Home Bargains Profitability Margin Analysis and Competitor Comparison

This report provides an analysis of Home Bargains' profitability within the competitive retail market. It begins with an introduction to the retail sector and Home Bargains, highlighting its growth and market position. The literature review explores profitability concepts, key factors influencing profitability in the retail industry, and strategies for supermarkets in a competitive era. The report outlines the research aims, objectives, and methodology, including research philosophy, design, approach, data collection, and analysis methods. A Gantt chart is included to visualize the project timeline, and the report concludes with references. The report aims to analyze Home Bargains' profit margins, compare them to competitors, and identify factors contributing to its financial success, while also providing insights into customer loyalty, sales turnover, technology adoption, and value selling within the retail context.

Analysis of profitability margin of home bargain as
compared to their competitors in this present
market.
Contents
1. Introduction.................................................................................................................................2
2. LITERATURE REVIEW............................................................................................................3
2.1. The factors contributing in profitability of retail industry..........................................3
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2.2. The key factors that enhance profitability of supermarket in today's competitive
era. 6
3. RESEARCH AIMS/ OBJECTIVES...........................................................................................8
4. RESEARCH METHODOLOGY................................................................................................8
4.1. Research-philosophy:......................................................................................................8
4.2. Research design................................................................................................................9
4.3. Research approach..........................................................................................................9
4.4. Research Type..................................................................................................................9
4.5. Data collection method..................................................................................................10
4.6. Data analysis..................................................................................................................10
4.7. Sampling.........................................................................................................................10
4.8. Validity and reliability...................................................................................................11
4.9. Ethical consideration.....................................................................................................11
4.10. Deliverables....................................................................................................................12
4.11. Significance.....................................................................................................................12
4.12. Required Resources.......................................................................................................12
5. Gannt chart................................................................................................................................12
6. References.................................................................................................................................14
1. INTRODUCTION
At present the retail sector is the highest growing which alone contributed £340 billion worth of
retail sales to the economy in year 2015 (About Home Bargainsyear ). Further, it generates
employment opportunity to around 2.8 million (Retail sales in UK, 2016). Thereafter, in UK
retail sector contributes to 5% of total GDP(About Home Bargains, 2016). Due to availability of
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immense growth and development opportunities the industry has attracted competition. vague
Home Bargains is well established retail company that owns and operates chain of discount
stores providing range of general merchandise products, grocery etc. Home Bargains was
founded in 1976 in England (About Home Bargains, 2016). The brand is providing its effective
services within UK. In 2013; Home Bargains published a record breaking turnover of £1 billion
(Retail sales in UK, 2016). The brand have total 370 stores across the nation that provide
effective and top quality services to wide range of customers. The UK retail market is facing
tough competition at present with presence of giant companies like, Tesco, Sainsbury, Morrison,
Asda etc (Anderson, Fornell and Lehmann, 2004). In order to stay competitive and maintain
their proficiency, companies are taking various actions like, introduction of new techniques,
improved marketing, use of sales tactics etc. There is increase in use of online channels for sales
and marketing. Presently, 12% proportion of sales are made online (Retail sales in UK, 2016).
2. LITERATURE REVIEW
The concept of profitability for supermarket industry
According to the views of Rishika, Janakiraman and Bezawada, (2013) profitability means the
operating efficiency of organization. It refers to competence of business to make profits on
sales. In the opinion of Anderson, Fornell and Rust, (2007) profitability is the main objective of
all the organization. In the absence of profitability the organization will not be able to sustain in
the long run. Further, profit is term that describes what is remaining of revenue a business
generates after it pays all expenditure directly associated to the generation of the profit. In the
words of Yu, Ramanathan and Nath, (2014) profitability is ability of organization to use its
resources to generate revenue in excess of its expenses. In accordance to the report, published
by Centre for Digital Financial Inclusion, the average profit margin for the supermarket industry
was 1.9% in 2010. The studies show that supermarket business is low margin sector with the
normal income margin for supermarket typically varying from 1-2%. Hirsch and Hartmann,
(2014) has argued that natural, organic and gourmet food market relish higher averages from
3.5-6% (Retail sales in UK, 2016). In the opinion of Anderson, Fornell and Lehmann, (2004)
supermarket industry is extremely fragmented. In order to improve the profitability,
supermarkets are focusing more on customer satisfaction, improved convenience through
effective services, intense marketing etc.
