The hypermarket sector in UAE has been considerably been affected by the strategies developed and functioning of the LuLu hypermarket. The LuLu hypermarket has been leading the market of the retail chains in UAE. The marketing and the business strategies adopted by the company is responsible for the success and popularity of the company in the global market.
The high performance of the employees, effective forms of ownership and the utilization of the current trends seen in the market has been carried by LuLu hypermarket. Marketing plan developed by them has been studied and it has provided an in-depth view of the environmental impact that the LuLu hypermarket is having through adaptation of sustainable measures in the market. The marketing mix and other marketing strategies adopted by the LuLu hypermarket are evaluated and it is observed that they have been very innovative and have strived to achieve environmental sustainability in the global market. They have adopted many strategies and measures for the development of the people in the society.
The management of the LuLu hypermarket has been very trained accordingly to provide best possible marketing and business plan for the operations. The projected cash flows and the profitability of the company in the market has also been developed. There are many entrepreneurship opportunities provided by the LuLu hypermarket through strategic alliances and a suitable time for the harvest strategy is determined during the product life cycle in the market.
Table of Contents
Executive Summary 1
Business Description 4
Statement on Sustainability 5
Performance Measures 5
Forms of Ownership and Market Analysis 7
Marketing Research and Analysis 7
Target Market Segment Strategy 8
Market Size, Trends and Competitive Analysis 9
Marketing Plan and Estimated Market Share 10
Market Strategy – Marketing mix: 10
Place: Sales and Distribution 10
Promotions and Advertising 11
Section V: Operations 11
Location and Facilities 12
Driving forces behind the business 13
Ethics and Social Responsibility: Doing the Right Things 13
Creativity and Innovation: Keys to entrepreneurial Success 13
Section VI: Sustainable Development Measures of Performance 14
Management Team 15
Business Plan 15
Organizational Structure 16
Section VIII: FinancialStart-up Funding 17
Break-Even Analysis 17
Projected cost, Profit and Loss 18
Projected Cash Flows 19
Section IX: Critical Risks 19
Harvest Strategy 22
Strategic Management and Entrepreneurship 23
Strategy Alliances 23
With the advancement in technology and continuous up gradation of the products has contributed to the increasing demands of the customers across the globe. There are a large number of small firms which hare being developed owing to the large scope and potential in these international markets. Due to this, there is a cut throat competition developed among the companies as they all strive for acquiring a considerable share in the global market.
For sustaining of their business there are many business strategies developed by these small firms. These business strategies involve the marketing strategies, business plan and model development, market share, establishing driving forces, managing the cash and material flows, harvest strategy and profitability. There is an extensive research carried out for the development of these strategies through evaluation of the market and other factors, developing strategies for them and then implementing them after checking its feasibility for the market (Vel, Dayal, & Eastaugh, 2010).
The strategies and the structure developed by the LuLu Hypermarket in UAE has been discussed in the report. LuLu Hypermarket, started as a small chain in the established channel of LuLu Group International. LuLu hyper market was established in 2000, with M. A. Yousuf Ali as the managing director in the beginning. It has been expanding tremendously since then, where today, it comprises of more than 118 outlets in the GCC (Gulf Cooperation Council) countries alone. The outlets of the LuLu Hypermarket chain has currently been employing more than 35,600 employees which belong to different nations and are working efficiently in the firm due to the friendly policies and employees schemes developed by the LuLu Hypermarket for all its stores across the world (LULUHYPERMARKET.COM, 2015). There is a great work regarding the corporate social responsibility and its awareness carried by the LuLu hypermarket for the overall wellbeing of the different sections of the society.
The very first store by the LuLu Group International was in 1995, in Abu Dhabi in UAE. The company, then developed many department stores in the Middle East countries. Taking the super market chain to a global level on a large scale, the LuLu group established the LuLu Hypermarket in 2000, which was located in Dubai (LULUHYPERMARKET.COM, 2015).
The total strength of the entire group consists of more than 118 chains across the globe and the also possess an impressive 32% of the retail market share. It stands at 11th position in the list of the biggest growing retail chains across the world (LULUHYPERMARKET.COM, 2015).
Statement on Sustainability
LuLu hypermarket has always been focusing on the environmental and social benefits through its operation and structure. This is very clear from the statement provided by the Managing Director of the LuLu Hypermarket, M.A. Yusuffali which is given as flows:
“Operating in various countries, and confirming to social requirements in these regions, have made us conversant with the concept of a free and fearless world where everybody can live in harmony with each other, and our commitment is to enable the realization of this world in every way we can” (LULUHYPERMARKET.COM, 2015).
This shows the commitment of the company towards developing peace and harmony in the society and also contribute to the needy in the society through coordinated efforts.
