Business Theme Of Digital And Technologically-Induced Hypermarket

Geographic Segment

The current study presents a business theme of digital and technologically induced hyper market. This involves a superstore containing a supermarket as well as a department store. In essence, this term hypermarket was coined by a French Trade expert named Jacques Pictet. The proposed business also like many other big-box stores normally has business models that focus on various high-volume and at the same time low margin sales. Again, the present business conception of technologically advanced hypermarket includes application of progressive mobile application for hypermarket and use of fully electronic based hypermarket (Donnelly et al.  2015).

Therefore, the present business idea of high tech hypermarket can help in locating products using mobile maps of the entire store. High tech hypermarkets can also offer hand held scanners present in store and mobile app that can help various shoppers to scan different bar codes. In this digital hypermarket, management can arrange for getting alerts at the time when more number of registrations are needed. This calls for the installation of the system that necessarily features certain infrared sensors right above the check-out lanes that can subsequently help in detecting the total number of shoppers. Again, the proposed business idea also contains supermarket mobile application with different useful applications. With the new mobile app, an augmented locator of store adds to the GPS technology along with driving directions (Recker 2015).  In addition to this, shoppers in this case can also get a view of their list of their shopping offline and assimilate them with the shopping list in the desktop. Furthermore, the digital supermarket can present carts that are kid-friendly and video-equipped. Again, automatic system of check out can also be introduced to lessen overall time for check out.

Geographic segment: Urban and various busy markets where the overall flow of customers is quite high for a specific trail

Demographic: The targeted customer segment intends to working population of both gender (male and female) aged between 22 years to 60 years.

Behavioural Segment: The working population having crunch of time can be considered as the targeted segment of customers as they are very busy in their professional lives. They want to shop easily by getting what they want in a very period of time.

-Value Propositions- The value proposition can be considered to be a promise of specific value that has the need to be delivered (Teece 2016). Basically, it is the primary reason why consumers would like to buy. The main value propositions of the proposed business are that the business intends to offer are as mentioned below:

Demographic Segment

Flexibility Advantages

 -Location advantage and both physical and online presence

-Very well connected network

-Facility of free delivery to customer door to door

Social Advantages

-Availability of particular regional markets

-Opportunity for employment for local people

-Improvement in level of satisfaction of employees (Hartley and Chatterton 2015)

-Promotion of demand of highly competent employees

Environmental Advantage

-Lessens the redundancy of paper

-Decreases emissions of carbon

-Decreases emission of green gas

Economic Advantage

-Enhances the nation’s Gross Domestic Product (GDP)

Channels

Distribution channel can be regarded as way of interdependent corporation that can aid the marketers in delivering their products to target consumers (Libert et al. 2016). The distribution channels of the digital hypermarket that can be selected based on the requirements of the end users of the company.

The digital hypermarket that essentially intends to retail can select the following channels:

-E-commerce: this can be selected as a particular channel of distribution that can permit a specific retailer to get admittance to their entire clientele across the world.  However, business transactions carried out in different foreign nations is necessarily subject to transnational laws of trade along with the law of the country in which the business is proposed to operate (Lubián and Esteves 2017).

Specialised Distribution: The management of the proposed business can adopt specialised channel of distribution where it can use more than one way of distributing its products to the end users (Bones and Hammersley 2015). In this case, according to the requirement of business, it can select from three different channels as mentioned below

For the purpose of procurement:- Financing contract can be utilized that include provision by the purchasers of working capital to uphold the production on particular land areas. Essentially, the grower provides assurance to market the output produced by him from that particular land at the time of harvest (Roggeveen et al. 2016). Therefore, a fixed amount of deduction for every box can be carried out based on the pre-determined rate and deducted upon disbursement after harvest.

-Key Activities- The key activities of the business would include home delivery of different products as well as maintaining stock in shelves of brick and mortar stores, maintaining a record of daily purchase history, presentation of details as regards each and every product offered by the company and maintaining seamless systems for online order placement and payment system. Activities also include utilization of scanners present in store and mobile app that can help various shoppers to scan different bar codes (Bereznoi 2015). In this digital hypermarket, administration can arrange for receiving alerts if more number of registrations is required. Therefore, the activity also involves proper installation as well as maintenance of the system that features certain infrared sensors right above the check-out lanes that can afterwards aid in identifying the total number of shoppers. Again, the proposed business idea also contains supermarket mobile application with different useful applications and this need to be monitored and upgraded at a regular basis. With the new mobile app, an augmented locator of store adds to the GPS technology along with driving directions (Mubako 2017).

