Business Plan

AROUND THE GLOBE

Report Submitted

By
Group 3
Section C

On
30-06-2018
 TABLE OF CONTENTS

Executive Summary ii
Mission & Vision Statement 1
About the Product/Service 1
USP 1
Industry Analysis 1
Target Customers & Markets 3
Marketing Strategy 3
Sales & Distribution Strategy 5
Purchase & Operations Strategy 5
Financial Projections and Break-even analysis 5
References

i
 EXECUTIVE SUMMARY

The business plan “Around The Globe” proposes an idea of selling all the famous foods around
the world in a single place. The shop will be open 24X7 throughout the year. In the report, we
have discussed various points related to the current market situations, the current opportunity
and threats in retail store. We have also tried to analyze the market using various methods like
Porters 5C analysis, STP, 4Ps of marketing etc. The financial analysis has also been done to
report the break even point of the business proposed. The business plan has tried to solve the
need of foodies who can taste the best foods around the globe while being in their own country.

ii
Company’s Vision & Mission

Vision
To be the premier provider of the tasty happiness from Around the Globe and provide it Round
the Clock.
Mission
A business serving as an outlet of rich delicacies, mouth-watering treats and connecting the
people to the world of food anywhere round the clock to the customers.

About the Product

The chain retail outlet provides the Foreign Nationals living in India as well as the Indian
Market, the option of rich and famous delicacies specific to various parts of the world, under
one roof round the clock to satiate the taste of that special thing from the world.

USP
A 24X7 outlet of world class food & snacks under one roof.

Industry Analysis
The Indian retail market is still in its budding stage. The organised retail market is valued at
US $60 billion, which constitutes about 9 percent of the total retail sector and the unorganised
retail market represents the remaining 91 percent of the sector. The same is the case with the
food retail market where the organized market constitutes only 3 percent in comparison to the
unorganized segment that forms 97 percent of the food retailing market. [2] Indian retail
industry accounts for over 10 per cent of the country’s Gross Domestic Product (GDP) and
around 8 per cent of the employment. India is the world’s fifth-largest global destination in the
retail space. [3] The organized retail in India is growing at a CAGR of 20-25 percent per year,
which is a strong indicator of its growth potential in the years to come. The unorganized sector
in food retail is predominantly dominated by general stores, kirana stores, convenience stores
and street markets. There are more than 15 million mom-and-pop stores. On the other hand,
the organized sector includes gourmet stores, department stores, discount stores, supermarkets
and hypermarkets, e-tailers and cash-and-carry formats.
The two most significant trends emerging rapidly in the Indian food market are:
• The expansion of imported food categories and products
1
 • The incremental popularity of gourmet food market amongst Indian consumers

Imported Food Market

Imported food constitutes about 15-20 percent of the total organized retail space. Vegetables,
fruits, and nuts are the major imported categories contributing 80 percent of the total food
imports in India. The imported food market in India is growing at a rate of about 30-40 percent
per annum from the last 4-5 years. [2]
Rising urbanization, changing lifestyles, increased foreign travel, increasing health awareness
and the boom in organized retailing have resulted in increasing the demand for imported food
products. Relaxed import regulations and reduced import duties have further increased the
demand for imported food products. [2]

Gourmet Food Market

The gourmet food market has witnessed a major transformation in recent years and is expected
to grow at a CAGR of 20 percent in the coming years. Prominent players like Godrej’s Nature’s
Basket, Le Marche, Foodhall, Nuts & Spices, Brown Tree are very positive about the ongoing
trend. The segment offers high margins to retail for high-end products as it caters to premium
customers who look for quality and variety and are willing to pay a premium price. [2]
Following various principles and codes, the company has reviewed the industry to be able to
understand the feasibility of the entry into such market and thus the project.
In the generic strategy, the shop tries to carve out a niche for itself in the food industry by trying
to keep all the best products from countries across the globe under one single roof. By this way,
the company separates itself from its competitors who are separated across the various product
distribution. For instance, the shop which only sells Arabic dry fruits will face a stiff
competition from “Around the globe” as it will be selling products apart from those Arabic
fruits giving the customer a wider range of options to choose from. By doing so, the number of
inventories/products sold will also increase raising the bars of margin which in turn will raise
the profits. Moreover, the shop, “Around the globe”, tries to cater to the needs of customers of
all age groups. Be it a kid of 8-10 years or an aged person of 70 years, every individual will
find a product that will adhere to their needs. This will raise the customer satisfaction to a
certain level and will help improve the brand name of the shop “Around the globe”. Another
strategic objective of the shop “Around the globe” will be to expand its supply chain by opening
the outlets at the other tier-1 cities such as Calcutta, Hyderabad, Mumbai, Bangalore and many
more giving the raise in the brand name of the shop to a national level. 2
Strengths: Diverse range of items to choose from, very good advantage of location,
24*7 round the clock availability,
Weakness: Very niche market, catering to only a particular group of people.
Opportunity: Very easily scalable to almost all the major airports of the country, in
Future the business can be scalable even to the inner parts of the city once the brand
Value increases.
Threats: The external independent vendors can cut cost and initiate a price war leading to a
decrease in margin.

