Small-scale departmental stores and grocery shops are considerably rudimentary and are not accorded much acknowledgement within the local economic sphere. However, a scheduled meeting with one such departmental store has contributed substantially to a transition in opinions and has broadened an existing knowledge base. This organization, which has been christened “Jagdish Departmental Store”, is located in the heart of South Delhi. Enclosed within the bustling marketplace of Yashwant Place Shopping Complex, Chanakyapuri, as a corner for exuberant economic activity; this shop appears like a typical neighborhood grocery shop, albeit a major footfall of customers- ranging from senior bureaucrats of the state and central government to expatriates and distinguished diplomats, who patronize the store for its variety, good quality of products and a substantial stock of goods.
An intrinsic curiosity, regarding its functioning and operational flexibility, compels me to speak with the owner himself and ask him a set of 25 questions, pertaining to the cost of operation, revenue earned, profit accumulated and loss incurred etc. An interview with Mr. Dinesh Kumar, also bought about the fact that departmental stores have been adversely affected by the rise of E-commerce websites. E-commerce websites have come up extensively and ostentatiously in the last few years; their rise has been so rapid that departmental stores have had a hard time catching up. Upon being asked about this recent, considerably detrimental development, he says “Businesses offering E-commerce services are massive business organizations which use efficient means of production and sales as well as aggressive marketing tactics. We as small business owners find it very hard to compete with such companies. However, we are still lucky because we have customers who feel that the services that we provide are safe and secure and feel more comfortable when it comes to daily supplies, when they shop with us. However, Mr. Kumar still feels that if E-commerce services are made more personalized, people would prefer to move towards them and local departmental stores would have to really up their game to compete against such enterprises.
The organization of the business
The USP of this organization, as elucidated by Mr. Kumar himself, is that there is greater personalized communication with the customers as well as the suppliers. The customers who visit him form a connect with him in such a way, that he is aware of how to satisfy the demands of each and every regular customer. He imports certain specific goods from foreign countries so as to cater to the demands of expatriates and diplomats from the African and the European continent. He has also developed certain basic language skills to speak and communicate better with the customers, so as to realize their demands and fulfill them accordingly. Catering to expatriates is one pivotal characteristic that distinguishes this store from other organizations.
Mr. Dinesh Kumar, who is the proprietor of this departmental store, gave us an insight into the functioning of this business organization. The store started initially in 1968 and then expanded further. The business was initially started on a small-scale and had a small, select group of suppliers. Mr. Dinesh Kumar is the second-generation owner of this organization, along with his younger brother. His eldest son currently manages the back-end activities of the business such as stock inventory, pricing and debit-credit records. Mr. Dinesh Kumar has since, expanded his business to include a sweet shop and a restaurant, as well as a shop for cold cuts and meat, in addition to packaged groceries. The preparation of the accounts of all the transactions undertaken in each functionary of this store is undertaken by an accountant who prepares them on the computer.
The management of all the three organizations is separate but the means of obtaining stock and procedure of accounting have a common source. The operations start with the creation of an inventory of the opening stock, in all three establishments. Within the departmental store, there exist separate counters for groceries, feminine products and medicines. After a proper stock inventory has been prepared, the stock that is required, is facilitated by contacting the suppliers. The stock is carefully arranged on separate shelfs by the shop-hands and the shop is opened for business. Whenever there is a cash sale, a bill is prepared by the operating counter concerned and sent to the main cashier counter, wherein cash is collected and the product is sold. A simultaneous bill is prepared on the computer, so as to have concrete evidence of the transaction. A credit sale is also recorded on the computer and a Bill Payable is given to the debtor. At the end of the day, the Closing Stock is estimated and the suppliers are accordingly contacted for goods. The cash inflow and the sale of goods for the day are estimated.
Forces of Demand and Supply
We scoot over to the feminine products counter and inquire about the products which have a higher demand, in comparison to others. We are told that feminine beauty products and healthcare products are highly demanded by the customers. Customer trends indicate that customers pay more heed to herbal products because of their minimal side effects and efficiency and are positive indicators for retailers, since they are priced at a higher rate. Among conventional groceries, food items are given more preference, and that is a trend which has been prevailing for the longest time. The restaurant and the sweet shop, observes the changes in the forces of demand and supply of sweets, due to a variety of reasons. Festivities lead to an increase in the demand of a few types of sweets and hence their supply increases. The demand in the establishment selling poultry and meat products also fluctuates from season to season. The demand for meat and chicken decreases during an auspicious festival such as Navratri, while the demand for fish decreases during the months of September-October due to their breeding season.
Costing and Profit
The costing for packaged goods is done easily because retailers purchase the goods at a cheaper price from the wholesaler. They impose a very slight increase of 8-10% on the cost of goods, to provide for a reasonable profit margin.
Since the sweet shop and the poultry shop do not sell packaged goods, they impose an increase of about 25%, to realize a suitable profit. The profit is realized after deduction of miscellaneous expenses of running the department store such as the cost of sales persons, electricity, rent, etc.
This excursion to a local departmental store, which I had earlier disregarded and not included in the list of “businesses with complex organization”, has changed my perspective towards sole proprietorships and local stores in general. It is educational to know that there exists a plethora of diverse economic activities all around us. We simply need to observe them and draw out favorable conclusions and analysis, to adjudge and ascertain the functioning of such an organization.