Behavioural Segment

-Key Resources- The key resources for the firm can be identified to be the suppliers, corporate and the customers. The suppliers have the need to be very trustworthy and multiple in numbers. Again, the corporate that form a very important of the company resources need to be very professional in nature and very productive from the perspective of performance (Bughin 2017). Finally, the key resource of the business can be said to the customers and the company needs to superior quality products/services to their customers and in the process gain their trust.

-Key Partners

The key partners of the proposed business would include the suppliers of the business, tie up with different social media as well as different offices

-Revenue Structure

The revenue structure of the proposed digital hypermarket business includes the earnings generated by the company from various points of sale. Mainly, the structure includes the .margin over sales of the product, advertisement presented on website and special offers as well as advertisement on various transport vehicles (Nyachwaya 2015)

-Cost Structure

The cost structure of the proposed business mainly includes cost incurred for payroll, rent and digitial innovations. Essentially, a good location of the hypermarket also calls for a higher amount of rent and higher cost of labour. Other costs of the retaler include utility as well as store supplies. Again, costs of transporation are also included in the retail costs relying on the origuns of the products. Costs associated to utilities as well as store supplies. Therefore succintly the cost structure of this digital hypermarket can be said to include financing of website, initial purchases made for gathering capital of the firm, costs of transportation, costs incurred for storage as well as marketing costs (Zheng 2015).

-Minimum Viable Product (MVP)

Minimum viable product (MVP) has certain central characteristics adequate to position the product (Doloto and Chen-Burger 2015)

-Size of the market-

-Growth rate of the industry- Revenue of the industry is forecasted to have developed by an annualised rate of around 4.2% in the 5 years till the period of 2016-17, achieving the figure of $105.3 billion (Price 2016). However, this contains estimated growth in revenue of approximately 3.3% during the period 2016-17.

-Examination of the full capacity of the market in Australia: Report presented by IBIS World’s on ‘Supermarkets and Grocery Stores in Australia’ elucidates in detail the fact that the supermarket industry of Australia is extremely competitive and exceedingly concentrated (Donnelly et al. 2015). The rapid growth rate of ALDI since the period of its launch in Australia during the year 2001 has destabilised the supermarket chain industry.

Value Propositions

The research presented by Nielsen show that 20% of Australians are already purchasing some type of products product online.

• 20% is the present yearly sales growth rate
• 20% is the anticipated fraction of AUD 10.6 billion growth for the segment over the subsequent 5 years (Teece 2016).

-Target Customers

The target customers are mainly the working population of both gender who have shortage of time and need to have easy shopping. The customers are mainly in both urban as well as rural areas.

The customers can get the product both from the physical stores as well as online platforms (Teece 2016).

The external factors that affect the operations of the retail operations include the following:

Government support and intervention: The political conditions exert impact on the retail segment in Australia as well as the performance of retailers such as Woolworths to a great extent. For example, the Federal Government of Australia has currently instituted a policy of competition that averts chief independent retailers namely Woolworths as well as Coles in averting competition (Lubián and Esteves 2017). Again, the escalating market supremacy of these chief retailers has led small retailers to struggle in the industry 

Dynamics of the industry: The development in progress of various sophisticated online platforms of sales of markets is anticipated to exert an growing influence on patterns of shopping, as noted by IBIS World, mainly with fitting online shopping alternatives. This includes pick-up as well as home delivery, digital technology including mobile applications as well as fully electronic systems for hypermarket, aiding the entire industry to enhance demand over the upcoming 5 years (Lubián and Esteves 2017)

Options that are available for development of this technology

The off-the-shelf development solution can have greater number of audience that can request functionality along with add-ons as well as integrations. Again the cost of development of this off-the-shelf software can be necessarily be recovered over a large number of purchasers. This in turn makes the overall cost very competitive. In essence, the off-the shelf software also possesses a library of tutorials to pursue , which is excellent for different small scale purchasers (Teece 2016). The management of the firm might choose this strategy for development of this technology.

The options that are proposed to be selected for producing the proposed product/service is by joint venture or partnership (Teece 2016). This will be a partnership business where more than one individual will undertake the business operation and enter into legal relationship.  In this case the owners form a contractual agreement to pursue the business as joint owners and here income tax is paid by the partnership, however the profit/losses are divided equally among the owners.

Channels

The key resources that are necessary for the business include suppliers, corporate and the customers. The suppliers have the need to be very reliable. Again, the corporate that form a very important of the company resources need to be very professional in nature and very efficient and skilful from the perspective of performance (Recker 2015). Finally, the key resource of the business can also include customers and the company needs to superior quality products/services to their customers and in the process gain their trust.