Target Customers & Market

The target customers of the company would be the Foreign Nationals residing in the India and
also the Indians at large who stay mostly outside and often visit India such as NRI’s as well as
those who find the foreign stuff intriguing or exciting. With the increasing Demonstration
Effect, many Indians would also choose to buy various goods from the store.
For the Target Market, the focus would be on the people flying regularly to Foreign countries
living in the Tier City such as Delhi, Mumbai, etc. So, the company is planning to target foreign
nationals and many Indians in the initial stage in such city, and choosing Delhi as the initial
start for the business operation as it has the highest footfall in all the compared to any other
international station. Also, Delhi would provide easy expansion to neighbouring cities of
Gurugram as well as Noida.

Marketing Strategy
For the marketing strategy, we have analysed the 4 P’s of marketing in relation to the.
Price: As the products will be bought in bulk supply from various countries at whole-sell prices,
a good margin of around 10-12% will be obtained from the sales. The cost-benefit analysis of
each and every product which are bought from all the different countries are yet to be taken
into consideration.
Product: The shop will include the most popular products from all across the globe. This will
in turn help the people coming from all across the globe get the same taste of food which they
happened to have got in their own country. It will cater to the needs of all the age group and all
the gender group.
Promotion: The promotion will include various promotion activities:
Advertising: The advertising of the shop “Around the globe” will take place via the traditional
method of marketing, newspapers and magazines. The newspapers will include, the 3
newspapers such as The Economic Times, The Indian Express and The Hindu. The magazines
which will be in collaboration with the shop “Around the globe” will be Forbes, fortune and
India today.
Collaboration with other airlines: In order to promote the shop “Around the globe”, we will
collaborate with various airlines such as Air India, Singapore Airlines, Lufthansa, British
Airways etc. to name a few. The influx of the tourists coming from these airlines are the highest
and hence it will be a win-win situation for both the airlines and the shop, “Around the globe”.
Advertisement through social media: With the help of online marketing via social media, the
web sites such as www.makemytrip.com, www.paytm.com,
www.goibibo.com,www.yatra.com etc. will show the ads of the shop, “Around the globe”,
which adheres to the needs of all the age group and the gender group.
First time discounts/ coupon codes: In order to endorse the brand more, first time discount
coupons should be made available online on the ticket booking website such as
www.makemytrip.com, www.paytm.com,www.goibibo.com,www.yatra.com etc and in the
magazines such as Forbes, fortune and India today. By doing so, not only will the foreign crowd
be attracted but the Indian crowd will be also be pulled with the help of these initial discounts.
Place: Currently it will be located out of Terminal 3 of the Indira Gandhi International airport,
Delhi catering to the needs of around 2.62 million international passengers and also the Indian
travelling traveling abroad. According to the analysis done by the tourism of India, the highest
footfall will be in the Delhi airport as shown in the pie chart.

Fig: Pie chart for foreign footfall at different airports of the country. [1]
4
Sales & Distribution Strategy
Segmentation: While the shop “Around the globe” will have only one shop that too at the India
Gandhi Airport terminal, in future it can be expanded across all the tier 1 cities. There are no
specific direct competitors of “Around the globe” right now but the product
Targeting: The target audience of the shop “Around the globe” are the foreigners who travel to
India and the Indian individuals and families whose income is well above the national average,
who are gourmets and have a keen interest in the food served outside the country. Most of the
audience are the people of managerial post who travel abroad for business meets or take their
family for an exotic vacation outside India. These customers usually don’t need any discount
coupons and will be usually averse to shopping to D-Mart or Walmart. “Around the globe’ is
targeting the audience of all age groups unbiased of any gender.
Positioning: “Around the globe” is probably the first store of its kind to be opened up in this
part of the world. It has items which are for a particular region or country from all across the
globe giving it a very niche market to capture which is currently untapped and undiscovered.

