Operational Evaluation Of Wickes: Market Share, Competitors, And Operational Analysis

Description of the Organisation and its Business Context

The current report aims to evaluate the operational procedures of the selected organisation, Wickes. It is one of the renowned garden centres and home improvement retailers in United Kingdom having more than 230 stores in the nation (Wickes.co.uk 2017). The first section of this paper would focus on providing a brief description of the organisation and its business context including market share, competitors and customers. The second section of the paper lays stress on providing a detailed operational evaluation of the chosen organisation by interviewing the managers and employees of the organisation to find out the issues and the opportunities for advancement. Finally, the report sheds light on providing recommendations to the organisation in the form of cost-benefit analysis and alternative recommendations.   

Wickes is a garden centre and retailer of home improvement in UK and the owner of the organisation is Travis Perkins. The organisation has above 230 stores throughout the nation. Its major business is the sale of materials and supplies for building trade and homeowners. In addition, the organisation is involved in bathroom and kitchen market, in which it has number of varieties from budget take away bathrooms and kitchens to greater bespoke professionally designed bathrooms and kitchens. In June 2009, the organisation has pulled out of the market of fitted bedroom and it has dedicated additional store space to a diversified bathroom and kitchen range. In 2012, the organisation has started to diversify its range by providing more than own brand products like Bosch, Makita, Rawl, Stanley, Velux and Speedfit (Babich and Kouvelis 2015).

Market share:

Wickes has enlisted itself on the London Stock Exchange in 1987. However, Focus has purchased the organisation in 2000 and in 2005; Travis Perkins has acquired the business for £950 million (Bianchi and Åhlström 2014). The annual sales of the organisation have reached £1.3 billion in 2017 and the market share of the organisation has been approximately 10% in the UK market.

Competitors:

The major competitors of Wickes in the UK market comprise of Grafton Group Public Limited Company, HHGL Limited and B & Q Plc. Grafton Group unites manufacturing plants of mortar along with building materials and DIY stores on Ireland. The organisation is engaged in operating plumbing and building supply outlets under the brands of Heiton Buckley and Chadwicks along with Woodie’s DIY stores in Ireland.  In UK, Grafton is engaged in operating Plumbase plumbing supply stores and building supply stores under the brands of Jackson and Buildbase (Brown, Bessant and Lamming 2013).

Market Share

HHGL is a garden supply chain of superstore based mainly in UK. The kitchen and bathroom fixtures, tools and flooring are available in around 300 stores in UK and Ireland and the products are available in online platform as well. In addition, the organisation has carried out appliances, furniture, and consumer electronics and lighting along with kitchen installation services (Chiang et al. 2014).

B & Q Plc is engaged in selling above 40,000 home improvement products at around 330 retail stores throughout Ireland and UK comprising of big warehouses and smaller supercentres. The stores of the organisation provide tools, insulation, lumber and associated products for repair and building projects along with items for home decoration like hardware, flooring, wallpaper and paint. The organisation is engaged in carrying a group of house furniture and home ware, gardening supplies and appliances (Choi, Cheng and Zhao 2016).

Customers:

The switching cost of shifting from one organisation to another is very low in the industry due to restricted differentiation (Gunasekaran and Irani 2014). Hence, the customers could switch over to the other organisations, in case; Wickes has decided to increase its product prices. Hence, the bargaining power of the customers is extremely high in the home improvement industry of UK.

The operations strategy of Wickes is that it is significant to the customers by categorising them into order qualifiers and order winners. The former offers an opportunity to finish, while the latter explains matching the needs of the customers at a better level than the competitors do. In order to provide an overview of the order winners and qualifiers, 12 customers have been interviewed and these are briefly described as follows.

Price:

According to majority of the customers, they are satisfied with the time value of money. They use to contrast prices with the other home improvement stores as mentioned above for matching with their prices or beating them. In case, the prices are greater than those in the stores of Wickes, the organisation is engaged in rewarding the customers with coupons, promotions and loyalty, which increases the monetary value of the customers (Heizer 2016).

Multichannel customer services:

Wickes has developed itself as one of the leading and profitable home improvement retailer with sales nearly £1.3 billion. In addition, the click and collect service is a major portion of the multichannel offering, which helps the customers to pick up their shopping as per their requirements. In addition, the customers have stated that self-service is another medium that helps them to be engaged in the service of delivery.

Competitors

Own brand:

Even though Wickes offers different brands to offer to the customers, it also produces own products of superior quality at cheaper prices for the customers (Hitt, Xu and Carnes 2016). Hence, according to the customers, Wickes offers effective products to its products in order to increase its overall sales and productivity.

