Aafno Store is a departmental store which will be located at Bhaisepati. The business will incorporate three partners each contributing Rs. 1500000 with the total equity of Rs. 4500000 and bank loan of Rs. 5000000 for starting up the venture. This departmental store will facilitate its customers by providing a variety and range of products along with excellent customer service through constant supervision, home delivery service, phone ordering service, parking facilities and leisure area to its customers.
The potential target market for this departmental store is the local residents and people from nearby places , Bhaisepati is the junction where there is easy transportation access for these target customers. Further, the increasing numbers of restaurants, offices, co-operatives, apartments and colonies in Bhaisepati area have increased the market potential of Aafno Store. During the initial stage of its operation, Aafno Store aims at gaining the market share of 5 to 10% which will gradually expand in few years by adding up new facilities.
The main competitor of Aafno Store is “Aawash Department Store”. As it is located in the Bhaisepati area and it does caters to various needs of customers from groceries items to kitchen appliances. Apart from it, the local retail and wholesale stores located at Bhaisepati area are also catering to the basic needs of the customer. In addition to this, there are shopping centers like Bhawani, Bhairav, etc. which will be indirect competitors for this business.
The company’s strategy is to concentrate on major factors that influence the customers to shop at departmental stores such as providing ‘value for money’, ‘quality of product’, ‘variety of product’ and ‘service of the store’ to gain competitive advantage.
The raw material will be procured from various wholesalers, distributors and also directly from the company depending upon the nature of the product. We will have total of 20 staffs consisting of 1 manager, 2 supervisor, 1 accountant, 8 salesperson, 2 cashier, 2 helper, 2 guard and 2 cleaner with total salary of 137000 per month.
The pricing strategy that our store will be following is cost plus pricing method. The margin on the products is differentiated on the basis of the category the products fall based on the nature of the product. For instance, the margin for the product within the grocery category is 10% whereas the markup for the product within the kitchen category is 20% and so on.
Among the various promotional strategies we have decided to promote our departmental store through advertising via print media, TV scroll ads on local cable, radio jingles, distribution of Flyers, banners, posting snaps and address of Aafno Store on the facebook and launching of the website. Further, we have selected positioning of Aafno Store to customers mind set as a store selling lifestyle and experiences along with the variety of products standing right behind them for their service. The advertisement expenses before inauguration is Rs.23050 excluding the launch of the website.
The sales for the first year are expected to be at Rs. 12000000. The number of households shopping at Aafno Store is expected to increase every year by 10%.
The income statement of Aafno Store shows that there has been an increase in net profit after tax from Rs. 1369914 in first year to Rs. 4210547 by end of the fifth year. Similarly, from the pro-forma cash flow statement, we can see that there is surplus cash at the end of the every year indicating proper management of short-term cash requirements.
Despite of satisfactory financial reports, the business has to deal with various internal and external risks such as political risk, and so on which needs to be considered. The future plan of Aafno Store is to expand the product line of departmental store by adding up various section and categories that are not included such as fresh vegetables, accessories,...