ARZANI BACHAT CENTRE PROJECT REPORT

ARZANI BACHAT CENTRE

PROJECT REPORT

 

PREFACE

This project report is regarding Departmental Store, which comes under trading sector. Departmental stores business is emerging as one of the good business ventures in Pakistan as it provides all the basic merchandise under one roof.

The objective of the report is primarily to provide a detailed analysis for commencement of the business as departmental store. The document covers various aspects of the project concept development, startup, marketing, finance and business management.

All the material included in this document is based on data/information gathered from various sources, self surveys and is based on certain assumptions. Main sources used include SMEDA, FBS (Federal Board of Statistics) and City Government official website.

The project was the great learning for me. Practice like this contributes very much in reducing distance between bookish and practical world. The project he has given me is very helpful in learning different aspects of marketing. I have tried our best to complete this project with our full understanding and effort.

“It is just a beginning, towards a prosperous way to success.”

I am thankful to our esteemed teacher ”Mr. Asif Izhar” who helps me a lot in making this project comprehensive and guided me very well throughout the course of marketing and really made these course fruitful for me. I enjoyed his company during the whole semester.

ACKNOWLEDGEMENT

Firstly, I am grateful to Almighty Allah who blessed me with the wisdom, courage and guidance to successfully accomplish this report. Further, I would also avail the opportunity to be thankful to my course instructor, Mr. Asif Izhar, whose kind support, guidance and untiring efforts helped me in accomplishing the task assigned to me. I would also like to show my gratitude to my parents who supported me in every way possible in achieving my goal.

TABLE OF CONTENTS

PREFACE ......................................................................................................................................... 2        

ACKNOWLEDGEMENT................................................................................................................. 3        

TABLE OF CONTENES................................................................................................................... 4

EXECUTIVE SUMMARY............................................................................................................... 5

1.      MARKETING MIX..................................................................................................................... 6

1.1.   PRODUCT............................................................................................................................ 6

1.2.   PRICE................................................................................................................................... 6

1.3.   PLACE ................................................................................................................................. 7

1.4.   PROMOTION....................................................................................................................... 8

2.      SWOT ANALYSIS...................................................................................................................... 9

3.      PRODUCT MIX........................................................................................................................ 10

4.      FACILITY DESIGN & LAYOUT............................................................................................ 11

5.      MARKET SEGMENTATION................................................................................................... 13

6.      MARKET TARGETING........................................................................................................... 14

7.      MARKET POSITIONING........................................................................................................ 15

8.      MARKET INFORMATION...................................................................................................... 16        

9.      KEY SUCCESS FACTORS...................................................................................................... 20

10.  KEY ASSUMPTIONS............................................................................................................... 21

11.  PROJECT INVESTMENT........................................................................................................ 22

EXECUTIVE SUMMARY

  This project report is regarding Departmental Store, which comes under trading sector. The objective of the report is primarily to provide a detailed analysis for commencement of the business as departmental store.

  The name given to the store is ARZANI Bachat Centre. The word ARZANI is an Urdu word which means deflation or decrease price.

  Product: The proposed departmental store will provide variety of goods ranges from grocery to garments and alike to customers under one roof.

  Price: We will facilitate our target customers with products at economical prices but high quality and brand name.

  Place: Locations proposed to the centre include Main University Road, Gulistan-Johr and Bufferzone on the basis of high population density. The proposed departmental store will have an area of 1500 sqft with 12 to 15 operating hours from morning to midnight.

  Promotion: The important marketing channels would be flyer distribution, billboards, magazines etc. and other innovative sources like transport advertisement, SMS services, unique discount offers, presenting gift hampers by lucky draws etc.

  SWOT Analysis: Providing a joyful environment, handsome discounts are our strengths. Difficulty in building confidence of the customers and operating loss in the initial year may be the weaknesses. Due to targeting the middle level customers, we have a great opportunity to become market king, but new entrants can easily share the business.

  Proposed product mix offered includes groceries, toiletries, garments, crockery, pharmacy, electrical & electronic appliances and other general items. A unique characteristic of the centre is that it also provides full of fun area for children and youth.