The laws as well as regulations are applicable for starting a business out there in Australia. The business owners opening a new business in Australia have the need to register their business before commencing any kind of business activity. It is also important to register the name. In addition to this, the laws that are applicable include:

-Australian Business Number (ABN)

-Pay as you go (PAYG)

-The Goods and Service Tax (Recker 2015)

-Tax File Number

The business also needs to make certain that it is complying with specified legal necessities. The authority “Australian Business License and Information Service” aids in the process of working out the licenses, registrations as well as permits that are required to operate the business. The business also needs to be aware of the obligations stipulated under the Australian Privacy Principles.  IP legislations are also there namely the Patents Act of 1990, Patents Regulations 1991, Trademarks Act 1995, Designs Act of 2003, Designs Regulations of 2004 and many others that the company needs to aware of (Bones and Hammersley 2015). The environment liability of the business is to abide by the directives of Environment Protection and Biodiversity Conservation Act of the year1999.  The use of the Big Data can be considered as the technological changes that are affecting the business of digital hypermarket.

(1) Sales Forecast
(2) Cash flow forecast
(3) Depreciation Schedule
(4) Profit and Loss Forecast
(5) Balance sheet
(1) SALES FORECAST
Year	0	2018	2019	2020
Projected Sales		3,45,000	3,79,500	4,17,450
(b) Cost of goods		2,07,000	2,27,700	2,50,470
(2) CASHFLOW FORECAST
	Preop
Year	0	1	2	3
CASH INFLOWS
Cash from Sales		3,45,000	3,79,500	4,17,450
Capital Employed	3,00,000	3,00,000	3,00,000	3,00,000
Other cash inflows
TOTAL CASH INFLOW	3,00,000	6,45,000	6,79,500	7,17,450
CASH OUTFLOWS
Payments for materials		2,07,000	2,27,700	2,50,470
operating expenses (         )	0
Premises (rent, rates)	0	3,500	3,500	3,500
Wages and salaries	0	25,000	27,500	30,250
General expenses	0	2,250	2,475	2,723
Interest and bank charges payable	0	2,500	2,500	2,500
Lease payments	0	4,250	4,675	5,143
Corporation Tax		6,210	11,579	13,600
Market survey costs	0	1,750	1,925	2,118
Other preliminary expenses	0	1,050	1,155	1,271
capital expenditure
Plant and other capital expenditure	0	27,500	27,500	27,500
financing repayments
TOTAL CASH OUTFLOWS	0	2,81,010	3,10,509	3,39,073
Cash flow summary
NET CASHFLOW FOR PERIOD	3,00,000	3,63,990	3,68,992	3,78,377
OPENING CASH BALANCE	0	3,00,000	6,63,990	10,32,982
CLOSING CASH BALANCE	3,00,000	6,63,990	10,32,982	14,11,358
(3) DEPRECIATION SCHEDULE
Year	0	1	2	3
Fixed Assets
Computers	2500	2,250	2,000	1,750
Vehicles	20000	16,000	12,800	10,240
Equipments	27500	22,000	17,600	14,080
Furniture & Fixtures	15000	12,750	10,500	8,250
Total book values (i.e. net fixed assets)	0	40,250	32,400	26,070
Annual Depreciation
Furniture-10% straight line		250	250	250
Vehicles – 20% reducing balance		4,000	3,200	2,560
Equipments-20% reducing balance		5,500	4,400	3,520
Furniture- 25% Straight Line		2,250	2,250	2,250
total annual depreciation		9,750	7,850	6,330
(4) PROFIT AND LOSS FORECAST
	Preop
Year	0	2018	2019	2020
Revenue	0	3,45,000	3,79,500	4,17,450
Cost of sales	0	2,07,000	2,27,700	2,50,470
Gross profit	0	1,38,000	1,51,800	1,66,980
Gross Margin		3,30,510	3,52,484	3,85,716
Expenses/overheads
Premises (rent, rates)		3,500	3,500	3,500
Wages and salaries		25,000	27,500	30,250
General expenses		2,250	2,475	2,723
Accountant Fees		5,500	6,050	6,655
Payroll Tax		1,250	1,375	1,513
Administrative Expenses		35,000	38,500	42,350
Utilities		3,750	4,125	4,538
Sales and Marketing Expenses		7,500	8,250	9,075
Postage & Telephone		1,500	1,650	1,815
Furniture-10% straight line		250	250	250
Vehicles – 20% reducing balance		4,000	3,200	2,560
Equipments-20% reducing balance		5,500	4,400	3,520
Furniture- 25% Straight Line		2,250	2,250	2,250
Repairs and Maintainance		4,500	4,950	5,445
Website Development Expenses		3,250	3,575	3,933
Preliminary  expenses		1,050	1,155	1,271
Insurance		2,000	2,200	2,420
Advertisement		2,500	2,750	3,025
Interest Expenses		2,500	2,500	2,500
Lease Payments		4,250	4,675	5,143
Total expenses/overheads		1,17,300	1,13,205	1,21,646
Profit before tax		20,700	38,595	45,335
Tax @ 30%		6,210	11,579	13,600
Profit after tax		14,490	27,017	31,734
Transfer to reserves		20,700	38,595	45,335
ROC		5%	9%	11%

