Aggarwal Book Store

Chetan Khanna

Question 1) Analyze the data provided in the

case study to decide on an appropriate store

location for Aakash Book Store. Which method

would you use and why?

Step 1 – Market Identification

• Ahemdabad was chosen because of higher

Average purchase (Rs per annum) for 3 groups

of customers with 3317 as average and 7862

for A , 2804 for B and 1087 for C

• Ahemdabad has higher percentage of cohorts

amongst customers

Step 2 – Determining the market potential

• Demographic features of the population i.e. more

number of people in the bracket of 30-40 followed by

20-30

• Characteristics of households in the area i.e higher

percentage of people in the age bracket of Rs 10-

20,000 per month

• Total Trade Analysis ( Books>Stationary>Magazine

and Music)

• Education Profile i.e. Graduate>MBA>Professionals

Step 3 and 4 – Identification of Alternate Sets and Selection of the sites

• Traffic ( Bopal < Satellite<Gurukul)

• Accessibility to Markets S and G = 10

Number of Stores and the type of markets existing in the area =

• Branded Retailers (S<G<B)

• Other book retailers ( S<G=B)

Amenities Available

• Within the complex ( B<G<S)

• Outside the Complex ( G<S=B)

Rent ( B<G<S)

Advance Payment (B<G<S)

Refurbishment Cost(B<G=S)

Lease Tenure ( S<G<B)

Proposed Space Description – S is Left , G is Right and B is front

Step 3 and 4 – Identification of Alternate Sets and Selection of the sites (Contd)

• Reilly's Law of Retail Gravitation will be used because it

means that people will have to travel to the largest place as it is

the most accessible. Furthermore according to the formula we

have

Satellite = 0.04

Gurukul = 0.051

Bopal = 0.022

• Therefore , the store should be located at Satellite keeping in

mind all the above factors

Question 2) Which of the three locations would

be profitable for the store?

Profitability Analysis for the 1st year for Satellite

• In relation to sales Gross Profit Ratio = Net Sales – COGS = Rs 10,800

GPR = 10,800 * 100 = 30%

36000

• Efficiency with which operations can be carried out

• In relation to investment • Return on investment

• ROI = NPBIT * 100 = 840 * 100 = 2.33%

Net Sales 36000

• Measures profitability of the enterprise

• Helps to plan the capital structure and helps in evaluation of investment decisions