group 9 _girish

8/3/2019 Group 9 _girish

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2/23

It is a measure of profitability commonly used by theretailers,

Direct product profit (DPP) equals an items grossmargin rupees, plus discounts and allowances earned,

less direct handling, selling, and inventory holdingcosts. DPP focuses on the contribution profit of individual

retail items in individual stores. It enables the retailer to develop results for brands,

categories, departments, stores etc., thus forming thebasis for merchandising decisions. The Direct Product Costs represent three distinct areas

of cost allocation. These include warehouse costs,transportation costs, and store costs.


3/23

Total sales amount = 807071

COGS = 640911

Gross Margin = 166160 (weekly)

Safety stock = 42.94 units

GMROF = GROSS MARGIN / SPACEPROVIDED= 166160/ 791.65

= Rs 209.89/sqft


4/23

Total sales amount = 974468

Cogs = 832561

Gross margin = 141907

GMROF = 141907/ 843.62= Rs.168.21/sqft


5/23

WEEKLY UNIT SALES BASISi. Grocery: 41.3%ii. Merchandise: 58.7%

WEEKLY SALES AMOUNT BASISi. Grocery: 45.3%ii.Merchandise: 54.70%

SHELF SPACE BASISi. Grocery: 48.41%ii. Merchandise: 51.59%


6/23

Destination Routine Ocassional Convenience

Cereals Jams Baking Needs Canned Fruit

Pulses Baby Food BakingMixes/PancakeMixes

Dried fruit

Flour Skin Care Desserts

Vegetables Hair Care Milk Modifier

Oral Care

Shaving Needs


7/23

Category RoleCategory Tactics

Assortment Pricing Shelf Presentation Promotion

DestinationComplete varietyat all levels

Leadership bestvalue acrosscategory

Prime storelocationPrime shelf space

High level of activityHigh frequencyMultiple vehicles

Preferred/Routine

Broad varietyCompetitive-consistent

Average storelocationHigh shelfallocation

Average level ofactivityAverage frequencyAverage durationMultiple vehicles

Seasonal/

Occasional Timely variety

Competitive in

season

Good storelocation

Average shelfallocation

Seasonal activity

Multiple vehicles

Convenience Select varietyWithin reach ofcompetition

Available storeLow shelfallocation

Low level of activitySelected vehicles


8/23

Hair Care

Oil Care

Personal Care

Shaving Kit


9/23

164.47

313.15

137.5188.03

192.97

309.84

234.71

GMROF - Hair Care

Conditioner

Hair Colour

Hair Gel

Hair Cream

Hair Oil

Hair Powder

Shampoo

9%6%

4%

3%

31%

1%

46%

Category Share - HairCare

Conditioner

Hair Colour

Hair Gel

Hair Cream

Hair Oil

Hair Powder

Shampoo

67.89

227.37

58.33

114.34107.64

200

159.01

DPP - Oral Care

Oral Care Accessiories

Hair Colour

Hair Gel

Hair Cream

Hair Oil

Hair Powder

Shampoo


10/23

We consider the product hair colour in the subcategory hair care.

Here we see that although the sales volume is

low at 6% within the hair care sub category yetit provides a high value in GMROF and DPPon floor space.

Therefore sales of this product should beencouraged by Girish by giving it a betterdisplay position and a position on the shelfwhich is at a higher level


11/23

1%

31%

67%

1%Category Share - Oral care

Oral Care Accesiories

Toothbrush

Toothpaste

ToothPowder

177.22

382.22

155.06

167.35

GMROF Share - Oral Care

Oral Care Accesiorie

Toothbrush

Toothpaste

ToothPowder

50.63

272.47

53.97

75.51

DPP on Floor Space -

Oral care

Oral CareAccesiories

Toothbrush

Toothpaste

ToothPowder


12/23

There seems to be a problem with the producttoothpaste.

Though its sales volume is quite high yet the DPP onfloor space and GMROF are quite low in this category .

Therefore the shelf space of this product should bereduced to give way to other products of this category .

Bundle toothpaste and toothbrush together as theformer is a fast moving product

Although Oral Care Accessories have a good DPP onfloor space, they also have a low GM% and SalesVolume , so their sales need to be improved or we haveto forego this product.


13/23

All Beverages

Bakery

Dairy

Staples and Miscellaneous


14/23

Item sales performance is the most important factor. If anitem succeeds to create a significant turnover during fieldtests it is automatically considered as a prospect to enter intothe assortment.

Incremental contribution of each SKU is tested throughregular evaluations

The decision to launch a private label is based onsubstitution analysis where the brand and private label is

presented on the shelf next to each other.

If the turnover of private label item reaches to 80 % of salesof the national brand then the national brand is replaced


15/23

Overall pricing strategy of the store is tomaintain EDLP.

Private label items are priced at 70% indexcompared to national brands and overall pricesare targeted around 85-90 index compared to

general market. Pricing is based on cost plus method.

Value based pricing is strategically notpreferred and not used.


16/23

Merchandise is best presented:

From left to right

At eye and hand level

Face-out

Vertically


17/23


18/23

Analysis show that promotions have had apositive effect on sales volume of all products

But the Percent increase in sales of some

products is more than others

We have sorted the product categoriesaccording to decreasing value of % increase(Refer Promotions excel sheet)


19/23

An aggressive strategy should be continued for someproducts which have shown excellent improvement.

They should be promoted by all of Price Reduction, FeatureAd and Display

For the others, am

oderate prom

otion should be continued They can be promoted by one or a combination of PriceReduction, Feature Ad and Display

For some products, the promotions have not resulted inmuch growth in sales.

Such products would sell even without promotions or low

promotion expenses This way we recommend to spend judiciously on only the

product categories for which the investment is worth


20/23

There are some exceptions to the Generalizedrecommendation

In some cases, due to LOW VOLUME of sales,

promotion should be less even though %increase is high

In some cases, due to HIGH VOLUME of sales,promotion should be more even though %increase is low


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22/23

22

FlagshipBakery products

& body care

CashBeverages

JuicesCanned fruits

Rehab

oral careHair remover

Oilsugar

Under fire

Shaving creamSalad dressing

Maintain/GrowSkin care

Dried fruitsSalts

Hair powder

Core Traffic

ToothpasteSoupscereal

HIGH MEDIUM LOW

LOW

HIGH

Sales Volume

Gros

sMargin%


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group 9 _girish

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