Abstract
Grocery Limited is one of the leading retail stores in Dubai. The company is currently facing challenges due to decline in its sales volume that has adversely affected its growth rate. The main objective of this study is to identify the factors influencing sales volume of Grocery Limited. Using quantitative research approach is applied to investigate the factors affecting sales volume of the company using descriptive analysis and regression analysis. Therefore, the relationship between household income, customer perceptions, quality of services and product range on sales volume is determined. The findings of study reveal that the changing lifestyle of people in Dubai has affected their preference over the store that has eventually affected its sales volume. The company needs to improve its advertisement and introduce convenient services (home delivery services and online stores) to increase its sales volume. In addition, the findings also revealed that the sales volume of Grocery Limited is significantly impacted by the household income.
Business Decision Making
Grocery limited was incorporated four years ago in Dubai. It operates different grocery stores in Dubai. Grocery’s Limited turnover growth rate was below the market average over the past two years. Grocery Limited offers a wide variety of non-food and food items in its branch that is located in the middle income earning residential estates of Dubai. It faces several challenges of remaining in business amidst the tough competition from the established stores that operate within the horizon. The company has not established a loyalty or discount program that helps target its customers and ultimately increase customer loyalty and frequent purchase. In order to keep fit despite the prevailing competition from established stores within the horizon, the Sales Director of Grocery’s limited has proposed home delivery shopping and the launch of private label foods as a measure to improve on operations and escalate business returns. This is a move that will also see the company stay ahead of all its competitors.
Problem Statement:
Grocery limited has experienced low sales in the past two years. This has greatly affected its turnover rate and adversely affected growth. The low sales of Grocery limited has affected the operating capital margin of the company, the resultant effect of all of this is few establishment of different products, reduced advertisements and lack of innovativeness and creativity as a result of the decreased liquidity. According to the Sales Director of Grocery Limited, customer loyalty is the main reason why the company’s sales have reduced over the last two years. The inability of the company to establish customer loyalty has been attributed to be the major reason why the company has noticed a reduction in sales.
Current Consumer Behavior of Grocery Shoppers in Dubai
Dubai’s grocery business is characterized by small grocery shops that are established on the ground floor of several residential buildings in Dubai. These grocery shops aim at satisfying the grocery needs for customers who reside within the buildings or those living in other buildings within the grocery shop’s reach. They operate on a daily basis and are normally opened from morning to evening. Since 2014, the boom experienced in the economy of Dubai has led to the construction of different real estate projects. This has greatly influenced and contributed to the development of the grocery industry in Dubai.
Future Consumer Behavior of grocery shoppers in Dubai
The groceries have seen their existence in convenient stores and supermarkets within the various constructed buildings. The increase in very tall buildings within Dubai is also a factor that has greatly contributed to the expansion of several grocery stores. The reason behind this is, an increase in office workers residing and working within the tall buildings look for grocery retail outlets where they could purchase groceries and different snacks at regular feeding intervals during the hours scheduled for work. Increase in residential buildings and complexes that have been fully constructed along the outer suburbs of Dubai. Many of these buildings are far away from established shopping centers and malls offering grocery products. Businesses are establishing grocery stores in these suburb regions of the United Arab Emirates in order to meet the weekly demand for the residents who have to travel amidst their busy lifestyle of the individuals in the United Arab Emirates.
Considering the busy lifestyle of individuals in Dubai and the fact that more buildings are constructed on the suburbs of the United Arab Emirates, poses an opportunity for Grocery Limited to increase consumer loyalty through the establishment of its new business model:
Home delivery shopping
Launch of a private foods label
According to the sales director of Grocery limited, the intervention of these two new business models into their existing operations will increase customer loyalty and increase the sales of the company.
Improvement Opportunities of Grocery Ltd:
In order to improve the sales of Grocery ltd and retain consumer loyalty, Grocery ltd should inculcate several measures onto its current business practice so as to improve its sales and retain consumer loyalty. In order to ascertain the actual causes and measures to improve sales and customer loyalty, a proper research study that aimed at solving the identified problem was conducted.
