Asper Chocolates Management

Retail and Channel Management - 118.331

Fall 2005

Group Project "Asper Chocolates"

Group Members:

Virginie Feroul 6835756

Clarence Jonker 6806414

Janine Mertens 6835330

Erik Roehrdanz 6835835

Stephanie Wladyka 6784754

Table of Contents

1. Description of the Type of Retailer 3

2. Location Strategy, Store Layout, and Markdown Policy 4

2.1 Location Strategy 4

2.2 Store Layout and Markdown Policy 4

3. Estimated Total Sales and Profits 8

3.1 Estimated total sales 8

3.2 Estimated total profits 10

4. Planned Inventory Levels and Stock-to-Sales Ratio 11

5. Promotional Tactics 13

6. Staffing 16

7. Store Operating Costs and Rent 17

8. Weekly Pro-Forma Income Statements 18

References 19

Appendices 20

Appendix 1. Kildonan place mall information 20

Appendix 2. Interview with Rocky Mountain and Laura Secord in St. Vital 21

1. Description of the Type of Retailer

Asper Chocolates is a retail chain of higher end chocolate stores selling a variety of chocolates, and chocolate related items. Our mission statement is:

To consistently exceed customers needs of selection, quality and superior service, in an enjoyable and comfortable environment.

All stores are located in malls, and have the same operating procedures, so for simplicity we will focus on one store located in Izzy Mall, Winnipeg.

In order to keep products consistent, we have adopted central distribution points. All chocolate items are made here, and shipped out to our different stores. Since most of our customers are individuals, their needs change on an ongoing basis and require different chocolate types. Corporate clients, who are a small percentage of our sales only order our highly standardized boxes of chocolates. This is the only product we stock in large quantities, due to the fact that corporate clients, as well as individual customers buy these products regularly. For simplicity we will focus only on individual customers. The remainder of our product line changes with the seasons. With the upcoming christmas season, these include christmas gift packages, as well as individual chocolate items available for individual consumption and for customers with special needs, e.g. dietary chocolates.

The outcome we have set as a goal is to research and forecast changes our store will go through in the time frame from November 16th till December 24th, 2005. This requires in depth analysis of advertising efforts, previous year customer trends, target markets, and types of merchandise.

2. Location Strategy, Store Layout, and Markdown Policy

2.1 Location Strategy

We chose to locate in Izzy Mall, a mall similar to Kildonan Place for several reasons. Growing local population will encourage long-term growth. Furthermore, complimenting stores such as jewelry and candy stores create a synergy, which drives more sales. Finally, since we are not a destination store mall traffic is desirable. Since chocolate sales are mostly impulse buys we are not considered a destination good. For this reason, high traffic areas are preferable and their increased cost can be justified. Without locating here, product would not move well at all. Depending on the mall layout, high foot traffic usually occurs by the food court, or close to centre court. Stores located in far reaches of the mall, or on upper levels are harder to access and are not a good fit for our product.

Other options we have analyzed are airports, resorts and store-within a store. The high cost of airports due to higher wages and higher rents do not have a high enough benefit trade-off to make it more profitable then a regular mall location. For a company like Tim Horton's where they can establish a store for brand name recognition it may be a smart strategic move. However our chain of stores is not large enough to receive enough benefit from such a strategy. Resorts do not offer much of a demand for chocolates. Finally a store-within a store is not feasible, due to the fact that most stores with high enough foot traffic sell many different varieties of chocolates for lower prices.

2.2 Store Layout and Markdown Policy

Based on interviews and observing existing chocolate stores we decided our chocolate store to have a total floor area of 600 square feet. Due to the fact that a display window constricts access to our store, we are not able to have this benefit. We will focus our attention on the right hand wall, which will be the substitute for our display window. Here we will showcase our products. Without a theme, a display is not effective. For that reason, in the upcoming Christmas season the theme portrayed will help the customer to see the benefit to buying chocolate for Christmas. An example is a poster of happy families receiving chocolate or a happy couple giving chocolates et cetera.

The back of the store will have our standardized 'staple' products, so that the customer will need to walk past all of our displaid

merchandise. By walking past the displaid

merchandise, we hope to catch the attention of the consumer, create interest and make them desire to purchase the product.

Lighting is bright, to create a cheerful atmosphere. Bright lighting also makes products stand out and increases overall sales. The cash register and counter is located at the front of the store on the left hand side. Our store