Business Strategy And Planning Of Costcutter

Business Strategy And readiness Of CostcutterThe corner shop or dodge store, as it is sometimes labelled, has been a feature of sell conduct in cities and towns from Roman times, if non earlier.To be sure, the Romans articulated the role of the convenience store in mundane life, developed its corporate identity and regarded it as an enterprise that operates optimally within the range of footfall. The Roman streetscape was cluttered with these stores, most engaging prominent positions, some even corner positions, but all dominating the facades of the masonry buildings they occupied. A characteristic of the Roman convenience store was its integration into the local merchandise, sourcing locally grown farm produce, provide locally refined products and distributing this merchandise at a local level.With the passage of time, the convenience store began to dawn the New World, and remained a characteristic feature of retail life in countries such as Australia, Canada and the linke d States, until well after the Second World War. But from the 1960s, as the economies of the industrialised world entered a dissolute phase of involution, the supermarkets emerged as the dominant players in the retail grocery domain. Yet, the convenience store managed to survive as a viable economic entity. Nowadays, even supermarket giants such as Tesco and Sainsburys here in the United Kingdom, stir begun to penetrate the lower echelons of the retail grocery sector with their own version of the corner shop. Using this conception as a launch pad, Tesco has already made inroads in the United States, though with varying degrees of success. Moreover, Tesco harbours moreover ambitions to establish its convenience scale outlets in such emerging economies as South Korea.On the confront of it, precise little appears to have changed over the millennia since the Romans devised the concept of the convenience store. Neighbourhood stores, if they form part of a larger national chemic al cosmic string, are still obsessed with such issues as corporate image and identity, not to mention their strategic role in the local market.1What has changed, however, is the for the most part oligopolistic nature of the retail grocery sector. By 2010, the major participants in this sector Tesco, Sainsburys, Asda and Morrisons controlled 65.4 per cent of a grocery market valued by manufacture analysts at a staggering 118.2 billion2. Given the strongly oligopolistic character of this market, it is hardly surprising to observe that these distinguish players have developed planning strategies that virtually anticipate their competitors next move. In new(prenominal) words, their behaviour is very much retaliatory There is evidence, too, to suggest that this behaviour is being emulated in the convenience store member of the market, where the hallmarks of oligopolistic competition are expert starting to appear3.COSTCUTTERCostcutter is one of the United Kingdoms leading conveni ence store chains.Although the bulk of the stores trading under its banner are based here, Costcutter also operates outlets in Northern Ireland and Poland. As a distinctive grocery retailer, Costcutter stocks a comprehensive range of groceries, alcoholic products, tobacco and confectionery. However, Costcutter operates two distinct retail store models (a) the directly owned outlet and (b) the independently owned certifyd outlet. Both models advantage from economies of scale, so that as the organization grows, so too, does its buying power. Yet, those outlets that are independently owned tend to operate along the lines of a retailers cooperative.Costcutter has developed a high profile corporate image, which is bolstered by its own range of branded products. Groceries explosive charge the fellowship brand name are often shelved alongside those of Nisa Today Costcutters warehousing and diffusion affiliate. The companys military headquarters are based in Yorkshire. As of Decembe r 2006, ownership of Costcutter is vested in James A Barry Co.4 come with HISTORYCostcutter was frameed in 1986 by Colin Graves, a former sales employee of the equip grocery group. In the defraud space of just 12 months, Graves set up seven stores in Yorkshire. By 1991, Costcutter had undefended its first outlets in Scotland and Northern Ireland. In 1992, the company completed a grocery distribution nerve in Barnsley. It was then keen to develop its corporate image and identity. By the mid-1990s, Costcutter operated some 500 outlets throughout the United Kingdom, the majority of them certification-owned.In 2004, Costcutter merged 50 of its outlets with the MURCO fuel distribution group. Thereafter, the Costcutter convenience store found its way onto the forecourts of an increasing number of MURCO petrol filling stations. In addition to their grocery lines, these stores stock railroad car care products and accessories. Exponential growth followed. By 2007, largely driven by a successful franchise recruitment campaign, the total number of outlets under its corporate banner, grew to 1500. Sales turnover exceeded 600m in 2010, making the company one of the most signifi layaboutt players in the grocery retail sector.For all that, Costcutter is not unlike the other key players in the convenience store market. Costcutter stores occupy prominent high street positions with a typical catchment area covering a radius of a quarter mile. The company continues to enjoy solid growth, though recently its instruction strategy increasingly promotes direct ownership of outlets. At present, more than 1200 stores in the chain are independently owned by franchisees.5Business models, concepts and tools in business strategy and planning of salutecutterAt an early do in its corporate history, Costcutter put growth at the centre of its retail increase strategy. Indeed, the company conducts an aggressive retail recruitment drive to enlist new franchise owners. Ideally, the company seeks existing operations which engage high footfall volumes and occupy floor space of between 1,000 to 1,500 square feet. By contrast, the typical Sainsburys local or Tesco Express occupies a floor space of between 2,000 to 6,000 square feet. Costcutter does not regard the absence of car parking as an issue.There are a number of advantages which Costcutter offers its franchise ownersan association with a well-established high profile retailercontinuous retail training and technical supportgenerous derive marginsa loyalty scheme which rewards franchise owners for primevalised purchasingimproved credit entry terms both within the group and externallythe cost benefits