Strategy Interview Question - How would you increase the revenue of a Hypermarket Chain ?

Strategy Interview Question - How would you increase the revenue of a Hypermarket Chain?

Interviewer: Our client is a hypermarket chain. They are looking at ways to increase their revenue. Please help them with a strategy for the same. 

Increase revenue of Hypermarket chain

Priyanka: To delve into the problem, I would like to understand our client better. Our client is looking forward to increasing their revenue, is there any other objective? 

Interviewer: Yes, that’s right. Let's focus on revenue. 

 

Priyanka: What type of products and services does our client offer? Who are the primary customers?  
Interviewer: Our client is like any other regular hypermarket chain like DMart, JioMart, Smart Bazaar, etc. Residents of the nearby area mostly visit the store. 
 

Priyanka: Which geography is our client located in? Since how long has the client been operating?  
Interviewer:  Our client operates in the core residential area of Bangalore. The client has been operating since last year and has been facing stagnant revenues.  

 
Priyanka: Does our client sell both online and offline? 

Interviewer:  No, the client sells offline only. 

  

Priyanka: What is the time frame we are looking at to grow the revenue? 

Interviewer: You can consider this for the next 6-12 months. 

 

Priyanka: Just to quickly summarise, our client is a hypermarket chain operating across the core residential area in Bangalore and is focused on improving the revenue. 
Interviewer:  How would you go about it now? 

 

Priyanka: I would start by breaking the revenue into No of orders * Average Revenue/Order. 

Further No of orders can be broken into No. of customers and frequency of visits. 

 
Here we can do a quick market sizing to understand what the number of customers will be. 
 

Interviewer: This looks quite comprehensive. 

 

Priyanka: Now I would like to break down the different customer segments that our hypermarket can target. 

1. Repeat shoppers: These customers shop frequently at our hypermarket. They are mostly people who reside close to our hypermarket in the neighborhood areas. We should retain them through loyalty points and nudge them by sharing personalized promotional offers. 

2. Occasional customers: They are the ones who visit sometimes or only during promotional offers. We should focus on converting them to more frequent purchasers. 

3. Bulk Buyers: These customers don’t visit us that frequently but whenever they do, they make bulk purchases. We should offer them a good experience during the visit so that they enjoy the experience and stay loyal to us. 

4. Health-conscious shoppers: These people come to shop for wellness and high-quality organic products. We should maintain our stocks to satisfy their needs and preferences. 

5. Senior citizens: These are old people who have specific shopping preferences. We should provide aid & assistance to them and help with special services like free home delivery etc. 
    

 

Now I would like to focus on ways to increase the revenue: 

• Better product range: We can expand and update our product range to meet the diverse needs of our customers. We can also use advanced analytics to predict products whose demand is high and ensure their stock is always available. We should also keep up with the seasonal demand by introducing relevant products. For example, fancy gifting, decor, and chocolate packaging during Diwali 

• Better cross-selling: We can create bundles of products that our customers frequently purchase together. We can also place them at locations which are easily accessible to the customer. Training the store staff to also sell these products will boost the revenue. 

• Store optimization: We should optimize the space in the store so that customers are able to navigate and fetch the products easily. We can also place high-ticket items strategically. Items that are likely to be forgotten can be placed near billing counters. 

• Technology optimization: We can enhance the store experience by building a self-checkout or contactless experience during shopping. We can also have RFID-enabled tags on the products which will reduce shoplifting. These tags can also contain product information so that people can scan and read about the products and know details or if they are allergic to some products, they can avoid the same. 

• Selling Private label products: We can develop private label products and sell them with much better margins. Since we also have customer data on what the most frequently purchased products are, we can start with their in-house manufacturing first. 

• Constant feedback and surveys: We should indulge in getting consistent feedback from our customers. The feedback can be regarding new products that should be added to the store, the shopping experience at the store, staff knowledge, etc. 
   

Interview: Thanks, it was a good discussion.