  The facility design and layout is suggested to be divided into four different zones i.e. FoodStuff, HouseHold, LifeStyle and FunLand based on the various product category.

  The target market locations include Main University Road, Gulistan-e-Johr and Bufferzone which have high population density and average income people.

  The market is positioned as “Have quality with savings” and “Leading towards a prosperous life”. We provide quality and branded products to our customers with remarkable discount offers.

  Market analysis concludes that Companies are coming with top quality products and with the increase in production level the employment also increases, thus creating a need for retail store to sell the product.

  Distributor analysis concludes that it is ideal to get the required merchandise from various distributors. It is also possible to have different payments arrangement with different distributors, such as, strictly cash, credit, and bill-to-bill.

  The total project investment is calculated is Rs. 54,000,000 including working capital/ cash in hand.

1.              MARKETING MIX

1.1.         PRODUCT

Departmental store is a large retail store organized into departments offering a variety of merchandize, commonly part of retail chain under one roof. The proposed departmental store will provide variety of goods ranges from grocery to garments and alike to customers under one roof. The project will offer following broad categories of goods to its customers:

      Groceries and food items

      Garments

      Crockery and plastic items

      Toiletries

      Ice-cream and beverages

      Books & Stationery items

      Cosmetics and artificial jewellery

      Electronics/electrical products

      General items

In spite of these, the project also offers a separate portion named FunPlace specifically for children and youngsters. This portion will comprise of:

      Audio/Video Centre

      Toys World

      Gifts Shop

      Play Land

      Light Delight (Snacks bar)

It is proposed that unbranded commodity items like rice, pulses, and spices etc. will be offered with the store’s own brand name and their packaging will be available in different suitable sizes. Details of the products offered are discussed in the section of Product Mix.

1.2.         PRICE

Pricing decisions are a major challenge for most of the retailers. Price is a major factor in dealing with competition from other retailers. Many lines of merchandise have what is accepted as a market-level price. It is common to find prices for normal general and medical items to be based on a standard markup percentage that is similar for all competitors. Supermarkets often adhere to almost identical prices so that competitors usually do not have a price advantage. A retailer can adopt both a high pricing strategy or a low pricing strategy. In some cases a store may offer something that permits it to set its prices higher than its competitors do. Pricing below market levels is used by retailers who have decided to focus on lower expenses, less service, and less ambience. Such a retail store attracts customers who are extremely price conscious but tend to purchase their entire months grocery from these types of retail stores. That is not to suggest that you necessarily need to compete on price, only that you be aware of providing consumer perceived value. Since our competitors are those of small general stores and other like consumer shops, we should facilitate our target customers with the same prices as of our competitors but product with a high quality and brand name. Therefore, we will offer all the brands which are available at economical prices. Besides, we will also give special discounts to a certain ratio, depending on the product category, to our regular customers.

1.3.         PLACE

Location of stores is of primary concern with any retail organization. Spending time and money wisely in the process of site selection is of primary importance. Some retailers open shop in a location simply because it is the only vacant space within a stones throw of their home or office. Knowledgeable retailers make a thorough examination of possible locations before investing their money and dreams.

It is suggested that the departmental store should be opened in a densely populated area where these services are not being provided. Apart from that it should be opened in the center so that it also covers the near by areas.

Since our target is to capture market from small or medium size general stores, garment and other products shops, and to provide facility to customers to shop variety of consumer products under one roof, our target locations are those areas where people generally don’t have a mindset to go to departmental stores for shopping.

Keeping all this in mind, we have proposed the locations as mentioned below. Here, it is important to notify that our strategy is to open stores at all locations not immediately, but gradually after an interval of about six to eight months. This is the part of promotional strategy which will be discussed in the heading of Promotion. 

Proposed Locations	Area Covered
University Road	PIB Colony, Al-Hilal Society, Gulshan-eIqbal, Hassan Square..
North Nazimabad	Sakhi Hassan, Bufferzone, Shadman Town.
Gulistan-e-Johr	Gulistan-e-Johr, Abul-Hassan Asfahani road, Safoora Goth.

