A supermarket retailer needs to know what sales volume he can
expect if he opens in a new shopping center. Then, what impact will
this store have on his sister units and his competitors? Furthermore,
what will be the impact of a new Wal-Mart Supercenter if it opens
and which of the weaker competitors will most likely close?
Due Diligence and Market Intelligence
A regional supermarket chain wants to divest several under-performing
units. The potential buyer who directly competes needs to know what
kind of sales volume and market share can be expected if they consolidate
the stores. Furthermore, will there be FTC implications? Other questions
need to be answered such as: Why are those stores under-performing?
What are their sales volumes?
Investor Due Diligence
An investor or money manager wants to make a multi-million-dollar
investment in a publicly held supermarket wholesaler. However,
he has heard rumors that their largest wholesale customer is having
financial problems. DJL personally visits all the stores operated
by this customer. Stock levels are found to be low, employee morale
is down, and regular maintenance of equipment is being postponed. The
size and sales of each store are obtained and it is determined that,
at their current sales per square foot, they are not profitable. It
is also discovered that Wal-Mart Supercenter is opening stores in several
of their markets. Direct-store-delivery vendors are interviewed
and the consensus is the company is about 120 days outstanding in monies
owed to vendors. Some vendors have this company on C.O.D. The
wholesaler is also holding a $25 million note from this customer which
may go into default. Instead of buying stock in this company,
the client shorts their stock.
A retailer has been given a demographics profile
from a developer. The data is broken down into one-,
three-, and five-mile rings. The
dilemma is that the proposed site sits along the Mississippi River
and there is no bridge for 10 miles in either direction. What lies
across the river is meaningless. The retailer needs to know exactly
what his trade area population isnot the areas he has no
chance to draw from.
There is a vacant shopping center located in a blighted area
of a large city. There is no supermarket within a three-mile radius.
The local community, municipal government, and landlord would like
to see a supermarket opened. A market study is performed. Despite
low expectations, a local independent is able to obtain government
funding and open the store.
The owner of a downtown shopping center in a small rural community
has a vacant supermarket space and is struggling to keep the shopping
center occupied. There is only one other conventional supermarket
located on the outskirts of town near a Wal-Mart Supercenter. There
is no room for a significant amount of square footage in this trade
area. The existing supermarket has only a mediocre performance. Our
study shows that by relocating this store closer to the population
base, sales per square foot can be increased. Another alternative
shows that if a strong operator opens downtown, the weaker store
on the outskirts of town would most likely be forced to close. With
financial incentives from the local government, a downtown supermarket
is opened. The supermarket on the outskirts of town is subdivided
and released to a non-supermarket tenant.
A retailer opens a new supermarket and it fails to
meet expectations by nearly 50%. The trade area and its
competitors are re-evaluated.
It is determined that the original market studys population
base included persons housed in a large prison facility. The per
capita expenditure was not reduced for students housed in dormitories
at a large university. The sales volume of the competitor across
the street was overestimated. The retailers attorney uses this
information in court.
Wal-Mart is trying to buy a regional supermarket chain. There is concern that if the merger goes through, Wal-mart will
also convert its existing stores to Supercenters. Then several small independents will be forced to close and Wal-Mart will have a monopolistic
market share. These facts are presented to the FTC for review.
The owner of an independently owned supermarket is getting divorced. The
owner’s spouse is making financial claim against the present
value of the supermarket. DJL Research prepares a present market
simulation and future sales projections that includes the negative
financial impact of new competitive market entries which will reduce
the future value of the supermarket. The court allows our client
to retain more of their personal wealth in order to compensate for
this difference. Future alimony payments are also reduced.
Loyalty Card Data
A retailer would like to know where his top 100 customers live
so that he may personally call on each one and present a gift. He
would also like to know what area 85% of his volume is derived from
and what his market share is. Advertising costs are reduced since
the retailer knows exactly what area to target.
A small city of 30,000 people will be getting a new Wal-Mart
Supercenter. The city council would like to know what the impact
will be on the existing supermarkets before a building permit is
issued. The net increase or decrease in supermarket sales is determined.
Troubled Store Analysis
A retailer opens a store and sales are 40% below projection. All of the research
is double checked and no errors found. This market is 25% Hispanic and 50%
African American with most of the residents having low incomes. After revisiting
the market it is discovered that the retailer does not accept WIC vouchers
and Food Stamps. Hispanic food offering are limited. Competitors catering to
low-income minorities were not affected by the opening of his store. The retailer
is presented with a list of recommendations to improve
Banking and Finance
There is a large regional bank specializing in making
loans to independent retailers for the purpose of building
or acquiring supermarkets.
Although the bank’s client had a market analysis performed by
its wholesaler, the bank required a second opinion market study before
approving the loan. The second opinion study is done and it is found
that the retailer’s wholesaler has indeed done its due diligence.
A regional bank would like to expand its in-store banking operations
into some new metro areas. DJL Research provides the bank with a
list of the highest volume supermarkets which do not currently have
an in-store bank. Then the future retail sales are projected for
these stores to determine the long-term viability of their locations.
The bank then approaches these stores for in-store bank development.