Research Study
The research study focused on solving the identified problem of improving the sales of Grocery ltd and retaining consumer loyalty in purchasing the different grocery products sold by Grocery ltd. To be able to achieve the best of the field study that was to be conducted, study objectives were created. The SMART acronym was useful in identifying the objectives of the study as the objectives had to be Smart, Achievable, Realistic and Time bound.
Objectives of the Field Study:
Improving Sales of Grocery Ltd through Home delivery shopping
Improving Sales of Grocery Ltd through the Launch of a private foods label
How Grocery Ltd could be the Market Leader in the Grocery industry
Research Methodology
The section of report briefs about research method adopted to conduct this business researcher. The main objective of this field study is to evaluate how Grocery Ltd can improve its sales performance. On the basis of objectives identified the researcher has adopted quantitative research approach to carry out this research. Quantitative research approach can be defined as a a ‘a formal, objective, systematic process in which numerical data are used to obtain information about the world. This research method is used: to describe variables; to examine relationships among variables; to determine cause-and-effect interactions between variables.’ The use quantitative research approach enables the researcher to investigate the research issue using numeric data. The findings obtained from quantitative research approach are inflexible and clear. In addition, it allows the researcher to investigate relationship between sales volume and economic variables. In order to achieve the stated objectives of the field study the research set its pace but the methods of data collection had to be identified. For the research assistants to be able to collect the necessary data that was sufficient enough for the research study and would represent the views of the respondents several data collection methods were categorized and identified. Primary and secondary methods of data collection were to be thoroughly reviewed on the basis of their merits in order to come up with the best method of data collection method.
Primary Data Collection Method:
Primary data is unique and specific towards the research. Unless the information is published no one else can access the data extracted from the respondents. The researcher made use of survey questionnaire is used to gather primary data for the study. Close ended questions were used to gather the data regarding sales and income level to determine its impact on performance of the Grocery Ltd.
Secondary Data Collection Methods:
Secondary data collection methods refer to data collected for different studies apart from the current study. The researcher made use of relevant data from reliable databases to develop conceptual and theoretical framework of this research. The information about the Dubai Retail market is gathered from the different sources, such as newspapers, magazines, research journals, books, government published reports and other publish sources. In addition, past annual report and financial statements are also reviewed to gather information about retail industry of Dubai.
Plan for Collection of Primary and Secondary data
The researcher will gather the primary data from by distributing questionnaire among the participants. The gather data is complied and put in the excel sheet to summarize. The researcher makes use of statistical tools and methods to analyze the data. The researcher makes use of descriptive statistics to summarize the data and gain frequency. Then relationship between sales and income level was analyzed using regression analysis. The significance of relationship between variables is determined through p-value of 0.05.
Population Sample:
The feedback from the respondents was necessary. The use of questionnaires was chosen as a method of data collection. They had to be administered to selected individuals who formed the population sample. The sample selected had to be representative enough, so as to represent the wishes ideologies and ideologies of the population. The selection criterion was to be free from bias as the feedback from the respondents had to be bias free.
Sampling
The researcher made use of random sampling to select its research participants. 50 participants living in Dubai were distributed the questionnaires to gather responses. The reason that the researcher opted for random sampling is because of convenience and accessibility.
Sample of the Questionnaire
Dear Respondents:
Kindly fill in your honest and sincere wishes about the questions asked. Feel free to give additional information if any on the questions.
Thank you.
Do you think Grocery customers in Dubai require home delivery of their purchased groceries?
Yes ()
No ()
Do you think Launching of a private foods label will help improve sales and increase consumer loyalty?
Yes ()
No ()
Do you think Groceries ltd has the ability to emerge as the market leader in the Grocery industry
Yes ()
No ()
Are you satisfied by all the products offered by Groceries Ltd.?
Yes ()
No ()
Do you think the average monthly household income in Dubai is increasing?
Yes ()
No ()
Do you think individuals spend a large proportion of their income on monthly household grocery Dubai market?
