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Zegema Retail: Space Planning

CASE STUDY, OPERATIONS MANAGEMENT
ET Cases, 10 Pages
AUTHOR(S) : Abhilash G. Nambudiri, Rajagiri School of Management

Case Preview

Zegema Retail: Space Planning

 

“Retail space-planning process is like a wild goose chase with logics woven through a large number of variables perpetually hunting for THE BEST alternative.”

– Shweta Deora (Deora), Head – Space Planning, Zegema Retail Ltd



It was a fine Saturday morning in Kolkata. Deora looked at the calendar as she sipped her favorite filter coffee. It was 7th of July, she had exactly ten days in which to create a comprehensive spaceplanning document for Avishar store and hand it over to their merchandising team for the launch.

Avishar was earmarked to be Zegema’s flagship store in Kolkata. Zegema was the organized retail business unit of AB Group, one of India’s largest business conglomerates, which branched out into the retail sector, the power sector, carbon black and tyres, education, the entertainment industry, infrastructure and hospitality, and IT services. AB Group of companies founded in the year 1979 was generally considered as an orthodox family-run business. In the year 2005 with the death of its founder,the second generation (founder’s sons) of the family stepped into key positions. Since then, the groupas whole became more aggressive in all its business concerns. This was further reinforced at the top level when the management indicted fresh talents from elite Indian business schools in the year 2006. Twenty graduates were picked from prestigious institutions like the IIMs (Indian Institute of Management), XLRI (Xavier’s Labour Research Institute, Jamshedpur), MDI (Management Development Institute, Gurgaon) and ISB (Indian School of Business, Hyderabad)............

Zegema Retail Ltd

In 2007, Zegema already had over four years of history in the food retail industry with a good presence in southern India. With over 22,500 square meters of trading area spread over Tamilnadu, Kerala and Andhra Pradesh, it was one of the first organized retail chains in India. Zegema came into being after exiting from its earlier joint venture with a Swiss company, Food Mart. Zegema was the new brand name for the retail chain after the split and Kolkata-based AB Group took control of the chain. Zegema began operations as a retail chain in the early 1990s in Southern India. Stores were largely set up in one of 2 formats. Convenience stores, called Zegema’s and Hypermarkets, called Zegema’s Hyper. Since then it had grown in footprint across various states in India by systematic addition of stores in different cities. Entire growth of Zegema was been organic in nature. All stores were on leased properties under long term lease by Zegema retail..........

Genral Issues with Merchandising

Zegema’s merchandising was based on the cascade model of SKU classification (Exhibit I). The classifications were Segment, Family, Class, and finally Brick, with Brick being a subset of Class, Class being a subset of Family, and Family being a subset of Segment. Finally, all SKUs were attached to any of the Bricks. There were separate teams to take care of merchandising activities for each Family. In some cases, where the number of SKUs attached to any particular Family became unmanageable or the number of vendors under any Family became unmanageable by a single merchandiser, that Family was split into two................

Infrastructure Availability at Zegema

Zegema used various types of structures inside their stores. They had wall-mounted heavy-duty racks with seven or more shelves (L-type). Then there were the self-supported six-shelved racks (A-type), and the End Cap racks with seven shelves (EC-type). Both the A & EC types were similar with just the widths differing. The EC type was 1.2 m in width while the A&L types were 1.5 m in width. The EC type had extra wood panels on the sides and at the top to make the rack-ends look attractive. All the racks were 0.45 m deep........

Space Allocation at Avishar

Avishar store had an overall trading area of 490 square meter. Zegema wanted to create an impression of a food-first retail unit in the minds of consumers. Hence, families like FMCG-food, staples, fruits and vegetables were given more priority in the store. The rule of thumb was to have an average of 10 SKUs per shelf and assume 7 shelves per rack. This was widely criticized for the fact that it failed to identify the intricacies of different families of merchandise.........