The proposed departmental store will have an area of 1500 sqft having covered/indoor shopping facilities. The store will operate for 12 to 15 hours from morning to midnight. The store will be divided into different zones according to different product categories to make customers to easily find out their desired products. They are:

1.      FoodStuff             :           All groceries and food items.

2.      HouseHold            :           Crockery, stationary, toiletries etc.

3.      LifeStyle               :           Cosmetics, Garments & other textile items.

4.      FunLand               :           Play land, Snack bar, toys & gifts shop etc.

5.            

The parking space is also reasonable, although there is no parking lot but there is enough space on the roadside and the nearby streets for the people to park their vehicles.

1.4.           PROMOTION

As we see in SWOT analysis that there are stronger competitors in the market, the promotion strategy for successful business must be unique and other than the traditional ways of the promotion. The important marketing channels would be flyer distribution, billboards, banners, newspapers, magazines, Cable TV, etc. However, we can use new and innovative sources. Some marketing and promotional tips are as under:

      SMS (Short Messaging Service) by which a handsome discount offer to the public.

      Include a gift with purchase, buy one get one free.

      Provides the consumer with an incentive to become a repeat customer by offering a future discount.

      Telemarketing.

      Discounted offers for first 100 customers at the beginning of every month.

      Providing a joyful environment presenting gift hampers by lucky draws.

      Public relations

      Introduce home delivery services.

      Frequent clearance sales.

Regular advertisement expense should be at least 0.5% to 1% of sales in the departmental store business.

Another important promotional plan is that the number of proposed departmental stores is three at three different locations. The advertisement process will be started three to four months before the opening of first store. The second store will be opened after about four to six months of the first store. The purpose is to promote and make the consumers convinced on the success of first store. The third one will be opened just after two months of the second one. Hence, this promotional activity will be completed within ten months.

2.              SWOT ANALYSIS

A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. Strengths and weaknesses are internal to the company. Opportunities and threats originate from outside the company. A SWOT analysis is usually performed early in the project development process, and helps organizations evaluate the environmental factors and internal situation facing a project.

2.1.         STRENGTHS

Ø  Easy availability of resources (manpower/salesman).

Ø  Helping and guiding staff.

Ø  Dynamic management.

Ø  Entertainment zone and play land for children.

Ø  Well maintained premises.

Ø  Handsome discounts.

Ø  Availability of adequate facilities like parking.

Ø  Free home delivery service (subject to conditions).

2.2.         WEAKNESSES

Ø  Difficulty in building confidence of the customers.

Ø  Operating loss in the initial year due to unabsorbed fixed cost.

Ø  High competition.

Ø  Credibility factor in the initial phase, as suppliers do not give credit to newly entrants.

2.3.         OPPORTUNITIES

Ø  Growing population.

Ø  Status symbol to shop from big stores.

Ø  No stores for lower-middle class population.

Ø  Popularity of variety shopping under single roof.

2.4.         THREATS

Ø  Economic and Political uncertainty.

Ø  New entrants can easily share the business.

3.              PRODUCT MIX

The store will offer the following broad categories of goods to its customer:

S. No.	Category of item	Proportion
1	Groceries and food items	40%
2	Garments & other Textiles	15%
3	Footwear	3%
4	Crockery and plastic items	6%
5	Toiletries	5%
6	Ice-cream and beverages	2%
7	Books & Stationary items	3%
8	Pharmacy	4%
9	Cosmetics and artificial jewellery	4%
10	Electronics/electrical products	3%
11	General items	2%

The project also offers a separate portion named FunLand specifically for children and youngsters. This portion will comprise of:

S. No.	Category of item	Proportion
1	Audio/Video Centre	2%
2	Toys World	3%
3	Gifts Shop	3%
4	Play Land	2%
5	Light Delight (Snacks bar)	3%

4.              FACILITY DESIGN & LAYOUT

­­­

The store will be divided into different zones according to different product categories to make customers to easily find out their desired products. They are:

4.1.       FoodStuff

The major zone will consist of groceries and food items.

It will occupy 42% area to the whole. It will

consist of the following items:

      Commodity items (Flour, Rice, Pulses, etc.)

      Dairy products (Milk, Yogurt, cheese, etc)

      Imported ethnic food items

      Fruits and vegetables

      Bakery items

      Ice cream & beverages

4.2.       HouseHold

This zone will consist of house hold and general items.

