Establishing a Supermarket Essay Example | Topics and Well Written Essays - 2000 words

Establishing a Supermarket - Essay Example As supermarkets buy the products on large scale, they will be able to sell the products at a much lower price than their smaller counter parts by passing the savings they incur by purchasing on a large scale. However, it is important to select a high profit location. The high profit in a supermarket depends on the turnover as the supermarket concentrates on buying and selling the products in large quantities. As per the afore-mentioned aspect, either Melbourne or Sydney is suitable for establishing a supermarket or chain of supermarket stores. The study on the market opportunities in the above two cities will make an entrepreneur to decide on the location. In Melbourne, various stores and services are available in different communities. Clothing stores, baby essentials, luggage world, animals and pets, automotive and mechanical, building and construction, computers and electrical, beauty and fashion, food, liquor, and big shopping sites that offer majority of above-mentioned articles are available community wise. It is necessary to attract the customers from different communities to the new supermarket or the establishment of supermarkets in different communities is necessary. In the first type of supermarket, the new entrant has to compete with large supermarkets like Coles, Westgrath and Woolworths. There are small supermarkets like Aldi in Melbourne that compete with pertinence, though having lesser number of products than Coles, Westgrath and Woolworths. If one wants to open a big supermarket, they have to display about 1, 00,000 products on a single store and it should be spacious and needs to attract customers who spend more and do not bother about the expense of the goods. However, if the entrepreneur wants to attract large number of customers who are economical in nature, chains of business stores like Aldi are necessary. In the afore-mentioned aspect, it is necessary to open chain of stores in various communities. If the entrepreneur is interested in attracting large number of customers who are cost sensitive, it is suggestible to establish chain of small stores having around 10,000 products rather than establishing a big store containing around 1,00,000 products. Establishment of chain of stores needs outlets in different communities of Melbourne. As a result, instead of a single location the entrepreneur has to search about few locations to set up the outlets of the supermarket business. As there are more than 31 communities in Greater Melbourne, it is better to select the communities to identify the locations. In the first step, it is suggestible to select Banyule, Frankston, Glen, Greater Dandenong, Hume, Kingston, Manningham, Monash, Port Philip, Melbourne and Yarra communities to set up the outlets of the supermarket. As the above locations cover almost all the area of Melbourne, it is easier in future to increase the number of outlets and transportation between them. As the stores are small, they can attract middle class and lower middle class people who are cost aware while shopping. 1 Porter's Five Forces Porter's model helps in analyzing threats and opportunities in the business environment faced by the industry. As different industries sustain different levels of profitability, structure of industry explains the difference and maximizing the profitability. 2 The following is the