Business Plan

On
‘Shop and Go’

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 TABLE OF CONTENT

Topic Page

EXECUTIVE SUMMARY 3

BUSINESS CONCEPT,MISSION&VISION 3

TARGET MARKET 4

INDUSTRY/COMPETITOR ANALYSIS 4

STRATEGIC ANALYSIS 5

MARKETING STRATEGY 8

FINANCIAL PLAN 10

OPERATIONAL/DEVELOPMENT PLAN 12

MANAGEMENT AND ORGANZATION 14

RISKS 14

CONCLUSION 15

BIBLIOGRAPHY 16

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 EXECUTIVE SUMMARY

In traditional retail stores, customers have to purchase and wait in the manual checkout
counters to complete the payment process which is time consuming especially during rush
hours. Moreover, customers need to carry the cash in case they does not have credit or debit
card. With a view to easing the customer convenience in superstore purchasing, we have
planned to open a physical super shop in UAE with the concept of automated check-out system
to become ‘cashier-less store’ and will be named as “Shop and Go”.

As a fast-mover in the UAE retail industry, we have a chance to flourish the market through
exploitation of QR code technology also used by Amazon Go. There also challenges like fund
management, IT infrastructure development and other issues to overcome in this highly
competitive Middle East market. In order to be successful, we have developed a business plan
to be implemented along with marketing strategy, development and financial analysis. Time
and cost constraints also need to be given focus while implementing the initial plan.

BUSINESS CONCEPT

‘Shop and Go’ is a physical super store with an android/istore mobile application that will
allow customers to purchase items from the shop without waiting in line for payment. The cash
counter less store will utilize the concept of machine learning, sensor technology and artificial
intelligence to enhance the QR code based payment. For a complete transaction, a customer
needs to register and download the authorized ‘Shop and Go’ mobile application found in
Google/Apple-store. Then they need to load the money in the app using credit or debit card so
that the shopping time in stores remains cashless and hustle free. Whenever a customer enters
the store, he/she needs to open the app and scan the app’s QR code at entrance. There will be
cameras and sensor system to track the movement of goods. The concept is heavily relied upon
mobile application and geo fencing technology which can detect when products are taken or
returned to shelves through sensors/RFID trackers and manage supply chain and inventory
management. After shopping is over, a customer will simply leave the store premises without
being waited for cash counters. The ‘Shop and Go’ app will automatically calculate the price,
charge customers from the virtual cart and send a system generated receipt. If implemented
successfully, the concept will be more secure ‘card not present’ transaction than other payment
sources and avoids lot of previous electronic infrastructure system like payment cards, payment
terminal and uses of POS machine. (Amazon Go, Wikipedia.Org)

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 MISSION

“Introduce cash & counter less technology to make shopping customer friendly, hustle free
and convenient”

VISION

“To become pioneer in the high end super store industry with the utilization of technology
efficiently and effectively”

TARGET MARKET

Based on demography, our target market for ‘Shop and Go’ will be urban tech savvy
consumers and super busy students and professionals who have passion to adopt high end
technology and have less time to go to the conventional stores for shopping. Based on age, the
target group should be between 15-45 years of age. Here in ‘Shop and Go’, they will find the
best utilization of their time by doing counter less shop at least possible time. At present, we
will establish one store in Abu Dhabi. Later, many other branches will also be opened if it
remains profitable.

INDUSTRY/COMPETITOR ANALYSIS

The retail industry of UAE is mainly dominated by large number expatriates, tourists and
business person with high individual net worth. The country has established itself as one of the
prominent place to do trade and therefore large globally renowned brands are establishing
business subsidiaries with modern infrastructure and high end technology here in UAE. The
retail market is highly resilient amid economic downturn as large numbers of global chains have
been operated here smoothly since inception. Due to high competition, super markets now
focus on attract customers through meeting tailored requirement based on demography,
offering discounts/premiums and cutting costs in order to increase efficiency. Companies are
now considering an alternate option of digital channels, online shopping malls and use of high
end technology to go ahead of its competitors. So, adaptation and improvise the IT remains a
key success indicator in this super competitive market in order to be innovative.

