Food Town Supermarket

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Food Town is a traditional brick and mortar supermarket and strategically situated in an inner suburb of Melbourne. David Cheng founded the food town independently and it has been opened over the past 20 years. Food Town sells the different kinds of food from the country’s top and private label brands as well as offers organic nourishment foods for both vegan and non-vegetarians. The retail strategies and e-commerce implementation for food town will be discussed in this report.

Q1. Overview:

The characteristic between food town and Fair Price is that food-town is the limited assortment supermarket while Fair price is the conventional supermarket. Food Town offers superior brand organic food, and they only carry around 2,000 SKU. On the other hand, Fair price has a large variety of products with a wide range of brands selection and the stock is over 30000-40000SKU. Thus, in terms of product variety, Fair Price can offer deeper assortment while food-Town offers limited or shallow assortments. As the space is limited, the product variety of food-town is 30-40 percent lower than conventional supermarkets like fair price. Moreover, Fair price has many outlets (traditional stores) across Singapore and practice multi-retail channels, so its service is modest. When food towns provide limited services there are no other outlet stores or online platforms.

Q2. Service output:

Since Food-town is a traditional retail store, it has a lower spatial when compared to new supermarket chains who will serve as one stop shopping & operate 24 hours. There is no waiting time for both supermarkets as customers can grab the items they need immediately. In terms of lot size, food towns have smaller inventory & lesser product variety compared to new supermarkets. Food-town only offers one variety of each item with 40-60% lower prices than supermarket chains which will have more varieties of single items with higher prices. The products from food town are sourced ethically while the new supermarket won’t trace if the products are sourced ethically or not.

Q3 Bullwhip effect:

The bullwhip effect is the built-up in inventory in an uncoordinated channel where retailers and vendors do not coordinate information about their supply chain activities. It is caused by delays in stores transmitting the orders and delays in receiving them, panic Buying or Overreacting to shortages, and ordering in batches rather than ordering in a number of small orders. To dampen the sudden spike in demand, Food Town has placed a purchase limit of panic buying items on certain items such as toilet paper. In addition, on introducing quota buying, Food Town can keep safety inventory to satisfy some part of the demand. This is only recommended under some conditions. The retailer can adjust its selling price, which is hiking up the retail price to discourage consumers. Food Town can also have a stricter return policy in order for customers to discourage hoarding and returning the items due to overstocking.

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