It will occupy 23% area to the whole. It will

consist of the following items:

      Crockery and plastic items           

      Toiletries

      Books & Stationery items          

      Pharmacy           

      Electrical/Electronic Produsts

      Other general items        

4.3.       LifeStyle

This zone will consist of items related to fashion

and home furnishing. It will occupy space of 22%

to the whole. It will consist of the following

items:

      Garments                        

      Footwear                        

      Cosmetics and jewellery                        

      Home Furnishing (bedsheets, curtains etc.)

4.4.       FunLand

A separate zone designed specifically for children & teenagers.

The main purpose is to attract customers towards the

store by providing them full of fun activities.

It will occupy space of 13% to the whole.

It will consist of the following items:

      Audio/Video Centre                  

      Toys World                    

      Gifts Shop          

      Play Land           

      Light Delight (Snacks bar)         

5.              MARKET SEGMENTATION

Most of the businesses organizations today recognize that they cannot appeal to all buyers in the marketplace or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. Thus, the organizations have moved away from mass marketing and towards target marketing – identifying market segments, selecting one or more of them and developing marketing strategies as well. Market segmentation refers to dividing a market into distinct groups of buyers on the basis of needs, characteristics, or behavior, who might require separate products or Marketing mixes.

We also segmented our market on the basis of some characteristics or attributes of our customer for our project. Here is the detail of these attributes.

5.1.         Geographic Segmentation (Karachi)

Area	Segments
University Road	PIB Colony, Al-Hilal Society, Gulshan-eIqbal, Hassan Square.
Gulistan-e-Johr	Gulistan-e-Johr, Abul-Hassan Asfahani road, Safoora Goth.
Jamshed Town	PECHS, Garden East, Mehmoodabad, Manzoor Colony, Akhtar Colony.
Liaqtabad Town	Qasimabad, Nazimabad-1, Rizvia Colony, Liaqtabad
North Nazimabad Town	Hydri, Sakhi Hassan, Bufferzone, Shadman Town.
Gulberg Town	Azizabad, Kareemabad, Aisha Manzil, Water Pump.

5.2.         Demographic Segmentation

Demography	Segments
Family size	1, 2, 3-5, 5+
Family system	Single, individual families, joint families
Income	Below 15,000; 15,000-40,000; 40,000-80,000; 80,000+.
Population Density	Low, average normal, highly populated.
Occupation	Sole proprietors, clerical, managers, officials, unemployed.
Education	Under metric, undergraduates, graduates, postgraduates.

5.3.         Psychographics

Demography	Segments
Social Class	Lower class, lower-middle, middle, upper-middle, upper class

5.4.         Behavioral

Measures	Segments
User Status	Non-users, ex-users, potential users, regular users.
Usage Rate	Light, medium, heavy
Buying Behaviour	Price oriented, quality oriented

6.              MARKET TARGETING

6.1.         Target Locations

Location plays a vital role in the starting of this business. Our proposed areas include Main University Road, Gulistan-e-Johar, & Buffer Zone. These areas are selected based on heavy population and a clutter of houses/apartments. The detailed analysis of the feasibility for opening a departmental store in these areas will be covered latter in this report. The approximate no. of households in these areas are as follows:

Area	Households
Gulshan-e-Iqbal Town	30,000
Gulistan-e-Johar	40,000
North Nazimabad	25,000

The number of households in these areas includes only A-B class households, with monthly expenditure of around Rs. 10,000-20,000 on groceries and spending around Rs.200-300 on daily purchases.

6.2.         Target Customers

Our target customer is a status conscious individual who is modern but values our traditions. He is a brand conscious person who prefers exclusiveness and prestige levels in the purchases and is willing to spend more for it. An educated class man oriented towards quality, style, tradition, uniqueness & art. Basically we serve all the humanity in the region but our main target customers are those who have:

Income                              :        above Rs.15,000.

