Introduction to Food Industry
The retail sector in UK is booming with new and existing stores expanding and bringing in new products and services to attract customers. Regardless of the increasing size of the industry the market still presents opportunities for unique products and concepts. Thus starting a new supermarket food store in organic category is a great opportunity.
A revolution is started in the food industry with the introduction of Organic Food. The reason it is becoming popular is the change occurred in the choice of food. Back in the 1960's, the Green revolution started at the industrial scale that involves use of large amount of pesticides and fertilizers to produce massive crops. But the resultant consequences of pesticides have turned out in the form of diseases and negative health effects. People and governments have realised the necessity to reduce the impacts of unhealthy food and thus have now started focusing on organic farming that produces food in health and chemical free environment. The food is pesticide free and have sustainable and health benefits. But still, there is lack of wider availability of organic food in terms of variety and quantity. The market presents huge scope and an opportunity to procure food and make them available for the people. Moreover there is also increasing demand for food product of Asian and Middle east specially in Non vegetarian category (Anderson and Khedair, 2009).
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It has been planned to open a supermarket in the city centre of Cardiff, Wales. The food variety includes Asian, Indian, Chinese and Arabian foods in both vegetarian and non-vegetarian categories. The objective of the business is to procure organic food from different suppliers and make them available through physical and online means. In the category of non-vegetarian food for which all these above nations are best known the supermarket will provide raw materials and spices. The procurement plan for food includes that certain health standards will be established to ensure that non vegetarian food maintains its health and nutrition benefits. Further, the plan also includes availability of food through online website so that people in other cities can also avail the benefit.
For first one year, the product variety and quantity will be limited to judge the customer response and will move accordingly.
Products and Services
All finished and unfinished food products of Asian, Indian, Chinese and Arabian cuisines in both veg and non-veg category will be made available through physical and online means. It includes spices, ingredients, ready to cook, crops and vegetables. The non-vegetarian category includes meat, chicken, pork, shrimps, fish and oyster. Furthermore, the non-vegetarian category includes both halal and non halal.
Start up capital
The establishment of physical store and website development requires substantial investment which will be contributed through personal savings and bank loan.
Total estimated investment - £2,500,000
Owner contribution - £1,500,000
Bank loan - £1,000,000
Registration Of Business
The business will be registered as private limited company. However, the registration process can be done online by depositing fees of £15 and necessary documents with the companies house. The following information and documents will be required -
- Name and address of the company
- At least one director
- At least one shareholder
- Articles of Association - It includes the objective, nature, duties and responsibilities of the members.
- Memorandum of Association – This is an agreement signed by the initial shareholders that confirm their agreement for the company formation.
Register for Corporate Tax
For this purpose, information about the company will be submitted to HM revenue and Customs (HMRC) within the three month duration of starting the business. The company registration with Companies house will provide unique taxpayer reference (UTR) which needs to be submitted online to HMRC. The following information needs to be submitted with HMRC:
- Date of business establishment
- Name and register number of company
- Company address
- Objective and nature of business
- Financial year to be followed
Register for VAT
The registration of VAT is necessary as it has been estimated that business turnover will be more than £82,000. The registration process can be done online and required information can be submitted with HMRC. The other way to register for VAT is to appointment an agent who will submit the VAT Returns and deal with HMRC on company's behalf. HMRC will send a VAT certificate and VAT number. The registration is compulsory because -
- Taxable turnover of the business is expected to be more than £82,000.
- The stock will be received in the UK from the European Union regions valuing more than £82,000.
There is also a provision for exception in VAT if taxable turnover reach above £82,000 on temporary basis. In that case, an application can be submitted to HMRC mentioning that VAT taxable turnover will not go above £82,000 in the next 12 months.
The business will require a licence as it involves operations regarding selling of food products. the business will be required to contact the local council for registration purpose and obtaining a valid license that approves the premises and functions undertaken therein.
The business will require to find suppliers that can supply foods products in desired standards. There are two options available to procure food -
- From the suppliers who are specialised in food products of multiple cultures the supermarket deals in.
- Alternatively, it can also procure food products from suppliers who are specialised with individual cultures.
Size and Growth of Market
At present there are 26 major supermarket chains operating in UK. out of these 10 are present in Cardiff city. All the 10 supermarket brands offer multiple products through physical and online channels. The interesting thing is that none of the major food supermarkets have any presence in Cardiff. Thus it means there is an untapped market offering huge opportunity for global foods.
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According to IGD, the growth in UK grocery market is expected to grow by 16.3% to £203bn. The share of hypermarkets and superstores is estimated to be worth £70bn by 2019 accounting for 35% of the total grocery market (Gladding, 2014).
The IGD research in the grocery market also revealed exciting growth opportunities with the fact that all three channels i.e. online, discount and convenience will have more than 105% of growth in the next 4 years. Another opportunity lies in the online channels which is considered as the fastest growing among the all three and is estimated to double by 2019 (Jones and Penaluna, 2013).