2.1. The factors contributing in profitability of retail industry
According to Akçay, Boyacı and Zhang, (2013) profitability is the efficiency of a business to
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earn a income. A profit is what is left of the revenue a business generates after it repays all
expenses directly associated to the generation of the revenue like, manufacturing a product and
other expenses associated to the conduct of the business functions. There are ranges of factors
that impact the profit of the retail industry. As per the views of Christine, Devie and Tarigan,
2015 cost of goods sold is main component in long term profitability. It further takes into
consideration direct and indirect cost that finally impacts bottom line profits. A retailer identify
these cost by involving the worth of inventory at beginning of given duration , adding in new
purchases made during the duration and also computing labour and shipping cost. By reducing
the unnecessary cost and increasing economies of scale, company can improve its profit margin.
McNeill,2012 state that mark up decision also play strong role in contributing towards the
profitability of retail industry. Markup is amount a seller can charge in addition to the actual cost
of delivering the product to market so as to make a profit. Markup is important part of business
competitive strategy as it requires to ascertain the manner in which entity cover present cost but
also permits for future contingency (Gouldson and Sullivan, 2014).
IN addition to this aspect Schiraldi, Smith and Takahashi, 2012 also stated that price is leading
factor that impact of buyer’s decision on whether to purchase a product. Therefore, retailer
decides whether they must charge competitive price, premium or low. Any mistake in charging
price can result into buyer shift to rival product. Therefore, retailer must charge price that is
must high enough to cover their cost but not so high that it pulls back the prospective customers.
The price is used as tool by retailer whereby they assure maximum overall profit for the
merchandise even it means less profit per individual item sold (Wrigley and Lowe, 2014).
Thereafter, profitability in retail industry is also determined by the efficiency of company to
keep minimum cost of operations. In order to keep minimum cost of functioning, entity can use
various tactics like, bargaining from suppliers; outsource certain function if they can be cheaply
performed by other entity. Thereafter, inventory and distribution is another factor that
contributes towards the profitability of business. As per the surveys of Forbes, in 2011 there is
40% hike in online sales while in bricks and mortar stores sales increased only 5.3%
(Profitability in Supermarket industry. 2016). Therefore, retailers are required to use improved
and upgraded online techniques for enhancing its profit margin. This will also help in increasing
brand love among customers as retailer tends to increase convenience from buyers. Ellram, La
Londe and Weber,( 2013)states that sales and service strategies is another factor that contribute
towards profitability. Retailers are offering similar products may differentiate themselves
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through customer service strategies purpose at influencing customer’s loyalty and repetitive
sales like, free shipping etc. The effective service strategies play a significant role in improving
the profit margin of business. As per the views of Mani, Kesavan and Swaminathan, (2015)
when buyers are required to pay for return shipping, there worth of buying declines. Thus, to
enhance the frequency of the purchase by customers, it is important for company to use service
strategies.
Furthermore, in the opinion of Sekeroglu and Altan, (2014) the inventory management is the
main factor that help in improving profitability within retail business. In case, the retail outlets
store much of any item that does not sell easily, they are stuck with the cost of stocking and
showcasing the products. Similarly, if the retail unit have too less of highly demanded product
than they may lose out the prospective profits by not possessing item on hand. Thereafter,
retailers to maintain there profit margin are needed to have proper product mix. In the words of
Billig and Waterman, (2014) retailers that specialize in one particular kind of products are open
to any price volatility for that unit. The maximum retailers use a product mix, which defend
them from the ups and downs connected with any specific product. The product mix also helps
retailers to render various products, which pull in a broad range of prospective customers.
Retailers can also learn about the gross profit margins from each type of product, set various
price points and discover the most gainful mix of products.