Frequency of purchase   :        daily/ fortnightly/monthly

Family system                  :        all preferably Joint family systems

Social class                       :        middle class (including both upper & lower middle)

Specialty of product        :        on brand-on price

Usage rate                        :        medium & heavy

7.              MARKET POSITIONING

As more and more retail outlets are opening and consumer buying has shifted towards

packaged/branded products. Companies are coming with top quality products and with

the increase in production level the employment also increases, thus creating a need for

retail store to sell the product. One window trend has already emerged in Pakistani

market, where the consumer would like to buy groceries, food/non-food, toiletries and

household products under one roof.

Since our target is to capture market from small or medium size general stores, garment and other products shops, and to provide facility to customers to shop variety of consumer products under one roof, our target locations are those areas where people generally don’t have a mindset to go to departmental stores for shopping. In this scenario, the brand is positioned in the market as “Have quality with savings” and “Leading towards a prosperous life”.

We provide quality and branded products to our customers with remarkable discount offers.

8.              MARKET INFORMATION

8.1.         Market Potential

As more and more retail outlets are opening and consumer buying has shifted towards packaged/branded products. Companies are coming with top quality products and with the increase in production level the employment also increases, thus creating a need for retail store to sell the product. One window trend has already emerged in Pakistani market, where the consumer would like to buy groceries, food/non-food, toiletries and household products under one roof.

According to a survey report there are about 125,000 retail shops/outlets in Pakistan, out of which 30,000 are located in major cities. Out of these about 5,000 are universal stores/outlets. These are further sub-divided into the following categories:

Retail Industry Analysis

Category	Size	No.Of Outlets	Type
A	Very Large	300-500	Modern Trade outlet
B	Upscale	5000-7000	Large General Store
C	Medium	10000-15000	Small Shop
D	Very Small	50,000 +	Kiryana/Corner Shop

Stores in the latter three categories are usually owned by the sole proprietorship. In addition hundreds of government-owned utility stores sell food and household items and serve as a mechanism for restraining inflationary price increase by following the government line on pricing.

8.2.         Distributor Analysis

Distributors play a vital role in transferring the product from the manufacturer to the retailer and finally to the end consumer thus maintaining an integral part in the value chain delivery.

Foreign companies considering marketing their products in Pakistan may choose to use the services of local distributors or may develop their own distribution chain. Distributors in urban areas generally deal on an exclusive basis. As a matter of policy, most companies do not provide credit to distributors and distributors in turn generally sell on a strictly cash basis to retailers. Smaller distributors often do provide credit to retailers, but the volume of such transaction is relatively insignificant. It is ideal to get the required merchandise from various distributors. It is also possible to have different payments arrangement with different distributors, such as, strictly cash, credit, and bill-to-bill.

8.3.         Economic Analysis

Departmental stores business is emerging as one of the good business ventures in Pakistan as it provides all the basic merchandise under one roof. In late eighties a paradigm shift in grocery store science occurred. The concept of the "Self-Serving Store" was started. Customers entered the revolutionary store and walked through a narrow maze of shelves containing groceries. They selected their goods as they continued through the maze to a cashier.

This phenomenon grew rapidly; and today thousands of stores exist in the big cities. These stores also began to offer products beyond the normal scope of the dry-good grocery store. They added meat, dairy, fruit and vegetables, and breads to their offerings (which had formerly been offered by individual stores such as butchers, bakeries, and the "milk man").

Over the decades, the departmental stores have evolved even further. Now, one sees that offer greeting cards, flowers, video rental, fast food, childcare, and much more.

Departmental stores business falls under retail sector. This sector has shown a significant growth over the last few years. In 2007-2008 this sector showed a growth of 6.4%.2 This sector’s contribution towards GDP in the year 2007-2008 is 17.1%3.

The following table shows the contribution of retail and wholesale sector towards GDP for the last 5 years at constant factor cost.

