As of today, ABC is Sri-Lanka’s largest retailer. The company’s legacy began in the year 1983 and since then it has created great change in the Sri-Lankan Supermarket sector, while being a fierce competitor in the retail trade. Although the super market chain under the ABC (Ceylon)PLC came into being in 1983, The House of ABC was established in 1844.
The year 1981 gave Ceylon Theatres the controlling interest of ABC. Under the new management ABC went to establish their first supermarket at Staple Street, in 1983.The KFC franchise licence was acquired in 1996 and hence has brought KFC into the Sri-Lankan community under the ABC name.
Today the company has entered into a multitude of sections that has uplifted the quality of the Supermarket chain. The processed food, dairy and diversified agri-processing is all housed under the ABC name. The subsidiary companies under are; ABC Foods Company (Pvt)Ltd, ABC Quality Foods Limited, Ceylon Agro Development Company (Pvt)Ltd, ABC Quality Diaries(Pvt)Ltd, ABC Agrifoods Limited, CPC (Lanka)Limited, millers Limited, ABC Quality Confectionaries(Pvt)Ltd, ABC Food Processors(Pvt)Ltd, Milk Holdings PLC and ABC Food Services (Pvt)Ltd.
Millers limited consolidating acquired the marketing and distribution operation in 2008.
“To be a global corporate role model in community- friendly national development.”(ABC,2015)
“Serve the rural community, our customers and all other stakeholders, through our core business- food with love- and other related businesses, based on the three main principles of
- Reducing the cost of living
- Enhancing youth skills
- Bridging regional disparity
by enhancing local and global markets.” (ABC, 2015)
CURRENT PRODUCTS AND SUPPLIES
I am narrowing down the subject of ABC Ceylon (PLC) to focus more on their retail sector, i.e the supermarket chain. The business has a committed operation of obtaining new deliver from small scale farmers which cover 13 accumulation centres for sourcing organic product, vegetables and fish. The framework incorporates two main preparing units and a 24-hour dispersion operation for housing the cold- chain over the esteem chain. The dry products distribution centre is a different operation while coordinate store conveyances are likewise done by chosen providers. As at March 31, 2016 297 ABC Super market outlets are operational over each of the 25 areas of Sri-Lanka.
The dairy and agro-food sold at CFC outlets are from the in-company units of food processing and so are the meat products. Along with in house brands of Milk, Sause and ABC international and other reputed local brands of consumer choice are readily available for sale.
CURRENT MARKET POSITION
The Retail business was tested beforehand for irregularity in financial strategy that hosed the general shopper condition, which made a solid turnaround in the latter days of the financial year. Likewise, the division enlisted a turnover development of 13.2% over a year ago to achieve Rs. 55.9 Billion as at March 31st, 2016. EBIT accomplished a development of 80% at Rs.1.7 Billion mirroring the solid measures taken to improve profitability and effectiveness in the general retail operation. The authority of the business is driving stringent gauges on front-end and back-end expectations covering value, administration, quality and accessibility which keep on moving the operation the correct way. The section benefit after duty was Rs.770.6 Million contrasted with Rs.46 Million in 2014/15. The current market position places ABCas the most profitable supermarket chain island wide with the staggering profits stated above. (PLC, 2015)
ABC Super markets operate in 3 scales as Express, Food city and Big city.
There exists increased competition in the retail industry with the entrance of new supermarket chains. The main competitor for ABC in the existing market is from DEF supermarkets by ABC. The major competitors are as follows;
- DEF super – main competitor incorporates similar strategies and similar product collection.
- GHI Super Centre – large premises and follows the concept of everything under one roof. Parking facilities abundantly available. Competitor to Big City (ABC)
- JKL Super markets – competitive with ABC express supermarkets.
- MNO- Government funded. Budget friendly.
ANALYSIS OF INTERNAL FACTORS OF THE ORGANIZATION
The analysis of the internal environment of ABC is carried out to identify the strategic functionality of the current practices. Hence, a SWOT analysis is carried out. This identifies the strengths, weaknesses, opportunities and threats integral for the company.
To investigate on the operations within the organization in the process of delivering a valuable service to the customers, value chain is analysed.