Planogram and Planogramming

Primary logic and information used for planogramming came from Zegema’s catchment analysis. Store staff gathered data about general consumer behavior pertaining to shopping from a modern retail outlet from families residing within a 5 km radius around the store. They found that most of the monthly groceries and other shopping happened in the first week of the month, and initial shopping was a family purchase event with both husband and wife coming to the store.............

Assignment Questions

I. What should be the in-shelf stock quantity of tata salt 1 kg?
II. What should be the resource allocation for different categories/families of SKUs? Substantiate your answer with sound logic for the allocation process.
III. Submit a store layout after the space allocation plan. Substantiate your layout with sound logic of allotting a specified space for a particular category/family
IV..............

Exhibits

Exhibit I: Cascade Model of SKU Classification

Exhibit II: Availability of Racks and Other Structures Across Different Formats

Exhibit III: Inventory Norms for Categories

Exhibit IV: The Store Layout and Associated Structures for Avishar Super Store of Zegema

Teaching Note Preview

Zegema Retail: Space Planning

 

Synopsis

This case provides an opportunity for the participants to get hand-on experience designing a space plan and planogram for a medium sized modern retail outlet (360 to 540 square meters). This case details the practical difficulties encountered while attempting to do space planning in a modern retail outlet. Dilemma of space allocation between categories, logics & processes of creation of planograms, process of implementation of planograms, debates of standardization vs customization of store layout & rack allocation, etc. are the areas which this case discusses. The real-time data made available as downloadable excel file will give an opportunity for the participants to keep playing with data and arrive at many interesting possibilities of space plans and planograms.

Learning Objectives

The objective of this case is to give a near-actual experience to the participant in creating space-plan and planogram of a modern retail outlet. This case also intends to discuss and debate the logics considered for logistic planning along with its implication on space planning process. This case will give an integrated perspective to the participants about the complexities of space planning process and the interconnectedness of space planning process to other verticals of retail industry.

Case Positioning and Setting

This case is ideally to be discussed during the middle of Retail Management course. This case requires the participants to be accustomed to the retail terminologies like Stock Keeping Unit (SKU),Distribution Centre (DC), etc. Hence it is recommended to use this case in the middle segments of the Retail Management course.

Prerequisite Conceptual Understanding

The participants should have an understanding of the concepts of merchandising and retail operations before this case is taken for the discussion in class with the help of the following chapter:

  • • Chapter 17 - Store Layout, Design, and Visual Merchandising; Retailing Management (8e), Michael Levy, Barton A. Weitz & Ajay Pandit, McGraw Hill Education (India) Private Limited.
 
Assignment Questions

I. What should be the in-shelf stock quantity of tata salt 1 kg?
II. What should be the resource allocation for different categories/families of SKUs? Substantiate your answer with sound logic for the allocation process.
III..................

...................................




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Abstract

This case provides an opportunity for the participants to get hand-on experience designing a space plan and planogram for a medium sized modern retail outlet (360 to 540 square meters). This case details the practical difficulties encountered while attempting to do space planning in a modern retail outlet. Dilemma of space allocation between categories, logics & processes of creation of planograms, process of implementation of planograms, debates of standardizationvs customization of store layout & rack allocation, etc. are the areas which this case discusses. The real-time data made available as downloadable excel file will give an opportunity for theparticipants to keep playing with data and arrive at many interesting possibilities of space plans and planograms.


Pedagogical Objectives

The objective of this case is to give a near-actual experience to the participant in creating space-plan and planogram of a modern retail outlet. This case also intends to discuss and debate the logics considered for logistic planning along with its implication on space planning process. This case will give an integrated perspective to the participants about the complexities of space planning process and the interconnectedness of space planning process to other verticals of retail industry.

Case Positioning and Setting

This case is ideally to be discussed during the middle of Retail Management course. This case requires the participants to be accustomed to the retail terminologies like Stock Keeping Unit (SKU), Distribution Centre (DC), etc. Hence it is recommended to use this case in the middle segments of the Retail Management course.



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