higher annual gross profit.
(b) To determine whether supermarkets situated in malls have the leadership position with
regards to the online stores, a comparison needs to be drawn with the FOODplus
supermarkets situated at other locations namely country and strip. Amongst the mall based
supermarkets included in the sample, the online presence is witnessed in 67.74% of the
supermarkets. The corresponding adoption rate for supermarkets located in country and strips
is 60.42% and 77.50% respectively. These figures clearly refute the leadership claim of
supermarkets based in malls in terms of online store presence as this position belongs to
supermarkets based in strip.
(c) For the FOODplus supermarkets sample data, wastage breakdown is to be computed.
Under the low waste category, 15.3% of the sample supermarkets falls while more than 50%
of the sample supermarkets generate waste labelling them as medium wastage. However,
there are 30.67% of the supermarkets in the sample which tend to generate high wastage and
thereby are a matter of concern. The company needs to contemplate various measures in this
regards. The states that have maximum representation of high waste supermarkets are
Queensland, Southern Australia and Victoria is order of decreasing representation. For the
given sample, the identified three states tend to contain more than 50% of the supermarkets
falling under the high wastage category.
(3) The objective is to estimate the variables which tend to offer maximum explanation in
relation to sales variation based on the sample data. The statistical analysis highlights that
70.6% of the changes in the sales is explained by corresponding changes in the expenses on
advertisement. This is on expected lines since high advertising expenses leads to higher sales
generation. Another variable which is significant is the number of staff whose changes can
offer explanation to 54.17% of the changes in the sales amount. This is not surprising since
the staff hired would be reflective of the potential business. With regards to the other
variables i.e. number of car spaces and number of trading hours significance in terms of
explaining sales variation is lesser as only 32% and 0.68% may be explained. The most
crucial factor from the four factors discussed above is advertisement expenses since it leads
to the highest explanation in sales variation.
(4) (a) Based on the given sample data of 150 FOODplus supermarkets, the objective is to
provide estimation of online sales per store for all the supermarkets of FOODplus. It may be
concluded that the online sales per store on an average should fall in the interval defined by
lower limit of $ 0.3 million and higher limit of $ 0.42 million. A key observation is that the
average online sales per store is still very less when compared to the total annual sales which
highlights the potential growth scope in online sales revenue in the near future.
(b) The main objective is to highlight the proportion of all supermarkets run under FOODplus
that generate low wastage. The statistical analysis highlights that 9.57% to 21.1% of the 750
FOODplus supermarkets generate low wastage. This value is still on the lower end and

therefore presents significant scope for future improvements in waste management practices.
With regards to NSW based FOODplus supermarkets, the proportion that would have low
wastage would range between 5.90% and 29.99%. In context of Victoria based FOODplus
supermarkets, the proportion that would have low wastage would range between 3.18% and
29.08%. The proportion of low waste category supermarkets does not differ between the
three intervals stated above as there is overlapping evident between these.
(5) (a) The objective is to assess if the average increase in prices across FOODplus
supermarkets has exceeded $ 6.85 or not. In order to comment on the same, the increase in
standard food basket from 2017 to 2018 would be considered for 150 supermarkets. The
analysis of this data indicates that the average price increase over the year (i.e. 2017-2018)
does not exceed $6.85and hence complies with ACCC requirement.
(b) Considering the sample of 150 FOODplus supermarkets, the objective is to test whether
the population proportion of 750 FOODplus supermarkets is atleast 70%. The sample data
does not provide support to the claim and hence it may be concluded that less than 70% of all
the FOODplus supermarkets are open on Sunday. Based on the given information, it is
apparent that in the long run, 70% of all FOODplus supermarkets should open on Sunday or
else the sustainability would be adversely impacted. As a result, changes should be
introduced in the policies of the company so as to introduce the requisite change to ensure
long term sustainability.
(6)(a)(i) It is imperative that the sample data should be representative of the underlying
population which would require that each state should be fairly represented with inclusion of
adequate supermarkets. Considering that the given data pertains to eight states, hence it
makes sense that each stated should ideally possess a share in the vicinity of 12.5% with
regards to supermarkets from the respective state. This is not the case in the given sample as
some states are higher and others have lower representation. One state where the number of
supermarkets chosen is higher than the desired 12.5% by a significant margin is Queensland
which has a share of 18%. Amongst the states, there are others like Tasmania and Western
Australia where the supermarket contribution to the chosen sample is 3% and 11%
respectively. Thus, the assertion made is supported by the sample data.
(ii) Even though the company started 27 years ago, but still the given sample data does not
present an anomaly. This is because with regards to supermarket business, the expansion in
terms of chains is gradual only and does not exist from the beginning. As a result, it is quite
plausible that few of the supermarkets that were opened in the initial years have not been
included in the sample. This is especially the case as the sample size is only 20% of the
overall population.
(b) The current sample size is 150 which seems sufficient in order to determine the gross
profit within $ 120,000 as the minimum computed sample size for this is only 148. However,
in regards to the high wastage store proportion estimation with a margin of error of 6%, the
given sample of 150 supermarkets would not suffice as the lowest sample size required is 227
which is much larger than the available sample size. Hence, the future survey would have to
be mindful of this requirement.