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2.2. The key factors that enhance profitability of supermarket in today's competitive era.
The retail organizations are at present working in cut throat competitive market (Akçay, Boyacı
and Zhang, 2013). They are recognized a promptly developing channels that play a viable role
in emerging economic progress of nation. In the current scenario,buyers are getting more
attracted towards retail market ( Mani, Kesavan and Swaminathan, 2015). With this aspect
there's is substantial amount of increase in market competition. Therefore, to survive in the
present competitive era, and maintain the profitability position, it is important for entity to pay
consideration to various factors. As per the views of Ellram, La Londe and Weber,
( 2013)customer loyalty is key factor that help in improving the profitability of retail
organization. This further help in assuring repetitive purchase from customers leading to
improvement in profit margin. In order to maintain the customer loyalty retailers are required to
fulfil different needs and preference of buyers resulting into their maximum overall satisfaction
level with brand ( Akçay, Boyacı and Zhang, 2013) . In addition to this aspect, it is important
for company to keep the customers informed about its products and services. In this respect,
intense marketing and promotion can be used as tool for spreading awareness among
prospective buyers. Mani, Kesavan and Swaminathan, (2015) states that customers must be
provided with value for money. The large retail entities generally deal in volumes and can
render a broad range of products at reasonable price and therefore stimulating customers at a
very big scale. The other major factor that improves the profitability of supermarket in retail
industry is sales turnover. In the opinion of Schiraldi, Smith and Takahashi, 2012 retail
organization must use different tactics to maximize the sales of business. In this respect,
suggestive selling is the aspect that can be considered by the retailers to maximize sales
turnover. According to Sekeroglu and Altan, (2014) suggestive selling is function whereby
sales personnel recommend the best product that can meet the customers need. It is effective
method that help in building worth of the offering in the Schiraldi, Smith and Takahashi, 2012
buyers mind, it become easy for sales executive to sell the product and improve the turnover.
According to the views of Akçay, Boyacı and Zhang, (2013) advance technology is another
factor responsible for maximizing profitability of supermarket in present competitive world. The
progressive technology has made it easy going for the retailers to manage large scale business
and cater the needs of usage. In this respect, the launch of computerized billing system,
electronic media and commerce techniques, barcode system has modified the face of retailing in
rendering products and services to buyers (Sekeroglu and Altan, 2014). Also the use of online
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market has impelled the retail sector towards progressive growth structure. Gouldson and
Sullivan, 2014 states that value selling is another factor that enable retailers to maximize retail
sales. Therefore, retailers can communicate the value of product that they are offering. With this
aspect, company can also justify the prices charged by them in return of quality of good offered
by brand. Therefore, entity can increase the sales of its premium products with the help of
strong concentration on value selling aspect.
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3. RESEARCH AIMS/ OBJECTIVES.
The current study is done with the aim that is to analyse the probability??? within retail
industry in today's competitive market: in the context of Home Bargains. The research will also
shed light on factors that can be considered by entity to improve the profit margin. With the
help of this study, learning will be shown regarding the methods that can be used to gain
attention of maximum audience that directly leads to improvement in sales and revenue.
AIM: To analyse the profitability margin of home bargain that how its beating or gaining the
enough profit compared to there sp competitors in this present market.
OBJECTIVES:
 To critically evaluate the concept of profitability for supermarket industry.
 To determine the factors contributing in profitability of retail industry in general
 To investigate the key factor which enhance profitability of supermarket in competitive era
(consumer loyalty/ sales turnover) by analysing the available sales and customer data
 To analyse the strategies which Home Bargains uses to enhance its profitability in present
UK retail competitive market. √
RESEARCH QUESTION:
 What do you understand by the concept of profitability for supermarket industry?
 What are the factors that contribute in profitability of retail industry?
 What will be the main factor that will enhance profitability of supermarket in competitive
era?
