The Evolution of FOODplus Chain - An Introspection of Waste Management, Online Sales, and Business Hours

This article reviews the evolution of FOODplus chain and its impact on waste management, online sales, and business hours. It explores the performance of the industry and the significance of advertisement expenses and employee strength in forecasting sales. The report also provides insights into the scenario of online sales and waste management in different states of Australia. Additionally, it analyzes the increase in the price of a standard food basket and evaluates the validity of the study findings.

The evolution of FOODplus Chain – An introspection of
Waste Management, Online Sales, and Business Hours
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Table of Contents
Executive Summary........................................................................................................................................ 2
Complete Assessment of Gross Profit...................................................................................................... 5
Insight from Descriptive Measures........................................................................................................... 5
Significant Variables in Forecasting Sales.............................................................................................. 6
Basic Estimates................................................................................................................................................. 7
Performance of the FOODplus Industry................................................................................................. 7
Review of Sampling Methodology............................................................................................................. 8
Conclusion........................................................................................................................................................... 9
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Executive Summary
The present article reviews the report on FOODplus (2018) for scope in advertisement
expansion, impact of professionals working on Sundays and worldwide business through
internet. Among the factors that have found useful in the report are operation on Sundays,
promotional expenses, volume of online sales, and waste management effectiveness.
The ISO 9004:2018(en) defines additive business standard as the process of improving
organizational quality to improve overall performance of the business model, usually layer
upon layer, as opposed to formative and subtractive methodologies. This report encompasses
different aspects, which have been created on a layer-by-layer approach by exploring gross
profit, revenue from sales, increase in food prices due to external factors, and competitive
challenges faced by FOODplus.
A key part of FOODplus Report 2018 is its comprehensive coverage of the prospects of
supermarket industry’s growth. This includes revenues and sales in both offline and online
segments. The foundation of this reporting is 2 years of data from supermarket service
providers, and industry employees, collected through surveys, interviews, and other means.
This analysis of the business has two years of data as its basis for computing profit, analysing
online sales trends, association tenure with FOODplus brand, competitors, Hours of trading,
demographic details of the managers, information on union strength, and parking space
available in the supermarket.
The report provides detailed descriptions of advertisement processes and cost involved
incurred for expansion of business. It also covers FOODplus’ history of price of a standard
food basket, and helps in investigation the price increase phenomenon. The report also
provides a synopsis of waste management in each of the supermarket location and state
Australia, along with important state wise comparison in efficiency of the process. The report
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also covers the bonus system process segment that encourages the supermarket managers,
and employees with new and fresh energy.
The report delivers current information on developments and trends in the gross profit of
stores for business on Sundays. The study provides updates on importance of business on
Sundays for competition with recent market players in different states of Australia. It also
documents waste management efficiency to increase profit margins by reducing and
managing unsold inventories. State wise collaborations for this activity around Australia
include extensive analyses on each of the three levels of waste controlling. Special emphasis
has been given for evaluating the scenarios in New South Wales and Victoria.
The report concludes with a discussion on the importance of sample size of the study, which
includes addressing the apprehension of the management regarding the adequacy of 150
stores to provide the exact picture of the entire scenario. The number of supermarkets from
Tasmania, Queensland, and Western Australia were also reviewed, and the business model
was critically studied to forecast the makeup of this emerging market leader in supply chain.
It also presents insights so that future strategic planning and investment can also be
forecasted for impending opportunities and growth.
The report focuses on following fundamental questions;
i. What is the criterion for the managers to achieve the level for annual bonus in this
business in Australia?
ii. How business on Sundays can positively impact the gross profit level of the
supermarket? Is it a necessary step to compete in the market?
iii. What is the exact picture of online sales?
iv. What is the scenario of the stores for the online business initiation and how it is
distributed across Australian market?
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v. How advertisement expenses can generate more sales revenue and whether parking
facilities available at the stores impacts revenue earned?
vi. How states are divided over the performance of managing unsold products?
vii. Is there any price in increase of standard food basket in 2018 compared to 2017?
viii. And, most importantly; are the findings of the study valid and its justification with
evaluation of effective sample size.