- Firm Infrastructure
Island wide supermarket network-297 stores in 24 districts, socio centric enterprise, serving over millions of customers monthly
- Human resource Management
Provision of employments to over 300 employees annually, Supporting small scale farmers by purchasing from them
Encouraging and supporting small scale famers
- Technology development
Adhering to latest technologies, Have their own IT departments
Purchasing of fruits, vegetables and meat from vendors
ANALYSIS OF EXTERNAL FACTORS AFFECTING THE ORGANISATION
Economical macro factors are crucial to any firm. The external factors that cannot be taken under the control of the firm have to be analysed using the PESTEL and porters five forces models. These positions the external factors hold determine the effectiveness of the company strategies.
- Government regulations of food and transport logistics
- Fluctuations in VAT and high cost for good delivery from farms to the warehouses.
- Fluctuations in pricing of goods
- High taxes on imports
- Inflation and economical condition of customers
- Supplier economics
- Organic products are of prime consumer focus
- Advertising campaigns and social media
- Technological use in pricing and operation handling
- Online marketing
- Home delivery
- Barcode and billing
- Eco-friendly business protocols
- Climate changes
- High level of organic food consumption
- Quality certification
- Food safety Acts
- Laws governing franchise and consumers
PORTERS FIVE FORCES.
The threat of new market entrants for ABC is extremely high due to leading supermarket chains and companies expanding into the retail business. But the company maintains an effective strategy and develops it to maintain the market prominence. The bargaining power of suppliers is low due to the diversified chain of suppliers who supply a multitude of goods. Although, Millers were the main supplier for CFC after the acquisition of Millers by ABC Ceylon (PLC) in 2008, the bargaining power was further diminished. Customer bargaining power is reduced with introduction of discounts and price reductions and the concept of best buys. The loyalty programme has helped in customer bargaining power reduction. The threat of substitutes is low due to the low quality of substitute products and low market accessibility. The brand loyalty of ABC promotes the lowering of substitute threats. Among all this the industrial rivalry for ABC is high but being the market forerunner for over 26 years has provided competitive advantage.
Bargaining power of suppliers
Bargaining power of buyers
Threat of entry
Threat of substitution
The company strategy helps in achieving the competitive advantage to deliver the value to its customers. The operation is designed in a streamline manner removing additional and unnecessary overheads. It has already reduced their costs to level with the economic standard of the general public and uses the company resources to an optimum. ABC Ceylon (PLC) has strategically designed the super market chain for ease of customers and taking into account the logistics of the area located. It has 3 sectors of super market as Food City, Express and Big City. Food city mainly focus on middle scale super market for food and grocery items, whereas Big City outlets provide everything under one roof services and ample parking. As the name suggests Big City outlets are for leisure and spacious shopping. The mini scale super markets go under Express. The collection of necessary items of everyday buy, are available in these.
When looking into Queue management techniques already in use at we see a wide variety of them are already used in the Sri-Lankan supermarket sector. The use of billing counters and the long lines of customers waiting to check out their carts are a common sight at any supermarket. During festive season the length of these queues are extensive and the sales personnel work extra hard. The customers usually prefer supermarkets with fewer crowds and hence reduce waiting time at queues, one of the main factors affecting customer retention. The main issue for extended waiting time is the delay in human assisted billing. Every one of us has been at one of these queues at least once in our lifetime and the extensive waiting hours are killing. Hence reduction of queue waiting time should be carried out. The counters at ABC food cities located island wide not only carry out item billing but also payment of electricity, telephone and other service bills. When looking into the customers at these queues we see that everyone does not hold the same number of items, some push around carts filled with grocery items and others have a less number of items. Hence, the problems identified for this project are;
- Item checkout along with payment of service bills.
- Need for minimizing queue waiting time.
The customer waiting time affects the customer retention of a business especially in the retail industry. To carry out the day today tasks of the competitive lifestyle speed in getting things done is important. Hence, customers at a supermarket demands fast checkout rather than waste time at queues. With the advancing competitiveness in the retail industry and market competitors acquiring new technology it is essential to seek better technological strategy to keep up.
When one customer spends more than 5-6 minutes at a counter waiting to check out the items, those at the end of the queue will be stagnant for more than half an hour depending on the length of the queue. Especially the customers who require to checkout few items find this an irritable situation. Thus, they tend to seek places with less crowd and fast check out. The ABCoutlets have an express counter which checks out less than five items. This reduces the waiting time for customers checking out few items. But this is not a feasible solution for those who are willing to pay service bills along with item checkout.