Yes ()
No ()
Is competition in Dubai market strong between Grocery stores?
Yes ()
No ()
Do customers have time for grocery shopping in Dubai?
Yes ()
No ()
Do you trust companies that do business online?
Yes ()
No ()
Do you prefer shopping in physical stores rather than online shopping websites?
Yes ()
No ()
Findings and Analysis:
Techniques used to analyze data effectively for Groceries ltd:
There are several different methods available for businesses to analyze the quantitative data collected from the field study.
Numbers and percentages of population samples with similar traits
Results of the survey that reports behavior of the population sample and other factors.
Test scores that analyze different levels and scores of analyzed data from the population sample.
Frequency calculations that indicate the duration and rate of studied conditions.
Exploratory analysis
Model fitting
Model building
Sensitivity analysis
Reporting
Analysis of Findings
The section of report provides discussion about findings obtained analyzing primary data gathered by the investigator.
The respondents were asked about their perception about the home delivery service provided by grocery stores would increase their purchases from these stores. The findings of the study revealed that the 87 percent of respondent agreed that they would purchase from the grocery stores that provided home delivery services. Only 13 percent of respondents disagreed that they would not purchase from the grocery stores that will provide home delivery services.
Further the respondents were asked if the launching of private foods label will increase the sales and consumer loyalty. Most of the respondents agreed that the launch of private food labels will increase the sales and consumer loyalty, as the results show that 73 percent agreed and 27 disagreed to the statement.
67 percent of respondents stated that the Groceries ltd has an ability to emerge as market leader, whereas only 33 percent disagreed that the store has ability to emerge as a market leader.
73 percent respondents agreed that they are satisfied by all the products offered by Groceries ltd stores, as only 27 percent disagreed that they were not satisfied by the products offers by the store.
Then further the respondents were asked about the average monthly household income in Dubai was increasing. 53 percent of respondents agreed whereas 47 percent people disagreed that the monthly household income in Dubai was increasing.
Further respondents were asked if the individuals would spend a large proportion of their income on monthly household grocery Dubai market. Majority of people agreed that the individuals would spend large proportion of income on monthly household grocery. Only 20 percent of 20 percent disagreed.
Then further the respondents were asked about competition in Dubai market was growing strong between Grocery stores. 67 percent of people agreed that the competition in Dubai market was growing strong among Grocery stores.
The respondents were asked about their availability and time for shopping in Dubai. Most of the people disagreed that they have time for shopping grocery in Dubai.
The respondents were asked if they trusted companies that do business online. Most of the people disagreed that they would trust companies that do business online.
The respondents were asked if the prefer shopping in physical stores rather than online shopping websites. 73 percent agree that they make use of physical stores rather than online shopping websites and 27 percent disagreed that they made use of online shopping websites.
Findings:
Based on the findings obtained it can be noted that the people living in Dubai are more inclined to purchase from grocery stores that provide convenient services to its customers. It is because the busy lifestyle in Dubai has make it difficult for the people to spend time shopping grocery. On the basis of results, it is recommended that the Groceries Ltd should introduce home delivery services and online shopping options for its customers. There is a great potential for the store to expand its business in the different region of the world. However, the customers want reliable and trustworthy services to its customers. It will provide a great opportunity to expand its business.
Estimate the statistical relationship between the average monthly household income and monthly household grocery spending in Dubai market using a linear regression model. For this, you can use the survey collected data. You will need to calculate and interpret the correlation coefficient and coefficient of determination, calculate the constants “a” and “b” for your linear?
Regression Analysis:
Problem:
The relationship between the average monthly household income and monthly household grocery spending in Dubai market
Statement
5 individuals in the population sample were randomly selected, and asked about:
Their Average Monthly House hold Income and
Their Monthly House hold grocery spending in Dubai Market
Regression equation
In the excel table, x1 column represents the feedback on the average monthly house hold income, and y1, the monthly house hold grocery spending in Dubai market.