The key findings of this study include:
i. Private innovativeness is a widespread activity in the Australian FMCG (Fast moving
consumer goods) as well as in self-service stores market. Participation of 150
supermarket stores from different states and locations in Australia enriched the overall
sample quality. The sample size of 150 stores seems to be adequate for most of the
findings.
ii. Gross profit in 2018 was approximately $ 1.03 million. No unusual profit figure was
noted for any FOODplus supermarket store.
iii. Managers of the superstores with annual gross profit of more than $2.23 million
qualified for the company bonus scheme.
iv. Business on Sundays for 67.74% stores proved to be profitable, average annual gross
profit for stores open on Sundays is $ 1.10 million, whereas, other stores earned $
0.89 million.
v. Queensland stores were the least effective stores in waste management, followed by
stores in New South Wales and Victoria. Supermarkets in Australian capital and
Northern territories were most effective in managing unsold products.
vi. Advertisement expenses and employee strength are the two significant predictors of
revenue earned in sales. Other factors such as working hours, car parking spaces did
not affect the sales revenue.
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vii. Price of food in standard basket has increased in 2018, compared to that of 2017. But
the increase seems to follow ACCC guidelines.
Complete Assessment of Gross Profit
Unusual sample observations are referred to as outliers in statistical language. No outlier
gross profit observation was noted in the gross profit analysis, and there were no special cases
of gross profit in the last 12 months.
Top 45 supermarket managers were within the top 6% profitable supermarkets, and were
found to earn gross profit of more than $ 2.23 million. Managers of these stores were eligible
for bonus offered by FOODplus.
The average annual gross profit for supermarkets was approximately $ 1.03 million. There
was a variation in annual margin for gross profit which is up to $ 0.74 million. The minimum
annual profit for any store in 2018 was $ 0.02 million and maximum profit was $ 3.16
million. The margin of gross annual profit for the 50% mid-level supermarkets ranged
between $ 0.44 million and $ 1.54 million. 50% of the supermarket stores earned gross
annual profit above $ 0.97 million. Among them, the upper 25% markets earned between $
1.54 million and to $ 3.16 million.
Insight from Descriptive Measures
Business on Sundays and the choice to open stores on Sundays was a profitable proposition
for the chain. 97 supermarkets were found to be open on Sundays in 2018, and their average
annual gross profit was $ 1.10 million. Minimum annual profit for such a store was $ 0.05
million, which reached up to $ 2.88 million for the leaders. The annual average gross profit
for stores closed on Sundays was approximately $ 0.91 million. This also varied between $
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0.02 million and $ 3.16 million. It can be inferred from the fact, that 50% of the market
closed on Sunday earned a profit above $ 0.89 million and 50% stores who did business on
Sundays earned an annual profit of more than approximately $ 1.07 million, supermarkets
should look forward to do business on Sundays also.
Evaluation of Online Sale initiative in malls revealed that the internet channel business was
active in 42 amongst the 62 malls in 150 supermarkets. Other than malls, also 60 out of 88
supermarkets have already adopted to online sales. Number wise scrutiny favoured the malls
for adopting the online sales compared to other places, but there was no statistical
significance establishing the difference.
Wastage management in Queensland was the worst with 23.9% markets maintaining a high
percentage of unsold products. South Australian FOODplus stores did not lag behind
Queensland in maintaining high amount of unsold products. 19.6% stores from Victoria and
17.4% markets in New South Wales were also in the list of high waste management. Overall
scenario revealed that 30.67% or 46 supermarkets were maintaining high amount of unsold
stocks.
Significant Variables in Forecasting Sales
Sales figure of the stores was assumed to be associated with four independent factors. The
expense on advertisement incurred by the stores, car parking space, number of staffs working
in the stores, and total hours of trading were expected to be associated factors. But, two of the
factors were found to be related significantly to sales of the stores. First and the most
important predictor was the expenses incurred on advertisement, and the second significant
factor was strength of workers in a store. The estimated annual increase in sales due to extra $
1000 input in advertisement was approximately $ 0.04 million. Similarly, annual average
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sales were expected to increase approximately by $ 0.06 million for one extra staff in the
store. It is to be note that these estimated impacts assume that other inputs do not change.