4. RESEARCH METHODOLOGY
The research methodology is the systematic, theoretical analysis of the techniques employed to
a area of study. It can be defined as procedure to gather information and data for the objective of
decision making. The research methodology is broad filed that involve publication of research,
interview, survey and other investigation technique.
4.1. Research-philosophy:
Research philosophy is regarded to be worth in addition to the belief of the investigator towards
application of outcomes of the investigation in various contexts. The research philosophy is
effective tool that can be used for doing detailed analysis regarding how Home Bargains is
performing better as compared to its rivals Further, by choice any impressive philosophy it is
manageable to measure the tool of data analysis along with the fundamental purpose behind
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performing study can be identified easily. ????There are mainly two types of philosophy that
can be considered by the researcher for the performance of the study; interpretevism and
positivism (Walter and Andersen, 2013) In the interpretive philosophy outcome are understood
which are connected with human behaviour instead of generalizing it. On the other side, the
positivism philosophy completely depends on the optimistic facts and ideas and it depends on
the notion that globe is external and single objectivity is available to facilitate investigation
process. For the current study based on the analysis of profitability margin of home bargain
that how its beating or gaining the enough profit compared to their competitors in this present
market positivism philosophy will be used. The main reason for selecting this philosophy is that
it will further help in focusing on facts and causes of social phenomenon with less emphasis
for subjective states of people, opinion etc (Stevenson, 2010)
4.2. Research design
The research design regards to total strategy that is selected to integrate varied components of
the study in a coherent and logical manner so as to obtain the outcomes of the research problem.
The research design can be referred as blueprint for the gathering, evaluation and analysis of
data. There are various kinds of research design that can be considered by the researcher,
descriptive, exploratory and case study ( Singh. 2010). The descriptive research design is used
to show the participant in exact way. It is used to create theories, ascertain issues with present
practices,justify present action and make conclusion. On the other hand, exploratory research is
kind of study that is performed for specific issues that is not clearly stated. Thereafter, case
study is detailed examination of specific state instead of statistical survey. In the present
research, descriptive research design will be used as it will assist in generating response to
questions like, who, where, how,what and when which are related with specific research
problem (Silverman, 2016) The descriptive research design will help in showcasing the
participants in actual manner.
4.3. Research approach
The research approach regards to notion of researcher with the aid of which investigation can
be performed out in best possible way. There are different types of research approach that can be
considered for the present study; inductive and deductive. The inductive approach is one where
consideration is on creation of new theory emerging from the data. Here, the researcher mover
from specific observation to wider generalization and theories. On the other hand, deductive
research approach consists of logical declaration from the identified facts. Here, research moves
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from general to specific (Billig and Waterman, 2014). In ty he present research, deductive
research approach will be used as it provide more direct results in less time.
4.4. Research Type
It can be stated as kind of study that is performed by the investigator so as to determine the
selection of different tools and techniques. There are two types of study that can be performed
by the company; qualitative and quantitative.
The quantitative research is one where concern of investigator is on presenting the data in
numeric form. It further involve use of statistical,mathematical and numerical assessment of
dataRetail sales in UK, 2016. [ gathered by using surveys, questionnaire, feedback forms etc.
therefore,it involve application of SPSS etc. On the other side, in qualitative research, data is
presented in non numeric form. Therefore, the unstructured data is gathered through use of
interviews, focus groups, observation etc (Walter and Andersen, 2013). The objective of
quantitative data is to discover facts regarding social phenomenon while, qualitative data is
based on understanding human conduct from the informants perspective .In the present study
qualitative research types will be used to arrive at the outcomes of research questions.
Therefore, Qualitative research will help in obtaining information regarding the perception of
the respondent, managers. The qualitative data is more reliable and can be used to attain the
objectives of the research.
4.5. Data collection method
It refers to method that will be used by the researcher for gathering, measuring data on
prospective variables in a developed fashion which then assist to obtain answers for specific
questions. There are mainly two sources that can be used by the research for collecting the data,
primary and secondary. The primary sources refers to first hand information that is collected for
the first time ( Singh. 2010).. Therefore, data gathered through questionnaire, interviews, polls
and observation etc. The secondary data is one which is used before. This data is obtained from
books, journals, online articles, newspapers etc. In the present study, based on the analysis of the
profitability margin of home bargain that how its beating or gaining the enough profit compared
to their competitors in this present market both primary and secondary resources can be used for
data collection. Therefore, both new and avail able information can be analysed to understand
the main fact ors that support in improving the profitability position of the ompany.
