NMIMS
Global Access
School
for Continuing Education (NGA-SCE)
Course:
Global Retailing
Internal
Assignment Applicable for December 2021 Examination
1. What
strategy did Hindustan Unilever to enter south east Asian countries. Do you
think the strategy will succeed? (10 Marks)
2. How
should Vicco Vajradanti create an amazing display (give an idea for visual
merchandising you are allowed to sketch and show and give a small writeup) on
the US strategy of Vicco inside their stores which will make it stand out? What
is the concept you can think of? (10 Marks)
3. Case
Study Dollar General hatches big plans for store expansion New formats, retail
concepts accompany 1,050 new units planned for 2021 Dollar General didn’t hold
back brick-and-mortar expansion in fiscal 2020, as the dollar store chain
tallied growth of more than 20% in net sales and over 15% in same-store sales
for the year. Also on Thursday, Dollar General Executives said two new store
formats are slated to launch in 2021 and, over the long term, the company
foresees opportunities to double its store count. This year, the
Goodlettsville, Tenn.-based retailer also expects to wrap up phase one of DG
Fresh, its two-year-old program to shift to self-distribution of perishables
and sell more fresh and frozen food in stores. Related: Dollar General to build
first brand-new dual distribution center Dollar General opened 1,000 new stores,
remodeled 1,670 stores, relocated 110 stores and closed 101 units during the 52
weeks ended Jan. 29. Those totals were up across the board from fiscal 2019,
when the deep value retailer opened 975 new locations, remodeled 1,024 units,
relocated 100 units and closed 67 stores. And on the e-commerce side in 2020,
the company stepped up expansion of its click-and-collect service, DG Pickup,
to more than 17,000 stores.
As of
the close of fiscal 2020, Dollar General operated 17,177 stores in 46 states, a
net increase of 899 from 16,278 stores in 44 states in 2019. Its stores are
located within five miles of about 75% of the U.S. population. Related: Dollar
General promotes Emily Taylor to chief merchant At the top line, fiscal 2020
net sales jumped 21.6% to $33.75 billion from $27.75 billion a year earlier,
fueled by a sales lift from new stores and comparable-store sales growth,
Dollar General said. Same-store sales surged by 16.3% year over year,
reflecting a higher average basket size partially offset by decreased customer
traffic. Dollar General noted that changes in shopper behavior triggered by
COVID-19 had a “significant positive effect” on net and same-store sales in
fiscal 2020. Comp-store sales growth reflected net sales gains in the
consumables (+19.7%), seasonal (+25.3%), home products (+37.1%) and apparel
(+24%) categories. The bottom line rose by nearly $1 billion in fiscal 2020.
Full-year net income totaled $2.66 billion, or $10.62 per diluted share, versus
$1.71 billion, or $6.64 per diluted share, in fiscal 2019. Net earnings for
2020 showed no significant change on an adjusted basis, compared with adjusted
net income of $1.74 billion and $6.73 in 2019. Analysts, on average, had
forecast fiscal 2020 adjusted earnings per share of $10.73, with estimates
ranging from $10.59 to $10.93, according to Refinitiv. Dollar General notched
its 31st straight year of same-store sales growth in 2020, according to CEO
Todd Vasos. “In 2020, we celebrated the opening of our 17,000th store and the
launch of our newest store concept, popshelf. In total, we completed a record
2,780 real estate projects during
the
year, exceeding our initial target of 2,580 projects as we continued to build
and strengthen the foundation for future growth,” Vasos told analysts in a
conference call on Thursday. “From a position of strength, we also made
targeted investments in other key areas, including the acceleration of certain
strategic initiatives to strengthen our competitive position and further
differentiate and distance Dollar General from the rest of the discount retail
landscape.” New store concepts on tap For 2021, Dollar General has 2,900 real
estate projects in the pipeline, with plans to open 1,050 new stores, remodel
1,750 stores and relocate 100 stores. That includes two new prototypes that
build on the Dollar General Plus (DGP) and Dollar General Traditional Plus
(DGTP) format, which is larger than traditional Dollar General stores to
accommodate more coolers and freezers for food and beverages. “Similar to our
larger-footprint DGP concept, the first new format has selling space of
approximately 8,500 square feet, which compares to about 7,300 square feet of
selling space for our traditional store. Beginning later this year, this new
format along with our DGP concept will become our base prototype for nearly all
new stores, replacing both our traditional and higher-cooler-count DGTP
formats, allowing for a more optimized assortment and room to accommodate
future growth,” Vasos said in the call. “Our second new format is even larger,
with approximately 9,500 square selling feet and will be deployed
opportunistically across new-store, relocation and remodel opportunities.”