The measurement of the performance of the LuLu Hypermarket is on the basis of various parameters that are responsible for developing of a considerable market share for them in the global market. It involves considering the following terms (Taha & Manoukian, 2009):
Sales/ hr.: It is measured through quantifying the sales of one person for different hours during the day and then establishing an average value of one hour sales by every person in the sales department of the company.
Average monthly sales: This refers to the monthly sale carried by the persons in the company per every month. The average of the values for an entire year is obtained for the employees who are existing since long time in the company.
Items/sale: It is the measure of the number of items that a person sells in one sale (Taha & Manoukian, 2009).
Conversion Rate: It refers to the number of visitors to the store that have been converted to the customers of the company. It is one of the most significant element in providing the success and evaluation of the marketing strategies and plans developed by the LuLu Hypermarket.
Wage – Sales ratio: It is the element which provides the relation between the wages that have been paid either on hourly or monthly basis to the sales made by the person for the respective number of hours or months.
Annual sales: It refers to the total sales that has been generated in the company through the selling of the products and services (Sellers-Rubio & Mas-Ruiz, 2007).
Average customer spend: It refers to the average of the amount that the customers spend during each visit to the LuLu Hypermarket. It is applicable only when a person buys at least a single product from the store.
Forms of Ownership and Market Analysis
The main market of the LuLu Hypermarket is the retail chain that it has developed through all the countries of the Middle-East and also in many of the Asian countries in the world. It has wholly owned subsidiaries of its products in the different countries. They have been using this strategy since the inception and it has generated very positive results for the company.
There is a great contribution of the market analysis in the development and sustainability of the Company’s products and services. It involves considering the market size of the potential global markets that is available to the LuLu Hypermarket. On the basis of the market analysis, LuLu imports the products as well as buys them from the local suppliers (Sellers-Rubio & Mas-Ruiz, 2007).
Marketing Research and Analysis
Market research and analysis is very important for determining the success of the product and also estimating the sales that the product would generate in the market (Sellers-Rubio & Mas-Ruiz, 2007).
There are various elements on the basis of which market Analysis is carried out and they are:
• Internal factors related to the development of the product.
• Market potential for the product
• Regulation of the market policies and legal framework
• External factors like GDP, inflation and Economic development
• Tax regulations in the market
• Foreign Exchange policies developed by the Government
• Public demand in the market.
• Trading policies and laws
• Competitor related factors like the cost, quality and availability (Vel, Dayal, & Eastaugh, 2010).
• Industry and Business related factors that directly affect the business of the company.
Target Market Segment Strategy
A target market refers to the specific population or a group of customers which have been considered while developing the product. It is very important for the LuLu Hypermarket to develop strategies on the basis of this target market that it has in the countries where it operates. On the basis of the target market selected, the needs and demands of the customers have to be analyzed. This has to be done by reviewing the customers regarding different products, getting feedbacks from the customers and getting first hand direct suggestions from the customers regarding their requirements and expectations from the product. On the basis of this target market strategy, the market has to be segmented. There are various forms of market segmentation like, Geographical, Demographical, Behavioral, Psychographic, Occasional, Cultural and Multi-variable. As the hypermarket contains different products, it has to observe different segments in its operation (Bradley, 2013).
For example, in exclusive department where the cost of the products would be high, psychographic segmentation would be more appropriate. On the other hand, in the general departments where the cost of the product is feasible, there has to be a mix of the behavioral, geographic and demographic segmentation to be adopted for providing better service to the customers (Menon, 2011).
Market Size, Trends and Competitive Analysis
The market size, trends and the competitive features of the competitors of the LuLu Hypermarket has been obtained in the following table:
Features/ Elements of the store Ownership local/foreign Size Purchasing agent type Location
City/region Percentage share in the Hypermarket business
Name of the Hypermarket
Carrefour/MAF Hypermarkets Local Large, 12 stores Local buyer / Importer Regional 5
Emirates Co-op Local Small, 6 stores Importer / Local buyer UAE 3
Spinney’s Dubai Local Large, 41 stores Importer/ local buyer/ wholesaler Regional 34
LuLu Group Foreign/ Local Large, 40 stores Importer/ Local buyer UAE 32
T. Choithram & Sons (TCS) Foreign Large, 26 stores Importer /local buyer/ distributor Regional 10
Al Maya Group L 26 Foreign Large, 26 stores Importer/local buyer/distributor Regional 8
The rest of the market is shared by other companies like Safestway/Giant Supermarket, Al Safeer Group, Abu Dhabi Co-op, Lebanese Fruit Co. (LIFCO) and many other such small firms (Taha & Manoukian, 2009).
Marketing Plan and Estimated Market Share
The marketing plan has to be developed on the basis of the estimated market share that the company has projected. This marketing plan is developed on the basis of developing a synchronization among the various elements so as to provide a considerable amount of advantage to the LuLu hypermarket. This can be very well achieved through the bootstrap style of marketing plan which consists of:
• Building a personalized customer list
• Knowing the demands of the customers:
• Using the social media effectively
• Getting grass root knowledge of the customer’s demands and the prevailing trends in the market.