       Contribution of retail and whole sale sector towards GDP

Year	Share %age	Growth %age
2003-2004	18.2	8.3
2004-2005	18. 7	12.0
2005-2006	17.2	2.4
2006-2007	17.0	5.4
2007-2008	17.1	6.4

Gross fixed capital formation (Investment in fixed assets) in this industry by private sector has also shown a progressive trend. In year 2007-2008 growth in gross fixed capital formation by private sector has shown an increase of 9.3%. The following table shows gross fixed capital formation by the private sector for the last five years:

Gross fixed capital formation by private sector in wholesale and retail sector at constant prices

Year	Retail and wholesale sector (Rs. M)
2003-2004	13,760
2004-2005	15,165
2005-2006	18,123
2006-2007	22,578
2007-2008	24,667

There are thousands of departmental stores and super markets in Karachi, Lahore, Rawalpindi, Faisalabad, Multan, and this number is increasing day by day. In Karachi there are about 40 to 50 big departmental stores or super markets, some of these are:

1.      Makro whole sale centre

2.      Metro Cash & Carry

3.      Naheed superstore

4.      Imtiaz super market

5.      ARY Cash & Carry

6.      Agha’s supermarket

7.      ChenOne

8.4.         Profit Margins

Margins in merchandise varies from 7-20 percent, depending upon the product category. It is safely estimated that average margin of 12-15 percent can be calculated for the purpose of feasibility study.

S. No.	Category of item	Avg. Gross Margin
1	Groceries and food items	10%
2	Garments & other Textiles	40%
3	Footwear	10%
4	Crockery and plastic items	30%
5	Toiletries	10%
6	Ice-cream and beverages	15%
7	Books & Stationary items	10%
8	Pharmacy	10%
9	Cosmetics and artificial jewellery	20%
10	Electronics/electrical products	30%
11	General items	15%
12	Audio/Video Centre	20%
13	Toys World	30%
14	Gifts Shop	30%
15	Play Land	15%
16	Light Delight (Snacks bar)	50%

The income statements and profitability are prepared on the basis of 15 percent margin.

9.              KEY SUCCESS FACTORS

Before making any investment decision, it is advisable to evaluate the associated risk factors by taking into consideration certain key element. In order to run the business effectively and efficiently strategic planning plays a vital role to be successful. This section will provide the entrepreneur with detail information relating to the strategic tips, which will act as a basic tools in order to run the business successfully.

The marketing concept states to sell a product keeping in view the customers needs and wants. Super market being the product of the entrepreneur should be marketed accordingly to be competitively successful. These can be done on the following basis:

9.1.         DISPLAY

As now-a-days most customers indulge in self-shopping, the product should be displayed in such a manner so that they are easily accessible. Keeping the large size product both breathe wise and length wise should be kept on the ground, major selling product should be kept on the second and third panel of the shelf so that it is easily accessible.

9.2.         KNOWLEDGE OF THE STAFF

The staff hired should have in-depth knowledge of all the products so that they are able to provide information if any required by the customers. Special care should be taken in hiring chemist for the medical section. A simple way to overcome this problem is by assigning aisles to the sales staff.

9.3.         SPONSORS FROM COMPANIES

The entrepreneur should try to gain sponsors from different companies so that they advertise their products by giving free samples and also set up stalls outside the super market so that customers get attracted.

9.4.         RENT ADVERTISEMENT SPACE TO COMPANIES

The entrepreneur also can rent advertisement space to companies where the companies are allowed to place hoardings, banners, posters, sign boards consisting of the companies product and also carrying the name of the super market.Inside board space can be rented out to companies from Rs. 15,000 – Rs. 30,000 for a quarter.

9.5.         DECREASE THE LOST SALES DUE TO INVENTORY SHORTAGES

The entrepreneur should be able to stock his inventory in such a way that he covers most of the demands of the target customers. It casts a very negative image on the customer’s perception of the shop if they are turned away with an excuse that a certain product is not available either because of a sell-out or the shop doesn’t carry the product. To minimize this problem the purchase section of the shop has to be managed efficiently.

10.       KEY ASSUMPTIONS

10.1.    Revenue Assumptions

The entire feasibility is based on the following assumption:

Total household in the vicinity: 10,000

Customer Category	Customer volume Daily	Merchandise Value	Daily Sales	Monthly Sales
Category A	25	2,000	25,000	750,000
Category B	50	500	25,000	750,000
Category C	100	100	10,000	300,000
Category D	100	50	5,000	150,000
Total Annual Sales				23,400,000

Annual customer traffic growth rate:                                          5%

Average merchandise value per customer growth rate:               10%

This will make up approximately Rs. 60,000 – Rs. 65,000 sales every day. It must be

noted that the sales numbers are calculated at a lower side. The potential of such type of

supermarket sales can go upto Rs. 90,000-125,000 per day within a small period of time.