There are many renowned and less-known brands and stores in UAE. But worth to mention
is, Carrefour Express, Lu Lu Group International and Spinneys. Carrefour Express is a
convenience chain store owned by French retailer Carrefour and started its journey in 2011 at
UAE with 17 outlets all over the country. Another one is Lu Lu Group International, an Emirati
multinational company that operates a chain of hypermarkets and retail companies. Founded in
2000 and headquartered in Abu Dhabi, UAE is one of the largest retail chains in Asia and is the

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biggest in the Middle East with 187 outlets in the Gulf countries. Spinneys is another well-
known super shop based on Abu Dhabi and mainly sells imported goods from UK. Apart from
this, many global e-commerce platforms also serve customers in UAE. For example, Amazon Inc.
is operating in UAE through the acquisition of local e-commerce company Souq.com and being
the largest online based store in the Arabian region. Again ‘Amazon Go’ might open a chain in
UAE in future which is very similar to ‘Shop and Go’ and possess a great threat to the business.
Others worth to mention in this regard are, Icflix, Maktoob, InFocus and Jumia Egypt. (Abu
Dhabi's retail sector going strong as shopping outlets expand, Oxford Business Group, 2017)

STRATEGIC ANALYSIS

We have looked at SWOT, PESTEL and Porter’s five forces of ‘Shop and Go’ to assess
strategic analysis of the business.

 SWOT

SWOT stands for strength, weakness, opportunity and threat for a company where
strength and weakness is internal and opportunity along with threat is treated as external.
SWOT analysis for ‘Shop and Go’ will be like:

Strengths Weaknesses

 First mover advantage  High cost of technological

 Automated check out infrastructure
 Customer convenience  System lock due to server shut
 Technologically advanced down
 Managing funds for overall set
up and maintenance

Opportunities Threats

 Growing number of tech savvy  Loss of jobs due to high level of

people in UAE
 More technological and
infrastructural development of
the country
 Expansion in other Gulf region
automation
 Entrance of other global
pioneers like Amazon Go in UAE
 Price competition and loss of
profit margin

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  PESTEL

PESTEL is a macro-economic analysis which primarily looks at the general economic

condition as a whole to do the business. PESTEL stands for political, economic, social,
technological, environmental and legal aspect of the environment. As for ‘Shop and Go’
operated in UAE, the PESTEL analysis will be like:

Political: Flexible political system and sound trade environment exists despite some occasional
political conflicts due to oil reservation.

Economic: Have high GDP growth and low unemployment rate along with good opportunity for
foreign direct investment.

Social: Globalization causes mixture of different cultures in UAE which have impact on business.
Also religious point of view and high end life style a major factor for social dimension.

Technological: Young population has passion for technology and the wealthy infrastructure allows
growing in terms of technological development in UAE.

Environmental: Productivity is slower due to hot, dry climate. Also high level of coastal area
causes to operate most of businesses using sea trade.

Legal: In terms of legal aspect, there are moderate level of legal rules and restrictions to operate a
business in UAE especially for the local citizens.

(A PESTEL analysis of the UAE, Thomas, 2016)

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  Porter’s five forces

Porter’s five forces is a tool to analysis micro economic environment for a business. As for ‘Shop
and Go’, Porter’s five forces analysis will be like:

Threats of new entrants Threat of substitutes

Low as new entrance Medium because many
requires adaptation of high customers especially elderly
end technology for the ones might still prefer
superstores which is time conventional grocery shops.
consuming and costly.

Rivalry among competitors

Medium to high because though

‘Shop and Go’ is pioneer in cash
counter-less perspective, the
other giant super stores might
still hold the major market.
segment.

Bargaining power of suppliers

Bargaining power of buyers
Low due to efficient
Dependence on large
distribution channel and
customer base of young
inventory management
people and ease of
through advanced technology
convenience it provide will
and procure from several
cause low bargaining power
sources.
for buyers.

(Porter’s five forces analysis, 2018)

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 MARKETING STRATEGY

Our unique value proposition will be “Go shop and return any moment without check out
entirely”. All a customer has to do is to carry a smart phone with “Shop and Go” app running on
it. And our high end technology based system will take care of everything for the customer. Our
main strength is the innovation of app based payment system linked with the shoppers through
GPS and artificial intelligence technology. So, to attract customers, we have to give a mindset
on them that we are pioneer in the field of synchronized payment system and we care of our
customers’ valuable time. So, if we not charge any premium pricing in the industry, customers
can come and shop here simply to save some time especially during the rush hours.

