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Assignment 2 - Operational Excellence at TruValue

Tru-Value Stores was founded in Hyderabad by two brothers to operate grocery stores. They expanded quickly using three formats - owned stores, franchises, and dealerships. Within three years they had 145 stores across South India. An audit firm assessed the stores' operational excellence on parameters like displays, shrinkage, cleanliness, and customer service. The brothers wanted to focus on customer service and shrinkage. The summary reworks the performance rankings based on revised weights for these priorities and provides suggestions to improve customer experience.

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Shaina Dewan
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99 views3 pages

Assignment 2 - Operational Excellence at TruValue

Tru-Value Stores was founded in Hyderabad by two brothers to operate grocery stores. They expanded quickly using three formats - owned stores, franchises, and dealerships. Within three years they had 145 stores across South India. An audit firm assessed the stores' operational excellence on parameters like displays, shrinkage, cleanliness, and customer service. The brothers wanted to focus on customer service and shrinkage. The summary reworks the performance rankings based on revised weights for these priorities and provides suggestions to improve customer experience.

Uploaded by

Shaina Dewan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ASSIGNMENT 2

OPERATIONAL EXCELLENCE AT TRU-VALUE

M/s Tru-Value Stores (TVS) was founded by two young brothers, Trinath & Karunakar Reddy from
Hyderabad. Their father started as a grocer and established five stores in Hyderabad by mid
2005. Mr Trinath, after his graduation, spent some years with the Landmark group in Dubai and
worked as a store manager for one of the Lifestyle stores. Meanwhile Karunakar started helping
his father in managing their traditional grocery store. With the retail sector booming, the brothers
found that they had an opportunity to expand their network across Hyderabad and perhaps,
make it as a pan-India network. Trinath was responsible for branding and operations standards
at the outlets. With his experience from the lifestyle group, he formed a core team of
merchandisers and trainers and started standardizing their own network of stores. Karunakar
headed sourcing and procurement and took care of back-end operations. Tru-Value Stores
(TVS) was born and they started expanding their network. The unique value proposition was to
sell groceries and greens at low margins, since costs were competitive due to direct sourcing
from farmers. For FMCG and other non-durables, they were able to negotiate hard and win
good discounts from the local branches of these companies.

Customer acceptance was good and there was a demand from other parts of the state to start
TVS outlets. The brothers wanted to own all their outlets. Initially, they started opening stores in all
the major cities and towns of Andhra. However, large industrial houses and politicians were
eyeing the sector. As a result, there was intense competition for real estate properties in most
towns. In order to expand quickly, TVS adopted a unique business model with three formats.

 Own Store – Stores owned and operated by TVS


 Franchise – Stores where the landlord owns a prime property, wants to operate the business
and is averse to leasing the property to others. For Franchise stores, investment on store
décor and stocks would be from TVS. Staffing, stock planning, depositing cash proceeds
from sale and customer service will be the prime responsibility of franchisees. They receive
mostly fixed and partly variable remuneration.
 Dealers – Typically influential business men who want to do business, not averse to
associating with TVS and have the ability to block the entry of TVS into their towns. They pay
management fees to TVS for branding, automation and supplies, while retaining the
differential between landed price and selling price as their margins for all the goods.

Vegetables and fruits, classified as Perishables, are procured locally by all the three formats. In
the case of exotic vegetables and fruits, TVS procures them centrally and supplies to all the
stores.

Within 18 months, TVS was operating 57 outlets in Andhra. Good Word of Mouth (WOM) from
their franchisees, dealers and customers, combined with good reviews in local and national
press, enabled the Reddy brothers to expand through-out South. Within three years, they were
operating 145 stores across South with a turnover of Rs 230 crores. A brief summary of their
operations in South is provided in the figure below. All the excitement of the launch now having
subsided, they have to focus on improving service standards at the outlets.

Marketing Metrics Sriram D


ASSIGNMENT 2

They decided to appoint M/s BVQI as an auditor to develop and measure the Operational
Excellence Standards of the stores. The parameters for audit were as follows:

Variable Explanation Weights (Phase 2)


X1 Perishable Section - Display 5%
X2 Perishable Section - Shrinkage 10%
X3 Perishable Section - Housekeeping 5%
X4 Non-Perishable - Display 5%
X5 Lighting & Ambience 5%
X6 Weighing Machines 2%
X7 Vehicle Parking 5%
X8 Staff Appearance & Conduct 15%
X9 Connectivity 5%
X10 Customer Service 15%
X11 Feedback forms & Loyalty program 2%
X12 Brand Compliance 2%
X13 Store Cleanliness 10%
X14 Book keeping & Statutory Records 2%
X15 Non-Perishable - Shrinkage 10%
X16 Stock Out 2%

M/s BVQI’s summary of the audit report with scores for each parameter (score out of 10) is
enclosed.

1. Based on these details, work out the performance of the states and of various formats.
a. Which are the best and worst performing states?
b. Which format is the best performing and which format needs improvement?
c. What factors need to be focused upon to improve the overall scores?
2. M/s BVQI held detailed discussions with the management and realized that the
management’s focus was on customer service and shrinkage. Accordingly, weights were
assigned for each of the parameters and the scores were re-drawn.
a. Re-work Question 1 and its sub-parts with the revised mandate of the
management, i.e. by assigning weights.

Marketing Metrics Sriram D


ASSIGNMENT 2

b. Is there a significant difference in the ranking?


3. What are your suggestions for improving the customer experience in TVS outlets?

Please provide answers through a detailed report including the methodology adopted, dash
boards indicating results and action plan to improve customer experience.

--xXx--

Marketing Metrics Sriram D

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