One should also keep in mind that in such a business it is almost impossible to maintain

an error free inventory. Chances of pilferage and damages increases due to large number

of sizes and variety of products. It is estimated that minimum 1 percent of total cost of

sale will be account for such purpose.

10.2.    Pilferages and Damages

One should also keep in mind that in such a business it is almost impossible to maintain

an error free inventory. Chances of pilferage and damages increases due to large number

of sizes and variety of products. It is estimated that minimum 1 percent of total cost of

sale will be account for such purpose.

10.3.    Days Operational :

The store will have to operate at full operational capacity as possible. It will have to

remain open for all days except gazetted public holidays under compliance with the

Shops and Establishment act.

11.       PROJECT INVESTMENT

S. No.	Description	Cost
1	Capital Cost	50,000,000
2	Working capital/Cash in Hand	4,000000
Total		54,000,000

11.1.    FACILITY REQUIREMENTS

The proposed departmental store requires an area of approx 1500 sq.ft. It is recommended that departmental store should be started at owned place rather on rented premises. However, land & building may be acquired on rent for 8 – 10 years agreement.

1)    Land & Building Requirement

a.     Purchasing & Construction/Renovation Cost

The main investment in this business is of land and building, which is very high due to very expensive land in the proposed locations and high construction cost. The cost of required land will be ranging from Rs.20 million to Rs.25million. In this pre-feasibility the cost of 1500 sq.ft land taken Rs.15.00 million.

Total construction cost of departmental stores for 1500 sq. ft area will be approximately Rs.4.00 million.

b.    Rental Cost

If the required land acquired on rent, it will cost around Rs. 100,000 to Rs. 150,000 per month in different proposed areas of the city.

2)    Area Utilization

Following table shows the covered area requirement for a departmental store:

Description	Sq ft.	Units	Area (Sq ft.)
Administration & Accounts Office	100	1	100
Warehouse	200	1	200
Display/shopping area/Till	1200	1	1200
Total			1,500

3)    Utilities requirement

The necessary utilities are electricity, telephone and water. A three-phase commercial electricity connection is required. At least two telephone connections are required; one solely used for home delivery service calls.

11.2.    ELECTRIC AND OTHER EQUIPMENT REQUIREMENT

Following is the detail of equipment required for this project.

S.#	Description	No. of Units	Cost per unit Rs.	Total Cost Rs.	Availability
1	Split Air Conditioners	4	30,000	180,000	Local
2	Refrigerator and deep freezers*	2	25,000	50,000	Local
3	Computers	2	15,000	30,000	Local
5	Printer	1	10,000	10,000	Local
6	Phone connections	1	3,000	6,000	Local
7	Signboard	1	50,000	50,000	Local
8	Motor cycle with delivery cabin	2	50,000	100,000	Local
9	Electric Fittings and installation			100,000	Local
10	Generator 10 KW	1	85,000	85,000	Local
13	Shelves & Counters			300,000	Local
Total                                                                                                                                                                                Rs.911,000

* Total of 4 refrigerators are required, 2 out of them will be purchased, rest ones can be easily obtained through Beverage & Ice cream companies.

11.3.    HUMAN RESOURCE REQUIREMENT

Skilled salesmen are easily available at competitive wage rates. Number of workers required for each department is given below:

Positions	Number	Salary/month (Rs.)	Annual salary
Store Manager	1	15,000	180,000
Sales persons	10	8,000	960,000
Cashiers	2	10,000	240,000
Helpers/janitors	2	6,000	144,000
Accounts officer	1	10,000	120,000
Security Guard	1	6,000	72,000
Total	17		1,716,000

The staff hired should have in-depth knowledge of all the products so that they are able to provide information if any required by the customers. Special care should be taken in hiring chemist for the medical section. A simple way to overcome this problem is by assigning aisles to the sales staff.

Posted in: ARZANI BACHAT CENTRE PROJECT REPORT