Store ordering and replenishment:

This is a primary order winner, since it makes effective contribution in the market because of sophistication of the supply chain management, which goes a long way to increase delivery time. Hence, according to the customers, Wickes is increasing its competitive presence in the market.

Range and quality of products:

The customers are often on the lookout for different brands for various products having superior quality (Khanna 2015). According to the customers, Wickes has developed the effective ranges of quality products, including the own brand of the organisation. In addition, they have stated that the stores are format-specific, which helps them in easy choosing of the products.

Delivery speed and reliability:

In the words of Krajewski, Ritzman and Malhotra (2013), this denotes the amount of time spent between request for a specific item on the part of the customers and delivery time. According to the customers, this is highly significant, which helps in forming effective record making in increasing the number of repeat visits.

In order to evaluate the operational design of Wickes, 5 managers of the organisation have been surveyed and these are briefly evaluated.

In-store:

According to the managers, a customer could visit a store of Wickes, which is accessible from most of the areas in UK. After picking up the needed products, the customers move forward to the counter for checkout and payment or they move forward to utilise the self-service (Lee and Tang 2017). Hence, the in-store facilities of Wickes are up to the standard, as per the opinions of the managers.

Online services:

This facility is provided through internet, as the customers could order products online while making the payment online as well. However, the customers sometimes complain about the late delivery, as the organisation fails to deliver all products within time due to lack of transportation facilities, according to the opinion of the managers.

Click and collect:

This facility is also provided through internet, in which the customers’ order different varieties of products online (Lim, Alpan and Penz 2014). However, according to the managers, they need to pick up the products from the designated stores that they have selected. In this case, the customers often experience trouble in visiting shops and sometimes due to lack of manpower; they often find delayed handover of the products that they have ordered online.

Customers

Store format, layout and accessibility:

In UK, Wickes basically operates through four different kinds of stores (Mahadevan 2015). According to the managers, the various store formats of the organisation are developed to meet the different shopping patterns of the customers. At the time of designing new stores, they consider the particular needs of the local community and it is careful to assure that landscaping and architecture match with the neighbouring areas.

Wickes has developed home improvement approach strategy to be followed on the part of its store layouts, as the customers could enter straight into produce (Malhotra et al. 2014). This has helped in strengthening its brand as home improvement store, according to the views of the managers. Wickes superstore has catered for most of the family requirements, which could be achieved in a single convenient time saving visit with the vast group of products on offer like home ware, furniture and many others. Wickes Metros are inherent in the high street, in which it offers the value and choice of the superstore for the employees and residents in town centres. Wickes Compact caters for those places that were previously difficult to serve (McCrie 2015). However, it needs to improve its distribution and ordering systems for supplying these small-sized compact stores, according to the point of view of the managers of the organisation.

In order to evaluate the operations management of Tesco, 51 employees of Tesco have been surveyed and the results are briefly demonstrated.

Operations scheduling:

Wickes is engaged in using replaceable shelves for minimising the time used on the part of the employees to arrange the products on the shelves (Roth et al. 2015). The organisation maintains optimal stock level through the use of advanced technology for deriving information, according to the opinion of the employees. In addition, they have also stated that based on the needs from a specific store, the products are delivered from the centres of distribution to the store. The information is accumulated electronically sent from the products scanned on the space of the shelves on the part of the staffs. In addition, information pertaining to point of sale between the two scans is utilised to modify the schedules of delivery (Roth et al. 2016).

Furthermore, the customers trigger the point of sale information, which enables the centres of distribution in continual replenishment of the products and information is delivered to the suppliers with the help of electronic data interchange (Zurich 2017). However, according to the employees, such system has resulted in loss of jobs for many staffs in the organisation. This is because the paperwork involved in traditional purchasing has been eradicated. Although this has helped the organisation in minimising the overall amount incurred on logistics operations (Slack 2015).

Operational Analysis of the Organisation for Identifying the Problem or an Opportunity for Improvement

On the negative side, there are certain drawbacks while implementing the supply chain management system in Wickes. One identified drawback is the incorrect evaluation of the costs of inventory. According to the employees, this drawback is often inevitable on the part of the organisation like viruses, failing to maintain effective associations with the suppliers, rise in demand and fall in supply, lack of adequate training of the proposed system, overoptimistic demand projections and many others. Thus, technology has overshadowed direct contact with the suppliers in Wickes. In addition, virus infection has become highly inherent in the modern day business organisations (Slack, Brandon-Jones and Johnston 2013). The viruses could impact the overall system and mess up all stuffs or even destroying the same within small amount of time, if Wickes fails to restrict its infection, as stated by most of its employees.