Basic Estimates
Estimated annual revenue from online sales was $ 0.36 million from the 102 supermarkets
that have adopted the initiative of the FOODplus. The maximum revenue earned from online
sales in 2018 was $ 1.46 million and the leading 50% supermarkets earned approximately $
0.33 million. The estimate for the annual revenue earned in 2018 for any FOODplus store
was between $ 0.3 million and $ 0.42 million.
Low wastage management was seen in 23 stores in the entire chain, which constituted
15.33% of the stores. The estimated percentage of low wastage stores in the entire FOODplus
chain was between 9.57% and 21.10%. Similar estimate for New South Wales and Victoria
yielded percentage range between 5.9% and 29.99%, and 3.18% and 29.08% respectively for
the two states. The reported estimates have 95% accuracy in estimation.
Performance of the FOODplus Industry
The comparison of prices for a standard food basket between 2018 and 2017 has been
done. The results indicated a price rise of $7 per basket in 2018 compared to 2017. Australian
Competition and Consumer Commission (ACCC) set guidelines for maximum price increase
was $ 6.85. Average food price per standard basket was $ 171.81, which increased to $
178.85 in 2018. Investigation of this scenario indicated that the price has increased in 2018,
but, the increase has been within the ACCC set guidelines of maximum increase by $ 6.5.
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Interesting result from the investigation provided significant evidence that less than 70%
stores were open on Sundays in 2018. Factually, 93 stores were open on Sundays out of 150
supermarkets in the sample. This fact did have much evidence to show that there was a 95%
probability that number of stores open in Sundays was less than 70%, but, this inference did
not have enough evidence to produce 99% probability for the fact.
Review of Sampling Methodology
Adequacy of state wise representation in sample size of 150 supermarkets has been
analysed. 27 stores were there in the sample from Queensland, 16 were from Western
Australia (WA) and 5 from Tasmania. Estimated representation from these three states are as
follows; 1185% to 24.15% for Queensland, 5.73% to 15.61% for WA, and 0.46% to 6.21%
for Tasmania. The estimated disparity was clear from the percentage division.
Outlier detection for years of association with FOODplus revealed that any FOODplus store
doing business for more than 24 years was an unusual observation. Hence, the sample
probably excluded any such observation. Therefore, there were no stores in the sample with
more than 24 years of association with FOODplus.
Adequacy of sample size has been addressed through two investigations. First, estimated
gross profit margin within $ 120,000 yielded a sample size of 148 stores (less than current
sample). Similar investigation for proportion of high wastage stores to be within 6% yielded
the required sample size of 227 stores. Hence, increasing the sample size seemed to be a
choice for a future research report.
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Conclusion
Managing FOODplus chain supermarkets demands focus on online sales in every stores in
supermarkets. Competition in FMCG market compels to open more than 70% supermarkets
on Sundays. Another important factor for increasing profit was to manage unsold products.
Stores in Queensland, New South Wales, and Victoria have to manage their waste
management to reduce their operating costs and increase their gross profit. The rise in food
prices in 2018 compared to 2017 for a standard basket was within permitted limit from
ACCC, and FOODplus management should adhere to the pattern of growth in food prices
with great enthusiasm. The sample survey was done with randomly selected supermarkets
and there was no balanced representation of supermarkets from all the states of Australia. A
larger sample could have minimized the differences in representation. The sample size of 150
stores was enough to estimate the future gross profit in the store. But, to estimate wastage
within 6% for the entire FOODplus chain sample size should be increased to at least 227.
The conclusions of this report are clearly important to reduce the wastage of products and to
increase the online sales for future business advancement. This report allows reviewing of the
decisive factors as an entrepreneur, where more thorough research is certainly possible way
to assess the impact of the independent factors on profit and sales. In that case data for more
than two years would be required to remove any sampling bias.
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