This tarnishes the goodwill of the organisation and hence the reputation. Further, this causes a decrease in the loyalty customer base and attraction of customers for more efficient convenient stores.
The proposed technological solution addresses the above two issues by the introduction of kiosk machines for payment of service and other bills.
The proposed technological solution addresses the above two issues by the introduction of kiosk self -payment machines where customers can pay their service bills.
The proposed technological solution involves the introduction of a minimum of one bill payment machine per major outlet. Although this is used in Sri Lanka it is still a novel concept and no major supermarket offers this facility as of yet.
The self-bill payment machines are equipped with a touchscreen which allows the customer to select the services which require payment. It has a cash administration unit and with the successful payment a receipt is printed at request.
The impact of the self-billing counters is analysed as below:
- Reduces the waiting time at queues.
- Reduction of labour costs.
- Real-time database uploads and monetary issues are minimized.
- Detection of fraud is possible.
- Minimum downtime at cashier points.
- Self-bill payment machines are smaller in size than traditional counters. Hence, saves floor area.
- Can employ tri-language settings for customer preference.
- Due novelty of the technology familiarization takes time.
- Maintenance for reliability and accuracy is required.
- High initial IT cost.
- Customers may not prefer the state of art technology over traditional cashier staffed counters.
- Requires a high capital investment in acquiring the machines.
The required resources necessary to introduce the self-bill payment techniques for queue management in CFC super markets are of both technological and human oriented in nature.
The technological requirements involved the usage of real-time database systems and LAN connections. The IT support along with backup power supply is required.
Moreover, the human resource is necessary to understand the functioning procedure of the system and for system maintenance. Store floor area is required for installation purposes.
Although sourcing this externally seems like a feasible solution with the expansion of Pay & Go Kiosk machines in Sri-Lanka, ABC Ceylon (PLC) has a functional IT department. The company has plans for investing in development of its IT infrastructure hence sourcing it internally is more profitable. The company itself acquiring these machines avoids them from paying a rental to the external companies and in house maintenance can be carried out with trained employees. Although these can be reduced by external sourcing it reduces the competitive advantage of the company. Hence, to retain competitive advantage and due to sufficient budget internal sourcing is more fruitful.
The Following is the NPV value and ROI per outlet according to the proposed technological plan per outlet;
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Total Cash Outflow||(205,000)||(20,000)||(20,000)||(20,000)||(20,000)||(20,000)|
|Increment in Revenue||200,000||220,000||225,500||226,000||231,150|
|Savings from Productivity||60,000||50,000||50,000||50,000||50,000|
|Total Cash Inflow||–||260,000||270,000||275,000||276,000||281,150|
|Net Cash Flow||(205,000)||240,000||250,000||255,000||256,000||261,150|
|DCF Rate 12%||1.00||0.89||0.80||0.71||0.64||0.57|
|PV of Cash Flows||(205,000)||213,600||200,000||181,050||163,840||148,855.5|
|Net Cash Flow||(205,000)||240,000||250,000||255,000||256,000||261,150|
|Cumulative Cash Flow||(205,000)||35,000||285,000||540,000||796,000||1057,150|
|PV of Cash Inflows||979,545.5|
|Net Cash Flow||1057,150|
|Project Title||Self-bill payment for ABC Super Markets||Start Date||31/01/2018||End Date||30/04/2018|
|Project Plan||Introduction of self-bill payment /Kiosk machines to major ABCoutlets|
Trial run with the IT staff and service officers
Implementation of the self -bill payment system to the customers
|Project Scope||Queue management to minimize customer waiting time at counters and express payments.|
|Risk Analysis||High initial cost|
Cashier staff dependent nature of customers
|The estimated budget is: LKR 132,00 per outlet|
Budget per outlet;
|Self -payment machine -purchasing cost||LKR 120,000|
|Contingency (5% of cost)||LKR 12,000|
|Total Estimated Cost||LKR 132,000|
In order to sum up the main purpose behind this research was to develop a technological solution for the queue management of ABC outlets. The minimizing of queue waiting time due to bill payment at was considered and self-bill payment units were introduced as a feasible solution.
Thus, this will provide a very high ROI for an initial investment
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