Managing capacity:

Wickes serves thousands of customers each day, which increases the overall volume of demand and function (Smith, Maull and CL Ng 2014). For managing and serving its customers in an effective fashion, Wickes has different delivery system channels for minimising congestion and queuing. These comprise of checkout at the counter, self-service checkout, click and collect along with system of online delivery. Hence, according to the perspectives of the staffs of the organisation, it has been effective in managing capacity to cater to the ever changing needs and demands of the customers.

Cost-benefit analysis:

Particulars	Year
0	1	2	3	4	5
Costs:
Development costs	-£   50,000
Operating costs		-£   75,000	-£   82,500	-£   90,750	-£   99,825	-£   1,09,808
Total costs	-£   50,000	-£   75,000	-£   82,500	-£   90,750	-£   99,825	-£   1,09,808
Discounting factor @15%	1	0.87	0.76	0.66	0.57	0.50
Present value of costs	-£   50,000	-£   65,217	-£   62,382	-£   59,670	-£   57,075	-£      54,594
Cumulative PV costs	-£   50,000	-£1,15,217	-£1,77,599	-£2,37,269	-£2,94,344	-£   3,48,938
Benefits:
Tangible benefits		£ 1,10,000	£ 1,21,000	£ 1,33,100	£ 1,46,410	£   1,61,051
Intangible benefits		£    10,000	£    11,000	£    12,100	£    13,310	£      14,641
Total benefits		£ 1,20,000	£ 1,32,000	£ 1,45,200	£ 1,59,720	£   1,75,692
Discounting factor @15%	1	0.87	0.76	0.66	0.57	0.50
Present value of benefits		£ 1,04,348	£    99,811	£    95,471	£    91,320	£      87,350
Cumulative PV benefits		£ 1,04,348	£ 2,04,159	£ 2,99,630	£ 3,90,951	£   4,78,301
Cumulative PV benefits + costs	-£   50,000	-£   10,870	£    26,560	£    62,361	£    96,606	£   1,29,362

The above table mainly helps in depicting the cost-benefit analysis that Wickes could experience, if it implements the supply chain management system for increasing its overall operational efficacy. The two types of costs that have been considered for this project comprise of development costs and operating costs (Spring et al. 2017). The cost of development in the initial year has been assumed as £50,000. Accordingly, the operating costs have been estimated for five years, since the life of the project is assumed as five years. The present value and cumulative present value of costs have been obtained by assuming a discount rate of 15%.

Similarly, two types of benefits have been taken into accounts from the implementation of the proposed system. These benefits include tangible benefits as well as intangible benefits (Taghavi, Adams and Berlin 2014). The present value and cumulative present value of benefits have been obtained by assuming a discount rate of 15%. After this, the cumulative present values of costs and benefits have been added together to derive the overall benefits of Wickes. It has been found that although the organisation would experience loss in the first year; however, it would start to experience the benefits from the second year of the project, which would tend to increase until the final year of the project. Hence, it is advised to Wickes to undertake the project for enhancing its overall operational efficiency and management.

Price

Wickes could improve more in terms of association with its suppliers by carrying out surveys on them for obtaining feedback in order to improve its overall services. Secondly, the information technology department of the organisation needs to enhance on anti-virus systems and firewall for restricting from virus attack, since such attack might hamper the overall operational system of the organisation. Finally, the application of information technologies is extremely crucial in Wickes, as it would help in replacing manpower along with saving time needed for paperwork. Hence, provision of training on the information technology systems is vital to the entire management of the organisation. In order to achieve this, the managers need to motivate and encourage the staffs for being a part of the training process so that any error in assessing the costs of inventory might be avoided.

Conclusion:

From the above evaluation, it has been found that Wickes is one of the leading home improvement retailers in UK. The success has not arrived by chance; instead, it is the outcome of efficient management practices of the organisation. The formation of a clear strategy is critical to the success of Wickes, which is further assisted in the form of commitments to the colleagues and customers. Each decision assures that communities, customers, suppliers and staffs are treated equally with due respect.

In order to manage its operations, Wickes has undertaken the continual initiative of replenishment. In addition, knowledge about the levels of inventory of the customers denotes that the suppliers could make better planning of their own inventory and production for fulfilling the needs and demands of the customers. This would help in minimising the amount of inventory stored in the warehouses of the suppliers and the number of staffs involved in the warehouses. Hence, provision of training on the information technology systems is vital to the entire management of the organisation. In order to achieve this, the managers need to motivate and encourage the staffs for being a part of the training process so that any error in assessing the costs of inventory might be avoided.

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