Excel Table:
Regression Equation:
Y=bo+b1X is the form of the regression equation. It is paramount to solve bo and b1 so as to conduct an effective regression analysis.
Solution for bo and b1
bo:
bo = Y-b1*X
bo = 77-(0.644)(78)=26.768
bo = 26.768
b1:
b1= Σ{(x1-X)(y1-Y)}/{(x1-x)2}
b1=470/730=0.644
b1=0.644
Regression Equation:
Y=b0+b1X
Therefore
Y=26.768+0.644X
Analysis
The independent variable(x1) is the Average Monthly House hold Income and the dependent variable (y1) is the Monthly House hold grocery spending in Dubai Market. If a randomly selected respondent had 80 as his Average Monthly House hold income then the estimated Monthly House Hold Grocery Spending in the Dubai Market would be:
Y=26.768+0.644X=26.768+0.644*80
=26.768+51.52
= 78.288 is the Monthly House Hold Grocery Spending in Dubai Market.
Question: Based on given data, determine Economic Order Quantity (basic EOQ), holding and ordering costs, advise whether to accept or reject the supplier’s order.
Economic Order Quantity:
The Economic Order Quantity is the level of stock, also known as the ordering level that minimizes costs incurred by an organization in holding inventory. Using the Economic order quantity a company will also minimize on the costs of ordering the depleted stock. EOQ is also known as the Wilson formulae:
Total Inventory costs= Ordering costs + Holding Costs
The equation for minimum cost is found by taking the first derivative of the function:
EOQ= SQRT(2*Quantity * Cost per Order/Carrying Cost per Order)
Data:
Groceries ltd in Dubai sales groceries, the groceries cost $400 per order and the carrying costs for the ordered groceries are $10 per unit per annum. The demand for groceries is 20,000 units per annum. The order size, total required orders annually, total carrying cost per year, and the total ordering costs are
EOQ= SQRT(2*20,000*400/100)= 1,265 Units
The demand for groceries per year is 20,000 units. Grocery limited had to place 16 orders (=annual demand 20,000/ order size 1,265). The total ordering cost is $64,000
Average inventory that is held by Groceries Ltd is 632.5{(0+1,265)/2} therefore the total carrying cost of $6,325.
Question 4. 2:
In order for us to better calculate Grocery Limited’s project float, we have to begin at the start date and add each path activity and their duration in a network diagram. This is important so as to ascertain the end date of the Groceries ltd projects.
Question 4.3.
NPV is a financial method of evaluating investments. It is the present value that is got from the Groceries ltd cost of capital at a discount rate.
NPV={PV of Cash Inflows}- {PV of Cash Outflows}
NPV={PV of Net Cash Flow)
NPV= N summation t=0 Ct/(1+r)t
Scenario:
This is project A and its Present Value figures per each year
NPV= PV( Benefits)- PV(Costs)
Where
NPV=-PV(Costs)+ PV (Benefits)
NPV=-100,000+68,136.92
NPV=-31,863.08
Decision Rule:
Reject the project if Its NPV is negative (-)
IRR Calculation:
Scenario find the internal rate of return for an investment of Groceries whose cash outflow is $213,000. Cash inflows of the project are $65,200, $96,000, $73,100 and $55,400 during the 1st, 2nd, 3rd and 4th years. Assume the discount rate is 10%
NPV at 10%= $ 18,372
NPV is greater than zero, therefore Increase the discount rate to 13%
NPV at 13%=$4,521
Increase the discount rate to 14%
NPV at 14%= $204
Increase the discount rate to 15%
NPV at 15% = ($3,975)
Since the NPV of this project that Groceries ltd wishes to undertake is close to 14% the value of the internal rate of return IRR is=14%.
Decision Rule
Accept a project whose IRR is highest for two mutually exclusive projects.
Works Cited
Newman, Isadore. Qualitative-quantitative Research Methodology: Exploring the Interactive Continuum. Carbondale: SIU Press, 1998.
Vogt, W Paul. SAGE Quantitative Research Methods, Volume 1. New York: SAGE, 2011.