	Year	0	FY-1	FY-2	FY-3
	(a) CAPITAL
	Capital Employed
	Owners Contribution		2,50,000	2,50,000	2,50,000
	Bank Loan		50,000	50,000	50,000
	Total Capital Employed		3,00,000	3,00,000	3,00,000
	(b) SALES FORECAST
	Projected Sales		3,45,000	3,79,500	4,17,450
	(c) COST OF GOODS		2,07,000	2,27,700	2,50,470
	(d) EXPENSES (Overhead)
	Premises (RENT & RATES)		3,500	3,500	3,500
	Wages & Salaries		25,000	27,500	30,250
	Accountant Fees		5,500	6,050	6,655
	Payroll Tax		1,250	1,375	1,513
	Administrative Expenditure		35,000	38,500	42,350
	Utilities		3,750	4,125	4,538
	Sales and Marketing Expenses		7,500	8,250	9,075
	Postage & Telephone		1,500	1,650	1,815
	Repairs and Maintainance		4,500	4,950	5,445
	Website Development Expenses		3,250	3,575	3,933
	General Expenses		2,250	2,475	2,723
	Interest Expenses		2,500	2,500	2,500
	Market survey		1,750	1,925	2,118
	Preliminary  expenses		1,050	1,155	1,271
	Insurance		2,000	2,200	2,420
	Advertisement		2,500	2,750	3,025
	Lease payments		4,250	4,675	5,143
	(e) FIXED ASSETS
	Computers		2,500	25,000	30,000
	Vehicles		20,000	20,000	20,000
	Equipments		27,500	27,500	27,500
	Furniture & Fixtures		15,000	15,000	15,000
	Breakeven Analysis
	Breakeven Sales Value =	average fixed cost/% contribution
	Average fixed cost (line 89)	70430.1
	Contribution %	50%
	Revenue	Contribution	Fixed Cost	Profit
	70430.1	35215.05	70430.1	-35215.05
	140860.2	70430.1	70430.1	0
	176075.25	88037.625	70430.1	17607.525
	211290.3	105645.15	70430.1	35215.05
Balance Sheet
Assets	2018	2019
Current Assets
Cash	345000	379500
Accounts receivable	345000	379500
Total current assets	690000	759000
Fixed (Long-Term) Assets
Computers	2250	2000
Vehicles	16000	12800
Equipments	22000	17600
Furniture & Fixtures	12750	10500
Total fixed assets	53000	42900
Total Assets	743000	801900
Liabilities and Owner’s Equity
Current Liabilities
Accounts payable	364100	384060
Accrued Rent	3500	3500
Bank Charges Payable	2500	2500
Income taxes payable	6210	11579
Accrued salaries and wages	25000	27500
General Expenses	2250	2475
Lease Payment	4250	4675
Total current liabilities	407810	436289
Owner’s Equity
Owner’s investment	300000	300000
Net Profits	14490	27017
Reserve and Surplus	20700	38595
Total owner’s equity	335190	365612
Total Liabilities and Owner’s Equity	743000	801900
Common Financial Ratios
Debt Ratio (Total Liabilities / Total Assets)	0.55	0.54
Current Ratio (Current Assets / Current Liabilities)	1.69	1.74
Working Capital (Current Assets – Current Liabilities)	2,82,190	3,22,712
Assets-to-Equity Ratio (Total Assets / Owner’s Equity)	2.22	2.19
Debt-to-Equity Ratio (Total Liabilities / Owner’s Equity)	1.22	1.19

The technical and management experience that are required in this case include thorough competency in the area of information technology, supply chain management and marketing. The owners have the need to be proficient enough in these above mentioned skills.