4.6. Data analysis
It is method of systematic application of statistical and logical techniques to describe and
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showcase, and assess the data. It can also be stated as method of examining, improving,
transforming and modelling data with the objective of discovering necessary content,
recommending conclusion and facilitating decision making process. In order to analyse the
obtained information related to the research, qualitative and quantitative techniques can be
used. In qualitative data analysis method contrasting themes are defined for analysing
information where data is showcased in non numeric form (Stevenson, 2010). Therefore, no
statistical instrument are used for the objective of data analysis. On the other side, in
quantitative technique numerical information is analysed with the assistance of statistical tools
such as mean, mode and median. This technique is reasoned to be extremely efficacious and
leads to foreseen outcomes. i In t he present research, the data will be analysed by
developing themes on the outcomes of the available information.
4.7. Sampling
The sampling can be regarded as important part of the study where respondents are chosen for
the purpose of collecting data from the study. A choice right respondent according to the quality
of research is quite important where it positively impacts the total study. In each kind of
research it is essential for researcher to assure whether sample size selected is proper in
assemblage reliable information or not (Billig and Waterman, 2014).. Broadly sampling method
are separate into two parts which takes into thought both probabilistic and non probabilistic
method. By fulfil subset in the presented set of population captious elements connected with the
investigation can be formulated easily and in correct manner.???/ In probability sampling
method every component part in the acknowledged set of population has equivalent
possibiliProfitability in Supermarket industry. 2016ty of being chosen and it proceeds large
amount of methods which are stratified or cluster, systematic, simple random etc. other than
this, in case of non probability random sample technique few components are easily existing in
the presented set of population and whole chance of being chosen is not existing and such
technique involve quota, convenience, snowbowling ??? and so on. For the present study based
on the analyse of the profitability margin of home bargain that how its beating or gaining the
enough profit compared to there sp competitors in this present market, data will be collected
through probabilistic method. why Further therein, random sampling method will be used where
every individual have equal chance of getting selected in a sample. Thereafter, sample size
refers to act of selecting the number of respondents that will be involved in the study. Here, in
the research sample size of 20 managers because too big sample size makes it complicated to
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analzye the data. of the Home bargains will be selected from obtaining information regarding
how the profitability margin of their company is more than its rivals.
4.8. Validity and reliability
In order to perform the study, it is important for researcher to use appropriate tools and
techniques. The term validity refers to the quality of being logically and factually sound. It
further determines the level to which the study meets the actual objectives. There are tow kinds
of validity, internal and external. The internal validity regards to how effective an experiment is
performed. The main concern is to determine whether the research was done right or not. On the
other side, external validity details out the level to which the outcomes of the study can be
generalized to other stated and to other individuals. Thereafter, reliability is other aspect that
state that data must be taken from authentic and trustworthy sources. it further determine level
to which stable and accordant outcomes and provided in study. In the present research, the
consideration will be given on both reliability and validity of the study.
4.9. Ethical consideration
In order to conclude the study in true sense and overall aspect, it is important for the researcher
to have strong focus on maintaining the ethical consideration. Therefore, the study must be
morally right. Thus, researcher must assure data is not copied from any other sources so as to
avoid the issue of plagiarism. It is also crucial to assure that there is no kind of manipulations of
the data. The information must be presented in true form. To maintain ethics od the study, it is
viable for the researcher to maintain the confidentiality of the respondent. Therefore, personal
information of the respondent must not be presented without the permission. Thereafter,
respondent must not be compelled to take part in the study. In addition to this, correct citation of
the works of different intellect must be done by the investigator in the right way.
4.10. Deliverables
4.11. Significance
4.12. Required Resources
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