As we are new and have limited budget, we will not go for commercial advertisement or bill
board initially. We also have a challenge to make the people accepted the new way of
purchase. So initially the cheapest way to promote the concept will be to use social media.
‘Shop and Go’ should have social media presence in Facebook, tweeter and Instagram. Through
the pages, we can influence target customer base by positing ideas, videos and the innovation
we bring in the UAE super store market. For example, if we open an official page of ‘Shop and
Go’, we can survey what customers know about QR payment system and GPS technology
through conducting questionnaire survey on Facebook during development phase. The whole
idea can be explained through animation videos and Facebook live chat option along with
regular post on the page. By interacting with customer, our marketing team can get the insight
of customer reaction of the idea and can work on it. Besides social media, other sources of
marketing can be as:

Online ads: Our business can get exposure by online classified ads. Our marketing team can
place targeted ads for our business online every day, and people will find them via search.

Content marketing: A successful content marketing strategy will drive traffic to our website and
help with search engine optimization, and it can be completely free.

PPC ad: Pay-per-click (PPC) advertising can drive a massive amount of high converting traffic to
our site. Our team has to find a balance between cost and revenue to make the best use of PPC
advertising.

Stickers, banners and festoons: Stickers, banners and festoons are an inexpensive way to get
customers known about the high tech superstore. Stickers and festoons can be given with other
swags or at events with the purpose of placing the innovative in all possible places. Stickers can
also be put in other random places like the roof of a bus or the side of a table. Also putting
graffiti, posters on own spaces or through renting others space to get close to customers will be
innovative and cheap.

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Discounts and sample/combo offers: Discounts and free offer are a surefire way of getting the
products into the hands of customers. People love free gifts and once they try the new business
model and get accustomed to it, mass sale will be occurred at once. Or a concept like “buy two
get one free” and “refer a friend and get discount” will also attract customers easily.

Customer loyalty program: Our automated server system will track and archive e the customer
info once they enter the store and shop. From the archive, our team can know details about
each customer purchase pattern, volume and customer retention rate. The returned customer
can be placed under loyalty program by giving special discounts; reward points and cash back
offers. In this way we will give superior value to our retained customers.

Some other ideas to promote our super store will be:

 We also have a plan to offer seasonal and promotional pricing during special occasions.
 Discounts upon customer referral regarding the new business model of cashier less
shopping experience.
 We will also have a plan to work closely with reputable brands in fashion and consumer
goods to promote the concept and to have availability of the products from reputable
brands in the store.

(10 simple supermarket marketing strategies, Tweak, 2018)

The 4P’s of ‘Shop and Go’

Place: Placing is the most important

Product: All the regular and specialized as customers will have access to the
products that found in a conventional product like a conventional super
super store will be displayed in highly store but the way of interaction and
categorized shelves. transaction is completely different.

Promotion: For promotional

Price: All the products will be charged
as per market price except some
special and premium imported goods.
FINANCIAL PLAN
campaign, we will introduce discount
or combo offers, free gifts for first
time shopping and customer loyalty
program.

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 We have developed a pro-forma financial plan for 3 years. It is assumed that initially we will
have annual sales of 4.2 million AED which will grow at a rate of 10% annually. Cost of goods
sold will be 80% of sales revenue. Salary and other administrative expenses will be 0.2 million in
first year which will be increased proportionately. First year there will be high investment
expenses (software development and GPS sensor system) on IT infrastructure development of
0.5 million AED. From next year there will be IT maintenance and app renewal fee 0.2 million.
The high initial investment will cause the first year to have negative profit or loss which will be
minimized in year 2. From 3rd year, the break-even reaches and there will be net profit of
23,380 AED in total.

Sales growth 10%

Tax 30%

'Shop and Go' Income statement

year 1(AED) year 2(AED) year 3(AED)
Annual Sales 4,200,000.00 4,620,000.00 5,082,000.00