The owners of the company include Toby Waugh, Peter Hudson and Jay Wilde. Toby has working knowledge and experience of 10 years in the area of supply chain management and a degree in business administration. Again, Peter Hudson started his career as a marketing executive and later on went on become the marketing head of retail chain. In addition to this, he has a degree in marketing with 9 years of working experience. Jay Wilde has a degree in Information Technology (MSc) and has worked as head in the IT division of a multinational firm for more than 12 years.

Key Activities

The ownership structure of the firm is mainly partnership. This structure can be said to be very easy where the start up cost of the business in shared, equal share and there is tax application (Lubián and Esteves 2017)

There are requirement for 50 employees in initial years. However, the right employees can be hired by following the below mentioned steps:

• Creation of description of the job
• Spreading this word regarding the job opening
• Preparation of interview (Lubián and Esteves 2017)
• Screening before employment
• Setting the new members of the staff up for the new role of the job

The policy of selection of the right policy for compensation includes proper reference and compliance with the directives of the nation. As per the rules of the Safe Work Australia Act of the year 2008, there are several functions regarding compensation of workers. The management needs to be aware of different functions and the rules association to each of the function for development of the compensation policy of the firm. These functions include Worker’s Compensation Work Program, Workers permanent impairment, return to work and many others (Bones and Hammersley 2015).

The management of the proposed business intends to motivate the employees of the firm by arranging for proper programs for rewards as well as recognitions and incentives related to the level of productivity of the employees.

Rigorous training is essential for the employees in the field of information technology, and customer relationship management (Lubián and Esteves 2017)

However, the company intends to attain steady rate of growth. The Start up that is a digital hypermarket can intend to attain higher rate of growth by adding to the teams and develop appropriate systems that can help in supporting the enhanced business volume.

Again, one of the most important factors of running this kind of business is the institution of a consistent control of quality from the perspective of both high volume stock and individual products.

The attainment of higher level of growth can affect the structure of the entire organization. However, this might perhaps prove to be true at the time when the corporation might start to expand to diverse geographical locations.

Reference

Bereznoi, A., 2015. Business model innovation in corporate competitive strategy. Problems of economic transition, 57(8), pp.14-33.

Bones, C. and Hammersley, J., 2015. Leading Digital Strategy: Driving Business Growth Through Effective E-commerce. Kogan Page Publishers.

Bughin, J., 2017. The best response to digital disruption. MIT Sloan Management Review, 58(4).

Doloto, U. and Chen-Burger, Y.H., 2015. A Survey of Business Models in eCommerce. In Agent and Multi-Agent Systems: Technologies and Applications (pp. 249-259). Springer, Cham.

Donnelly, C., Simmons, G., Armstrong, G. and Fearne, A., 2015. Digital loyalty card ‘big data’and small business marketing: Formal versus informal or complementary?. International Small Business Journal, 33(4), pp.422-442.

Hartley, P. and Chatterton, P., 2015. Business communication: rethinking your professional practice for the post-digital age. Routledge.

Libert, B., Beck, M. and Wind, J., 2016. The network imperative: how to survive and grow in the age of digital business models. Harvard Business Review Press.

Lubián, F.J.L. and Esteves, J., 2017. Value in a Digital World: How to assess business models and measure value in a digital world. Springer.

Mubako, A., 2017. Digital Transformation. The Realignment of Information Technology and Business Strategies for Retailers in South Africa. Anchor Academic Publishing.

Ng, I.C., 2014. New business and economic models in the connected digital economy. Journal of Revenue and Pricing Management, 13(2), pp.149-155.

Nyachwaya, W.N., 2015. The influence of Urban Forms in the Use of Digital Technology in urban spaces: A Case of Nairobi Central Business District (Doctoral dissertation).

Price, R., 2016. Controlling routine front line service workers: an Australian retail supermarket case. Work, employment and society, 30(6), pp.915-931.

Recker, J., 2015. Evidence-based business process management: Using digital opportunities to drive organizational innovation. In BPM-Driving Innovation in a Digital World (pp. 129-143). Springer, Cham.

Roggeveen, A.L., Nordfält, J. and Grewal, D., 2016. Do digital displays enhance sales? Role of retail format and message content. Journal of Retailing, 92(1), pp.122-131.

Teece, D.J., 2016. Profiting from innovation in the digital economy: Standards, complementary assets, and business models in the wireless world. Research Policy.

Zheng, Z., 2015. Introduction to Big Data Analytics and the Special Issue on Big Data Methods and Applications. Journal of Management Analytics, 2(4), pp.281-284.