Purchase & Operations Strategy

We have adopted the Future Retail supply chain strategy and it has been described as follows.
We are keeping the safety stocks with minimum inventory of 10 days so that there does not
arise the stock out situation. The purchase system is MEQ Purchase i.e. purchase order directly
placed with the supplier when quantity of a product falls below minimum level. Similarly,
Automated Replenishment Systems (ARS) will generates purchase order automatically when
quantity falls below minimum level. Using Bi-Weekly Replenishment model we will ask the
global vendors to replenish inventory twice a week after receiving purchase order. We will be
having our dedicated distributors who will get its orders fulfilled from some of the local
distributors or will approach directly to the global distributors which cater specifically to trade
channel members, offering them deep discounts.

Financial Projections & Break-Even Analysis

As per reports,considering airport-specific dynamics, rentals for retail space at international

terminals in Delhi are hovering at Rs 3,000-3,500 per sq ft a month. In comparison, rentals for
space on the ground floor of a grade A luxury mall are Rs 850-1,250 per sq ft a month on carpet
basis, showed data from JLL India.
Stores at airports are all about efficient spaces as the customer base is focused with a limited
time and hence merchandising is also done accordingly which has quick turnarounds. The rents
and revenue shares at airports generally tend to be higher compared to malls due to efficiency
of spaces and high-quality traffic," said Pankaj Renjhen, MD -Retail Services, JLL India.

Read more at: https://economictimes.indiatimes.com/retail-turns-hot-property-at-airports-as-

footfall-takes-off/articleshow/54927385.cms

So, to begin with our financial analysis based on the above data.

Per Square Feet Price Assumed 3500/ SQFT

Total Rental Price of buying a 300 sqft kiosk 3500*300 =Rs 10.5L
Per Square feet price of buying a 1000 sq feet 2500/SqFt
shop nearby the airport
Per Square feet price of buying the inventoryRs 800 (Guestimate source https-
storemore.com)
Area of the inventory. 1000 sqft
Total Rental Cost of the inventory per month Rs 8L
Total Quantity of inventory 500 =
Average cost of buying one single item 4000
including custom duty
Total cost of buying items including custom 20L
duty
Total guestimate of Investment Cost 10.5 +20+8=38.5L

However as we are setting up Kiosk in the international Airport we would be providing duty
free products which would help us reduce the tot al investment cost.
Its analysis is as follows

Per Square Feet Price Assumed 3500/ SQFT

Total Rental Price of buying a 300 sqft kiosk 3500*300 =Rs 10.5L
Per Square feet price of buying a 1000 sq feet 2500/SqFt
shop nearby the airport
Per Square feet price of buying the inventoryRs 800 (Guestimate source https-
storemore.com)
Area of the inventory. 1000 sqft
Total Rental Cost of the inventory per month Rs 8L
Total Quantity of inventory 500
Average Rate of Custom Duties imposed on 30%
products in India
Average cost of buying one single item 280
deducting custom duty
Total cost of buying 500 items excluding 14L
custom duty
Total guestimate of Investment Cost 10.5 +14+8=31.5L
PRICING MODEL AND THE BREAK EVEN ANALYSIS

Similar to Amazons pricing model for getting on board the local sellers ,we would be following
a similar strategy which would be done for collaborating with foreign sellers.

Source:- https://sellerengine.com/how-much-does-it-cost-to-sell-on-amazon/

So setting a target profit margin of at least 10 %, our analysis will be as follow to find out the
break even point.

As we are buying the products at an average price of 2800 and selling the product at the rice of
3080 we are expecting a profit of Rs 200-250 on each product

Assuming monthly sales to be 200/month.

Monthly recovery will be Rs 40000-50000.
So the breakeven value will be 43.5L/40000=108months=roughly 9-10 years.

This can be expressed though a tabular format as follows :-

Average Cost Price of each product 2800
Average Selling Price of each product 3080
Expected profit per product 200-250
No of products expected to be sold per 200
month
Monthly recovery 40000-50000
Breakeven value 4350000/40000=109 months=9-10 years.
 REFERENCE

1. http://tourism.gov.in/sites/default/files/Other/INDIA%20TOURISM%20STATISTIC
S%202017.pdf
2. https://www.indiaretailing.com/2018/02/13/food/food-grocery/food-retailing-india-
way-forward/
3. https://www.ibef.org/industry/retail-india.aspx