COGS 3,360,000.00 3,696,000.00 4,065,600.00

Gross profit 840,000.00 924,000.00 1,016,400.00

Administrative expenses 800,000.00 530,000.00 583,000.00

Lease expenses 200,000.00 200,000.00 200,000.00

Operating profit (160,000.00) 194,000.00 233,400.00

Earning before tax (360,000.00) (6,000.00) 33,400.00

Tax - - 10,020.00

Net Profit (360,000.00) (6,000.00) 23,380.00

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If we look into the balance sheet, the total asset is estimated to be 5 million AED in first year
which will grow to 5.3 million and 5.8 million in year 2 and year 3 respectively. The first year
cash balance will be 1.4 million and the cash will grow at a rate of 5% yearly. The inventory
balance will be 1.6 million in first year and also assumed to be increased yearly. We will take
the store space as a lease of 2 million for 10 years. So, lease payment will be 0.2 million yearly.
So, the equity of ‘shop and Go’ will be 2.8 in year 1 and 3.3 in year 2. The equity will grow to 3.9
in year 3. There will be fixed asset of 2 million AED in year 1. The fixed asset will grow to 2.2
and 2.5 million AED in year 2 and 3 respectively.

Shop and Go'Balance sheet

year 1(AED) year 2(AED) year 3(AED)

Cash 1,400,000.00 1,470,000.00 1,543,500.00

Inventory 1,600,000.00 1,680,000.00 1,764,000.00

Fixed asset 2,000,000.00 2,240,000.00 2,508,800.00

Total asset 5,000,000.00 5,390,000.00 5,816,300.00

Lease 2,000,000.00 1,800,000.00 1,600,000.00

Accounts payable 200,000.00 230,000.00 252,000.00

Total liability 2,200,000.00 2,030,000.00 1,852,000.00

Equity 2,800,000.00 3,360,000.00 3,964,300.00

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 OPERATIONAL/DEVELOPMENT PLAN

The development plan includes two parts; one is the formation of user friendly mobile app
and the other one is establishment of high tech physical super store.

Formation of mobile app: Setting the mobile application for ‘Shop and Go’ with right
technology will be the first step towards implementation of counter less super market. The
basic design of the app will include information page to be filled up by customers to create an
account. In the app, details know how will be shown via demo video and in written format via
FAQ (frequently asked question) section. Each customer account will be linked with a unique
mobile number as well as email address. However, more than one customer can be added to
the same account in case of family purchase. There will be an option to reload money in the
app via credit/debit card or through bank account. Every mobile app will be password
protected which also have an option to be secured via finger print. Each time the app is opened,
a unique one time password will also be sent to the linked cell number to keep each
confidential customer information safe. The reloading process with card/bank account will also
be secured via trusted server.

At the beginning, we will first develop

a proto type of the app by our software
engineers. Then the proto type model will be
tested via trial and error basis. Budget is a
major constraint in this case as developing a
commercial app is costly and time
consuming. So we are planning to give very
basic features in the development stage like
account open, cash reload and QR code scan.
The design will be simple but should have pleasant appearance.

In the advanced stage, we plan to add other features such as full updated product list
will be displayed in the app. So customers can save time by drill down the product and sorted
the essentials from home. Each product shelf number according to the product category will
also be shown in the app. So, when customers go to the shop, he/she directly can go to
respective shelf number and pick the product. A notification sound or vibration will be formed
whenever customers start or end shopping. There will also be a notification whenever the
loaded balance in the app become close to zero so that customers will not be in an awkward
position of picking the product and then return it to the shelf due to lack of balance. There will
be a section of customer complain and feedback in the app. An updated version of the app will
regularly be found in the app stores to keep pace with the technology.

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Formation of stores and transaction process

Each time customer enters the ‘Shop and Go’

premises; there will be a QR code point in the door ways
where only one person at a time can pass through. The
door will open only if the QR code is scanned to get rid of
fraudulent activity. By scanning the QR code in the app, it
gets synchronized with physical store and a signal is sent to
the store server with the required customer information.
The server can track the goods movement done by that
customer mobile app via geofencing or GPS technology.
The synchronization of the server with the app needs to be
effective all the time as customer pick up quantity shown in
the app and the server quantity will be same. Any
mismatching will cause the whole system to collapse. When
the purchase of a customer is over, he/she needs to press
the finish button in the app. The server will automatically
calculate the total purchase amount and sends it to the
synchronized app. The app will automatically credit the
customer account even before he/she leaves the store. The
store will also have automated system of holding the transaction temporarily due to server
down. The GPS system will eradicate the possibility of product theft and misuse. Any unusual
activity will cause an alarm to be given to server. Again if the good are picked but not
purchased, it has to keep in the same place. Input of goods in wrong place will also cause the
server to get notified.