Approach to Market
The business plan includes selling food products from both channels i.e. physical store and online means. It is recommended to procure and sell organic food products from both the channels. This helps to focus on one single category and increase the product quality. The food category includes both vegetarian and non-vegetarian products. Moreover the vegetarian category includes only organic food. Thus market segmentation can be done on the basis of behaviour of customers that includes choice of food. Thus with the select category the business can provide service to mass consumers (The food people, 2014).
For online services, the business needs to tie-up with local logistics providers who can deliver goods in other cities. The organisation requires entering into strategic partnership with at least two logistics providers who can provide services for paid and CODDING orders.
Risk involved in the business
The business plan aims to deal with goods that are perishable in nature. Thus it is important to identify suppliers who can supply quality products with proper storage and transportation facilities. The business aims to sell grocery products of multiple cultures that may not be available in UK. It is thus recommended to search for suppliers from the Asian countries that can transport quality products to UK. It is important here to develop standard of food supply so that quality is maintained for long time (Alexander, 2008).
The plan is to supply food products from exclusive cultures that are not easily available in UK. This will helps to gain competitive advantage in the market as the brand will have exclusive food products in both veg and non-veg category.
Online Website Development
Features of full e-commerce site with shopping cart and offline plus online payment facilities, The admin area includes full management from the back end that allows to input and modify stock information along with changing prices and inventory levels. The home delivery will be available for minimum order of £20.
Store and online operation
- Store Manager - An experienced and professional manager will be appointed to oversee the operations of the store.
- Cashier - An experienced cashier will be appointed to handle and mange sales orders at the supermarket store.
- Sales team - A sales team of 4 people working under the store manager will be appointed to check the availability of inventory at the physical and online store.
- Admin - The online operations will be handled by the admin who ensure that input and up-dation of stock and prices and order management.
- Website Management - An additional staff will also be working with the online admin who will handle issues related with website.
- Customer Services - A customer services employee will handle customer queries and complaint through phone and email for both physical and online store.
- Marketing - A professional and experienced marketing and sales employee will be recruited who will for marketing and advertising for both the channels.
- Segmentation - The customers are segmented on the basis of income and culture. the business plan is to target customer in low and middle income range. The brand will target local customer and nearby cities in physical and online services. Thus the target customer will be people belonging and attracted towards Asian and Middle East cuisines (Ceretta and Scherer, 2003).
- Positioning - The products will be positioned in two different ways based on the vegetarian and non-vegetarian category. In the vegetarian category, it will feature organic food products if multiple cuisines. While in the non-veg category, it will feature halal and non halal meat products (Miranda and Kónya, 2008).
- Pricing - The products will be offers at discounted range to attract customer. The brand will offer discounts on the basis of order value and membership for the whole year. This helps to attract customers in and also analyse the supply of raw material on the basis of membership (Alexander, 2008).
- Promotion and Advertising - For the physical store, it is planned to advertise through local newspapers that ensure the mass reach in local market.
- For the online store the marketing and advertising plans
- It will use Google ad words, affiliate marketing, pay per click and social networking sites.
- The organisation will advertise aggressively through online channels as they consume less time and cost in comparison with traditional mediums. The online mediums reach more fastly to people outside the cities and generate online sales.
- Moreover the online advertising also attracts suppliers from local and outside market.
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Financial forecast is done taking into consideration the different factors related with growth and development of grocery market in UK and Cardiff and number of competitors.
- It has been estimated that sales will grow by more than 125% on yearly basis.
- The online sales will grow higher than the store sales
- website orders will be handled and managed for all week days.
- It has been decided to purchase the store and rent an additional space for inventory storage.
- An online website will be developed by professional developers to ensure quality and customisation.
- The website domain will be purchased and renewed every year.
- The logo for the website will be designed with a professional service provider.
- The website hosting will be purchased and renewed every year of the basis of usage.
- The website will be connected with a trusted online payment service provider for prepaid orders.
- For the first year, the expenses exceed the income earned and thus no taxes are paid.
- For the second year taxes are paid at the rate of 20% of profit.
- The miscellaneous expense and interest amount will also increase in line with the business operations.
- It has been planned to appoint a team of 10 employees for the first three years. the employee will be entitle to salary hike of 10% each year.
- The employees will be insured under the National Saving Scheme.
- The business will purchase machinery and furniture for physical and online store.
- Ceretta, P. and Scherer, F., 2003. Recent Performance of Large Brazilian Supermarket Chains.Latin American Business Review.
- Jones, C and Penaluna, A., 2013. Moving Beyond the Business Plan in Enterprise Education. Education + Training.
- Miranda, M. and Kónya, L., 2008. Are supermarket shoppers attracted to specialty merchandise rewards?.Mrkting Intelligence & Plan.
- Anderson, M. and Khedair, J., 2009. Successful Business Plans: Get Brilliant Results Fast. Crimson Publishing, Limited.
- Alexander, A., 2008. Format development and retail change: supermarket retailing and the London Co-operative Society.Business Hist.