Dollar General began piloting the two new store formats in 2020. “On average,
our DGP and new store formats are outperforming the chain on a comp-sales basis
and have considerably higher sales volumes compared to both the traditional and
DGTP store,
which
bodes well for the future as we look to increase their unit counts in the years
ahead,” said Vasos. Plans call for the first new format and DGP to account for
more than 550 store projects this year, with the second new format earmarked
for over 100 locations, according to Chief Operating Officer Jeff Owen. “With
about 8,500 square feet of selling space, both our first new format and DGP
concept allow for expanded high-capacity cooler counts, an extended queue line
and a broader product assortment including NCI [non-consumables], a larger
health and beauty section, and produce in select stores,” Owen told analysts. “The
second new format consists of about 9,500 square feet of selling space. In
addition to an extended queue line and broader assortment, this larger layout
also includes nearly 50 high-capacity coolers, an expanded produce offering,
fresh meat and additional checkout lanes including a self-checkout bullpen with
multiple stations. “We believe this even larger format better positions us to
meet the growing needs of our customers, particularly in highly underserved
markets,” he explained. “Overall, these larger formats allow us to incorporate
our best and most impactful initiatives and are designed to expand high-growth,
traffic-building categories in a more customer-friendly format, all while
continuing to drive strong returns.” Dovetailing with that are existing
initiatives to boost perishables and home goods. Plans call for Dollar General
to add fresh produce in about 700 stores in 2021, bringing the total number of
stores with that offering to more than 1,800, Owen said. He described the
retailer’s cooler expansion program as its “most impactful merchandising
initiative.” During 2020, the chain added more than 62,000 cooler doors across
its store base, and it expects to install more than 65,000 in 2021.
Dollar
General also plans to expand its Non-Consumables Initiative (NCI), which brings
stores an expanded home section, including home decor, bath, kitchen and party
items. More than 5,800 stores offered the NCI concept at the end of 2020.
“Given our strong performance to date, we plan to expand this offering to about
5,700 additional stores this year, bringing the total number of NCI stores to
more than 11,000 by year-end,” Owen said. Also in 2021, Dollar General aims to
bring its popshelf $5-and-below store format into Dollar General locations as
specialty shops. The company opened the first five popshelf stores in 2020, and
their strong early performance has the retailer speeding up the rollout from an
initially planned 30 stores to 50 stores by the end of 2021. Sized at around
9,000 square feet, popshelf stores offer on-trend seasonal and home décor,
health and beauty care, home cleaning supplies, party goods and entertaining
needs. “We also plan to incorporate this concept in up to 25 Dollar General
stores in 2021,” Owen said. “In terms of our store-within-a-store concept, a
smaller-footprint popshelf shop will be prominently positioned in the center of
the store, and we will display both Dollar General and popshelf branding on
exterior entrances to build and maximize awareness. From these initial stores, our
goal is to test, learn and ultimately expand to more locations over time as we
look to leverage the unique strengths of these complementary formats.” DG Fresh
sees accelerated rollout Under the DG Fresh effort, Dollar General ended up
self-distributing refrigerated and frozen consumables from 10 facilities to
more than 16,000 stores at the end of fiscal 2020, up from its previous
projection of 14,000-plus stores.
“Overall,
we remain well on track to complete our initial rollout across the chain in
2021,” Owen said during the analyst call. “The primary objective of DG Fresh is
to reduce product costs on our frozen and refrigerated items, and we continue
to be very pleased with the product cost savings we are seeing,” he noted. “In
fact, DG Fresh continues to be the largest contributor to the gross margin
benefit we are realizing from higher initial markups on inventory purchases,
and we expect this benefit to grow as we continue to scale this
transformational initiative.” Dollar General plans to open another two DG Fresh
facilities in 2021, and the company expects its combination DG Fresh and dry
distribution center in Blair, Neb., to be completed in late 2022. “Another
important goal of DG Fresh is to increase sales in these categories. We are
pleased with the success we are seeing on this front driven by higher overall
in-stock levels and the introduction of new products in select stores being
serviced by DG Fresh. Given our success to date, we are further accelerating
the rollout of additional offerings with the recent introduction of even more
products, including both national and private brands, as we look to further
optimize our assortment while increasing our relevance with customers,” said
Owen. “And while produce is not included in our initial rollout plans, we
believe DG Fresh provides a potential path forward to expanding our produce
offering to more than 10,000 stores over time as we look to further capitalize
on our extensive self-distribution capabilities,” he added. Over the long term,
Dollar General projects approximately 17,000 new store opportunities across its
formats, including its mainline stores, popshelf outlets and DGX
express/convenience stores.
“We estimate there are now approximately 13,000 additional small-box store
opportunities in the continental U.S. which are available for a Dollar General
store. This compares to our prior estimate of nearly 12,000 opportunities and
is inclusive of our 2021 new unit pipeline,” Owen said. “Although these
opportunities are available to all small-box retailers, as a leader in
small-box retail, combined with our proven track record of new-unit development
and format innovation, we believe we are well-positioned to capture a
disproportionate share.” Dollar General sees about 3,000 additional store opportunities
for popshelf and 1,000 for the roughly 3,500-square-foot DGX format, introduced
in 2017. Owen said these opportunities offer“long runway for new-unit growth”
to Dollar General. “Overall, our real estate pipeline remains robust, and we
are excited about the significant new-store opportunities ahead.”
a. How
has Dollar General, captured part of the US market? What is the strategy?
(5 Marks)
b. What
do you think is the most successful period in a retailer’s life? What steps he
should take to grow and make profits? (5 Marks)
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