As for physical appearance of super shop, it will be

spacious with all modern amenities. There will be
surrounded cameras and the whole place will be under GPS
tracking. Each product will be kept according to the relevant
category in the shelf. The GPS system will create efficient
inventory management by continuous update of inventory
levels. There will be buffer stock quantity embedded in the
server and when any product quantity goes below the buffer
level, server will track automatically and a message will go to
the procurement team. So virtually no chance of being out of
stock.

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 There will be video display in different corners which shows the direction to customers.
Though the whole store is cashier less, there will be some sales service agent for customer
guidance and IT expert for smooth operation of network and the application. Again the main
constraint will be choosing a budget friendly yet demanding location as we have limitation of
fund as a new comer. A long term loan can be considered in that regard. (How do Amazon Go
stores work, 2019)

MANAGEMENT AND ORGANZATION

As for management of ‘Shop and Go’, we will have IT, finance, marketing and supply chain
director apart from the Managing director and owners. Several other employees will work
under the directors in a top to bottom centralized management structure. Finance director will
look after the investment, cash flows and profitability. Sales director will be responsible for
meeting yearly sales target while supply chain director will be for efficient procurement and
inventory management. The top most important person will be IT director and so the IT team
which will handle the system of app synchronization and automated tracking as well as
purchase process through GPS technology. Though there will be no cashier in the store, a
relatively less number of customer service agent will be required to ensure the smooth
operation. All the employees will be given required training and other facilities and will be gone
through a transparent performance evaluation system.

RISKS

There are some risks associated with the cashier less super shop business. For example, it
may happen that the GPS system not working properly due to server problem and showing
wrong quantity purchased than the actual quantity. If the app quantity is greater than actual
one, then customer will be charged more and it will diminish the customer trust and royalty.
Again, if the app quantity is lower than the actual one, then customer account will credited less
and it will cause the company to loss. Again, if the system is not totally working, no cashier will
be there to give manual service urgently to customers and it will again lose reputation. So, to
avoid this type of problem, routine server maintenance and demo work is required.

Another risk is fraud activity during sudden power cut due to electricity problem. It has to
be ensured that generator support will be there for 24 hours because if power cut occurs and
no GPS system working, then anyone can go to the shop and take out a product from there
without any system notification or free of cost.

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 CONCLUSION

In short, we can say that the cash counter less ‘Shop and Go’ business will be a profitable
one if operated smoothly. But certainly, there are challenges. Firstly, the management of fund
and limitation of budget. We need a good amount of lease in favorable term for our store space
in a good location which might be difficult to get for a newly business like us. Then comes the
attitude towards change. We will bring a new shape in super store industry of UAE. But not all
might welcome the change especially the elderly people. So, to make a positive positioning in
the customer mindset remains a great challenge. Effective change management is required to
get a good vibe in the beginning. Also, there will be competition from the traditional stores as
well as the global giants. The traditional super stores might start to give more promotional
offers and special features so that they do not lose customers to ‘Shop and Go’. As a new
business, we cannot give same sort of offerings and benefits to customers and so a careful
consideration will be required from ours. Also global giants like ‘Amazon Go’ might enter the
UAE market which also has the same technological business concept like ours and might
outcome ours due to their brand reputation and strength. So, our management should work
from now on what will be our reaction if it happens in future and has to make a plan to build
strong brand loyalty and increasing trend towards market growth as well as market share.

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 BIBLIOGRAPHY

 Amazon Go, retrieved from https://en.wikipedia.org/wiki/Amazon_Go

 https://en.wikipedia.org/wiki/Category:Supermarkets_of_the_United_Arab_Emirates
 Abu Dhabi's retail sector going strong as shopping outlets expand, Oxford Business
Group retrieved from
https://oxfordbusinessgroup.com/overview/upward-bound-sales-remain-robust-
shopping-outlets-continue-expand
 A PESTEL analysis of the UAE, Thomas, 2016, retrieved from
https://pestleanalysis.com/pestle-analysis-of-uae/
 Porter’s five forces analysis, 2018 retrieved from
https://medium.com/@kwrdarisipudi/porters-5-forces-analysis-of-amazon-go-
afe3bb90cc8c
 How do Amazon Go stores work, 2019, retrieved from
https://qz.com/1635952/how-do-amazon-go-stores-work/
 10 simple supermarket marketing strategies, Tweak, 2018 retrieved from
https://www.tweak.com/blog/supermarket-marketing-strategies/

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