• Developing efforts to return something to the customers as well as the employees through extensive support (Hemalatha & Sivakumar, 2009).
Market Strategy – Marketing mix:
Development of high quality, cost effective product is the strength of the LuLu Hypermarket and the customers are satisfied through their product. The uniqueness element has been retained in each and every product of the company.
Place: Sales and Distribution
LuLu hyper market has developed a very strong and smooth flow of the distribution channel through the development of whole sale distributors for the products. The channels of sales and distribution that have been adopted by the LuLu hypermarket is through the whole sale retailers and dealers which are locally present.
The needs of the customers and their demands have been considered while pricing the products and services in the LuLu Hypermarket. The price is very effective as compared to the high quality of product provided by the company. This has been liked by the people in UAE and they have been preferring the LuLu hypermarket for the quality products that they require from the market.
Promotions and Advertising
They have developed a considerable part of their schemes and promotional offers over the social media as well as at some public places like malls, parks, tourist destinations through advertisement in the media. Effective medium of promotion involves providing posters in the public areas, developing of small advertisements over the social media, providing a customized app for the LuLu hypermarket where customers can easily check-in and carry their purchasing of the products (Menon, 2011).
Section V: Operations
It is very important for the LuLu Hypermarket to adopt operational excellence and smoothness which can be achieved through proper utilization of the resources and development of better inventories for the same. The operations have to be maintained through proper handling of the flow of data, goods and managing inventories so as to ensure that a proper balance between the demand and the supply is obtained. This is very important for ensuring profitability in the operations of the company. For this, the location and facilities is discussed (LULUGROUPINTERNATIONL.COM, 2015).
Location and Facilities
The location and facilities provided in the display and selling of its products is one of the most significant strength of the LuLu Hypermarket. It has been laying benchmarks in terms of customer service and experience as it can be seen in the figure below, where there is a smooth flow of operations. The location which has been developed for the LuLu hypermarket across different cities and countries are very exotic and are user friendly.
The allotment of the parking and the space outside the LuLu market is also very user friendly and it leads to satisfaction among the customers. The parking facilities and other amenities provided to the customers while visiting the Hypermarket is shown in the figure:
Driving forces behind the business
The main elements which are contributing to the business of the LuLu Hypermarket has been the innovative strategies, structure and other social contributions of the company in the market.
Ethics and Social Responsibility: Doing the Right Things
It has been one of the most important element which has been achieved by the LuLu hypermarket through understanding and providing help to the people with special needs. It has organized various events and campaigns for promoting the same among the society (Mahfooz, 2014)
Creativity and Innovation: Keys to entrepreneurial Success
It serves to be the key to the large scale success of the LuLu hypermarket. They have been setting benchmarks in the customer service quality, smooth operations and easy functioning of the hypermarket (Vel, Dayal, & Eastaugh, 2010).
Section VI: Sustainable Development Measures of Performance
The development of the company on the basis of a sustainable form of organization depends on the strategies applied by the company and its effects on the environment as well as the welfare of the overall society. In this aspect, the LuLu hypermarket outperforms the other competitors through a huge contribution in the wellbeing of the society (Nair, 2012). They have been constantly working for the development and upliftment of the people with special needs. They have been providing numerous opportunities to them through effective planning and development of the market for them. The efforts carried by the LuLu hypermarket and the LuLu group has been awarded and recognized by many authorities across the world (Rettab, Brik, & Mellahi, 2009).
The management structure that has been adopted by the LuLu Group for the LuLu hypermarket has been very effective in developing of success and the high market share among the global markets. The management has been very considerable in developing the products and services that would accomplish the needs of the people and provide them with a considerable growth in UAE’s market. The managers have been highly skilled and specially trained for ensuring high levels of functioning and effectiveness in the company. These managers then would train the other staff members under them. This would develop a supportive culture in LuLu hypermarket through effective training and optimum utilization of time that would be provided by the management (Vel, Dayal, & Eastaugh, 2010).
The management of the LuLu Hypermarket has been such that it has ensured smooth flow of operations throughout the system. The development of the whole sale network has to be such that it would help the people in the UAE to develop entrepreneurship and other business skills through exposure of their culture and recognizing it across the world. It consists of different managers and supervisors regarding the different departments involved in the development and selling of the product through the developed chain. An example of the wholesale system adopted in the LuLu Hypermarket is shown below (Barros, 2006):
Business refers to the planning and framing of the strategies that would be helping the owners of the business, the customers and the investors to get the maximum outcome. The development of the business plan involves utilizing the potential of the management team and getting the best possible results from them in order to develop pa niche for the company in the global market (Mellahi, Demirbag, & Riddle, 2011).