of group purchasing powerfast and cost-effective Epos accounting and inventory controlan efficient and reliable supply chain calendar methoda robust business development strategy deploying the services of a range manager to exploit profits and sales turnoverextensive national, local and in store advertisi ng6As an adjunct to this, for each one franchised outlet is indelibly stamped with the Costcutter corporate identity. All newly franchised premises are refurbished to the Costcutter specification, though refits are tailor-made to a range of budgets. The process of nurturing company image is achieved througha conspicuous company logotype which largely resembles a bannerdistinctive company fascia advertisingthe use of a thematic colour palette to harmonise the in-store ambiencethe use of a standardised in-store lighting formatin-store radio providing a continuous voice for product promotionthe shelving of Costcutter branded productsextensive advertisingThe cost of a Costcutter franchise is between 70,000 to 100,000. Annual management fees amount to 1880. Projected first year net profit for a typical outlet is in the region of 100,000.7THE BUSINESS DEVELOPMENT STRATEGYAt the look of Costcutters retail development strategy is growth itself. It improves market share and even allows new products to be sold. to a higher place all, growth promotes economies of scale. Such economies are reflected in the companys burgeoning purchasing power and presence in the wholesale distribution markets.From its inception, Costcutter has enjoyed continuous year-on-year growth, condescension predatory competition from the huge multiples. Growth has been achieved throughthe setting of annual expansion targetsa vigorous franchise recruitment program, as noted abovethe defection of other franchisees from the ranks of competitors notably, from the SPAR groupthe direct acquisition of small groceriesthe purchase of other outlets under administration8Continuous expansion of the Costcutter chain remains a development priority.Not surprisingly, Costcutter has devised an ambitious overseas expansion drive, which at present has targeted such emerging powerhouse economies as India and Pakistan. But such proposed international development is to be accompanied by further consolidation of i ts core business in the United Kingdom.9In recent years, Costcutter established a close relationship with Nisa Today, the leading independent wholesale distributor of groceries throughout the UK. Critical to the companys development is the straight integration of wholesale grocery distribution. Costcutters affiliation with Nisa Today partly achieves this objective. But in 2007, the Bibby Line group, a direct competitor to Nisa Today, acquired a 51% shareholding in Costcutter. In the event, Nisa Today has retaliated by establishing its own retail outlets.10Despite this, the growth strategy of Costcutter remains the same. That approach incorporates a number of other marketing facetsthe development of new lines, especially fresh, locally sourced productspromotion of the concept of value for moneya narrowing of the cost profile between its outlets and those of the huge multiplespromotion of the concept that Costcutter can deliver quality food as needed, thereby avoiding the arduous wee kly shopping eventan increasing investment in technology, especially as its relates to online marketingthe promulgation of a company ethos, culture and set of values, as noted below11Appraise processes of Costcutter to set their goals and valuesTHE COSTCUTTER ETHOSNot unlike Tesco, Costcutter espouses a human relations approach that values its clients and staff. The company prides itself in the marketing of fresh, quality products. But unlike Tesco employees and management, Costcutters staff are versatile individuals, well versed in product knowledge across its full range.In addition, all staff together with franchise owners, benefit from continuous retail training. All franchise owners undergo a rigorous induction course. Furthermore, the company has established its own academy to equip store managers and their staff with cutting edge retail techniques. The development of customer loyalty through harmonious relations and rapport is central to the company ethos.12ANALYSIS OF THE CO STCUTTER GROUP profound to the development strategy of the Costcutter group is its continuing growth. Using the convenience store model it has developed for the UK market, Costcutter is equanimous to make significant inroads into the emerging markets of Asia.But it is here in the United Kingdom, that Costcutter has reached a mature stage in its evolution. At the top end of the grocery retail sector, leviathans such as Tesco and Asda compete for market share, in what is overwhelmingly an oligopolistic market. Retaliatory marketing techniques are a conspicuous feature of such markets, as these companies clearly demonstrate.Yet, as companies like Costcutter continue to expand, even the bottom end of the retail grocery sector is beginning to display oligopolistic behaviour. Second guessing the competitors next move is par for the course. Nevertheless, Costcutter seems well positioned to fare reform than most of its competitors, as it signs up an increasing number of franchisees, attra cted by its generous profit margins and reduced overheads.4.0 decisionThe convenience store has endured as a potent force in the retail grocery sector, despite increasing competition from the huge multiples, such as Tesco and Sainsburys. Indeed, the blue print for the convenience store has largely remained the same since the Romans articulated its role in everyday life.Costcutter remains a robust example of the convenience store concept. The floor space of the typical Costcutter outlet is less than one quarter that of its major rivals notably, Sainsburys Local and Tesco Express. In this way, the typical Costcutter outlet manages to reduce its overhead costs, and at the same time, benefit from the substantial purchasing power of the Costcutter group itself.As a convenience store chain, Costcutter lacks the bureaucratic structure of the huge multiples. Instead, it fosters a more flexible and independent approach to its management. Such flexibility enables its local outlets to purcha se outside the central distribution arm of the organization. In recent times, this has allowed the company to stock more local fresh produce. Thus, Costcutter can be perceived as a highly evolved and adaptable form of enterprise, and one which is not just sensitive to the tastes and preferences of the local market, but in some instances, equally sensitive to its ethnic composition.