FoodWorld Supermarkets

Early Returns

During the first three weeks of operation, 36,000 customers visited the new store. Sales volume and gross margins by the end of the month exceeded pro forma estimates. (Refer to Exhibit 6, Results from the First Two Months.) Some manufacturers and suppliers were showing a willingness to be creative and innovative, even to the point of discussing the implications of a changed relationship derived from dealing with a large chain of stores.

Bolstered by this response, Spencers' executives were eager to proceed with the continuing rollout of the FoodWorld stores. The basic offering, they realized, was strong as was the broad product offering. Sales and margins were beyond expectations. The results from one store, however, were not enough to validate their initial assumptions and conclusions. Another two stores in Madras were already in the pipeline for August openings, and plans were in place for a fourth. A similar rollout scheduled for late fall and early winter in Bangalore would provide a much more meaningful picture and give more direction in determining what adjustments they would have to make to the formula.

David Wylie, Babson College

Prepared under the supervision of Professor Nirmalya Kumar, International Institute for Management Development.

Copyright © 1996 by IMD—International Institute for Management Development, Lausanne, Switzerland. Not to be used or reproduced without written permission directly from IMD.