There are different types of business plans which can be adopted and they are:
• Startup considerations
• Internal factors
• Dependent on Strategies
• Feasibility of the project
• Business plans based on operations
• Based on Growth
Section VIII: FinancialStart-up Funding
For any business, the initial start up is very critical and it requires huge funding from different sectors. This has to be achieved through developing of business plans and strategies that would be useful in attracting the maximum number of investors in our project. At the same time, the ethical considerations are also to be made regarding the trust developed by the customers on the company and hence, the promised returns have to be provided to the investors and stakeholders in the market (Vel, Dayal, & Eastaugh, 2010).
It involves considering break even cost which is provided by the ratio of the fixed costs and the gross margin percentage in the market. Break-Even analysis involves a break-even point which is the maximum point of growth for the product’s life cycle in the market. It has been shown in the following figure:
(Vel, Dayal, & Eastaugh, 2010).
Projected cost, Profit and Loss
There are various costs which are to be determined as follows:
Loss prevention: It provides the shrinking loss or stock loss.
Operational: Costs involved in maintaining the stock and inventories
HR development cost: The cost involved in developing the HR strategies and structure in the LuLu hypermarket.
Variable costs: The costs which very as per the market conditions and the taxes levied on the products.
Projected Cash Flows
The projected cash flows is calculated and determined on the basis of various elements which have been given below:
Account payable turnover: It is the accounts that is payable divide by the cost of the sales obtained for 365 days.
Accounts receivable Turnover: This is generally calculated in the number of days. It is calculated by considering the Average Accounts received divided by the credit sales for 365days.
Acid test ratio: It is provided by the difference in the current assets and the inventories which his divided by the current liabilities.
Administration cost: It is the total administration costs divided by the sales and multiplied by 100.
Average inventories: It is determined in the form of an average of the sum of the inventory from the beginning to the end period.
Section IX: Critical Risks
It is necessary to calculate the risks involved in the process of providing the products and services to a large number of customers through development of large chain stores and extensive network across the countries. However, this involves considering few factors that may pose a threat to the profitability of the business or to the image of the company in the market. These risks are estimated and on the basis of that the level of operations and strategies is determined as it would be the deciding factor for the success of the firm in the market.
It is calculated through the SWOT analysis of the various strategies that are provided by the LuLu Hypermarket through its products and stores. The general diagram of the SWOT analysis is shown below:
• The unique and large range of products and services provided by the LuLu Hypermarket provides the LuLu Hypermarket with a special position in the markets of UAE.
• Development of a firm base and feedback from the customers has increased the level of customer satisfaction.
• Constant up gradation and development of attractive schemes have attracted large number of customers.
• The main weakness is the lack of effective relationships with the local companies.
• They do not buy or sell anything in specific through providing partnerships to small local dealers.
• The increasing competition in the market of UAE for establishing a considerable share in the market has affected the company’s sale.
• The ever increasing GDP of the UAE provides a pool of opportunities to LuLu hypermarket.
• The development of the tourism and other related activities would also provide a vast range of opportunities to the LuLu hypermarket.
• The high levels of service offered by them would increase their customer reach through the social media.
• The main threat to LuLu hyper market is the entry of potential competitors in the market.
• The low prices offered by the competitors pose a real threat to the customer base of the LuLu hypermarket.
• There is a huge threat of the online companies which are considerably providing cheap products and this would attract more customers and lead to shifting of the customers from the LuLu hypermarket to the new online company.
Harvest strategy refers to the limiting of the investment that has been carried out in the business due to very less or no business growth estimated from the product in the future. This is carried out to save the investors from investing money in non-profitable business processes and also help the company to develop a good image in the market through earning of the investor’s trust. It is carried put when the growth matrix of the LuLu Hypermarket’s specific product comes in the cash cow stage. The growth matrix is shown in the figure which is also known as BCG growth matrix:
Strategic Management and Entrepreneurship
The management of the strategies is very important from the point of view of developing a considerable share in the global market. This has been carried out very effectively in the LuLu Hypermarket. It involves developing entrepreneurship opportunities through its operations and helping the people to emerge as a successful entrepreneurs. Human Resource management staff of the LuLu Hypermarket has been very appropriately maintaining the entrepreneurship and other communication skills in the employees through regular and effective training.
This involves the tie-ups and sharing of subsidies with the local companies, distributors and small chains for effectively reaching a large number of local population in the foreign market by the LuLu Hypermarket. This has been achieved through establishment of the whole sale distributors through the LuLu management and there has been removal of the retailer chain of middlemen which led to increase in the cost of the product to the customers.
Thus, it can be seen that the marketing plans, strategies and structures developed and adopted by the LuLu hypermarket are very special. This feature is in terms of its utilization and implementation for the market in UAE. Such techniques would help a small organization to achieve a considerable growth and share in the market.
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