Case Analysis

on

Pleasant Ridge Habitat for Humanity

Second Chance Home Supply
Case Background
• Located in Pleasant Ridge, Oregon, SCHS store started in Jan’13
• Addressable Market - 50,000 people
• Format similar to ‘ReStore’, but limited sales volume & working hours
prevented from using the brand name
• Sold only donated items, hence no COGS
• Customer Segments
○ Largest - lower income households, looking for bargains
○ Homeowners looking for repairs or old home parts
○ Green Consumers
○ Collectors of antique items - least price sensitive
○ College students
○ Landlords and Contractors
• Store features - 4570 sqft, 1000 sqft administration and amenities,
large windows for display, 2 garage doors on front and back, ample
parking 2
Problem Statement
● Declining sales and contribution in FY17 even after increasing opening hours and
promotional activities

● Whether to rebrand the store as a “ReStore” to get listed on the Habitat for
Humanity ReStore website

● Whether to go back to the old model of limited working hours with only one store
manager

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Financial Analysis

● Spring/ Summer time (Apr-June) has a higher remodeling demand

● Higher sales in Aug-Oct can be attributed to college students beginning new academic year
● Low sales in winter months (Nov-Jan) due to cold weather - hence low constructions and
remodeling projects
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Financial Analysis
Building material has the maximum Doors category has the maximum revenue
contribution to sales per sq. feet

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Impact of expanding store hours
● The store operating hours expansion has led to decline in minimum, maximum and
average sales per day
● Since operating hours had increased, store had sales of even smaller items leading
to fall in minimum sale amount.
● The average went down because the number of items sold might have increased
with greater contribution from low value items.
● However, the weekly total average sales value has gone up

Minimum Maximum Average Weekly total

average

Before store hours expansion $212 $3,579 $747 $1778.29

After store hours expansion $37 $1,022 $417 $2029.61

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 FY 2016 FY 2017 Percentage FY 2016 FY 2017 Percentage Change
Actual Actual Change Actual Actual

EXPENSES
INCOME
Payroll 24,553 35,118 43.03%
Sales 114,207 97,108 -14.97%
Rent - Main Building 23,100 23,100 0.00%

Cash Donations 995 655 -34.17%

Rent – Overflow 450 0 -100.00%

Sales Tax Collected 6,852 5,826 -14.97% Utilities 3,198 3,751 17.29%

Advertising 2,859 3,335 16.65%

Total Revenue $122,054 $103,589 -15.13%
Operating Expense 1,458 1,980 35.80%

NET INCOME $50,044 $26,082 -47.88%

Vehicle Expense 3,840 998 -74.01%

Building Maintenance 375 540 44.00%

● With sales going down, payroll,
Credit Card Expense 1,785 1,155 -35.29%
operating expense and building
maintenance has gone up. Insurance Expense 3,539 1,704 -51.85%

● These factors combined have led to Sales Tax Expensed 6,852 5,826 -14.97%
net margins going down by around
Total Expenses $72,010 $77,507 7.63%
47.9%
Improvement Areas for Store Operations
• Instead of dumping non-salable items (items that do not match with SCHS product
offering), the company can partner with thrift stores for pick up

• Product placement needs to be taken care of. Exhibit 8 reveals a haphazard

placement. Customer needs to have a clarity of product offerings and also a scope
for impulse buying.

• Post the warehouse catalog on social media to take direct orders - similar to a
digital product catalog

• Least average sale is on Wednesday. Highest average sale is on Saturday, may

be because of weekends. Need to rethink on store operating days

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Store Evaluation and Constraining Factors
• Store’s digital marketing efforts have increased engagement and followers (150-
300 vs 5000) but data insufficient to understand direct sales impact

• Color coding helps customer to understand pricing and discount; also helps store
to track prices without investing in an inventory management system

• No commonality between buyers and donors, therefore effort required to market to

both categories

• Since Product offering depended entirely on donations, lack of depth in any SKU
discourage B2B buyers

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THANK YOU