November 21, 2008

CORE RETAIL BUSINESS ACTIVITIES AND THEIR ENHANCEMENT THROUGH FACILITIES MANAGEMENT

Summary

7-Eleven is convenience store in Hong Kong that seeks appropriate strategy to maintain it leadership in the industry. This paper has analyzes its organization and its competitors as well as the industry as a whole. Having analyzed the internal and external environment of the organization, a performance-based development strategy is the identified appropriate strategy for the organization. In addition, an improvement plan is formulated to give the organization a guide for the execution of the plan.

In the past decade, there has been a substantial decline of small supermarket operators. Between 1997 and 2004, the number of supermarket operators decreased by 31 percent whereas the sales and the number of persons engaged in the supermarket industry rose by 11 percent and 29 percent respectively (USDA Foreign Agricultural Services, 2006). These figures reflected that the supermarket industry has been growing but in a way not favorable to small operators. Many small operators left the market due to severe competition.

Almost all Hong Kong supermarkets require listing fees, that is, a fee charged to allow a new product to be put on their shelves. This is a one-off fee for a trial period. The listing fees are extremely negotiable and vary greatly among different supermarket chains. Major supermarket chains, such as Wellcome and ParknShop which have many branch stores, have expensive listing fees. Industry sources revealed that key supermarket chains may charge HK$1,000 (US$130) per SKU for each of its store (USDA Foreign Agricultural Services, 2006). A 30 percent discount may be offered to certain suppliers. The discount offered varies tremendously depending on the popularity of the products and the bargaining power of the supplying companies. Agents/importers will not bear this cost, which is transferred to their principals. In short, all supermarkets require listing fees except those belonging to Japanese department stores.

Hong Kong consumers usually demands for numerous trading term from Hong Kong food retailers, such as promotional discounts; back-end income (flat rebate per year that a U.S. exporter has to pay to the retail chain based on the annual turnover); D.G.A. (Distribution allowance - the fee that the supermarkets charge for distributing the products from its warehouse to its many branch stores); and incentive rebate (a percentage of turnover rebated to the supermarkets in case sales exceed the agreed amount). It can be expected that the bigger the supermarket, the harsher the trading terms. For general reference, about 15 percent of the annual turnover has to rebate to the major supermarkets and 8 percent to small ones (USDA Foreign Agricultural Services, 2006). Agents representing very popular items with large turnover usually have a stronger bargaining power and will be able to negotiate for a lower rebate rate.

 

RESEARCH PROBLEM

            To be able to analyze core retail business activities and their enhancement through facilities management. 7-Eleven is convenience store in Hong Kong that seeks appropriate strategy to maintain it leadership in the industry. This paper has analyzes its organization and its competitors as well as the industry as a whole. Having analyzed the internal and external environment of the organization, a performance-based development strategy is the identified appropriate strategy for the organization. In addition, an improvement plan is formulated to give the organization a guide for the execution of the plan.

There are already 600 superstores and convenience stores in Hong Kong today not including their outlets. Competition is more dynamic today and organization must possess flexibility in order to cope up with the dynamic changes in the industry. However, with the increase of working women, convenience stores sales have increased in the year 2006. Convenience stores have increasing become popular giving 7-Eleven more opportunities to expand. However, in order to attain sustainable competitive advantage human resource development plays a vital role in the success of any organizations objectives through development of its employees.

OBJECTIVES

-          to investigate the behavior of consumers who buy in retail stores

-          to determine purchasing trends of food and its relation to marketing trend

-          to determine the factors that affect the purchasing decisions of shoppers

-          to evaluate the current effectiveness of 7 Eleven's marketing strategy as to its effects on the consumers' decision to purchase

 

METHODOLOGY

The research design used in the study is descriptive research. Descriptive research intends to present facts concerning the nature and status of a situation, as it exists at the time of the study (Creswell, 1994). It is also concerned with relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing. In addition, such approach tries to describe present conditions, events or systems based on the impressions or reactions of the respondents of the research (Creswell, 1994).

In addition, the descriptive method is widely used in studies concerning behavioral sciences. This means that this method will be able to capture the essence of the study, which is to determine the purchasing behavior of online shoppers particularly those who are 7Eleven customers. The use of the descriptive method also suggests that the research will be focusing on obtaining qualitative data. Qualitative research is an umbrella that refers to various research traditions and strategies. This type of research design was chosen since it gives emphasis to attitudes and beliefs of that explain the way they interpret and make sense of their world. In the case of this research, the perception of the consumers regarding shopping in retail stores for food and other related items.

 

 

 

Reference:

Creswell, J.W. (1994). Research design. Qualitative and quantitative

approaches. Thousand Oaks, California: Sage.

USDA Foreign Agricultural Services (2006) Hong Kong Market Development

Reports Exporter Guide 2006. Available: http://72.14.203.104/search?q=cache:gkajYCPgXXoJ:www.stat-usa.gov/agworld.nsf/505c55d16b88351a852567010058449b/f270704242c0cfdc8525720b00738baf/%24FILE/HK6025.PDF

 


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