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Retail Management

Case Study

Large Retail Outlet-


Tee-Emm Mart

Group Members:
 Amjad Ali Memon
 Ariba Ahmed Aswat
 Bakhtawar Ali
 Nida Yasin
 Wajiha Sultan
 Sameel Noman
Tee-Emm Mart- Locating at the right place?
It was the celebration of fourth year of the store; Mr. Tariq Rahim was sitting in his room,
reviewing the sales receipts and financial statement of the store. His eyes kept pondering over
basket value receipt of the customers and the 6-month statement showing an increase in sales of
an average of 10% . However, he is still not impressed by the revenue figure. He set out to
explore possible reasons for the revenue, and realizes that 10% sales hike on a small figure is
insignificant. Suddenly, he caught attention on the number of customers in the store, and now he
found out where the problem actually is. Starting the store with six to seven local residents in
2010, the store has yet to maintain a sizeable amount of customer base contributing to a high
basket value. The surrounding of the store is still vacant, and all you can see are houses far apart
from each other with the store relying on captive audience residing in Creek Vista & Defence
residencies.

About the Company

Tee-Emm Mart is a retail outlet located in the far end of Defense Housing Authority Phase VIII.
The retail outlet is owned by two partners Mr. Tariq Raheem and Moin Khan. The name is
acronym for the two partners Tee (Tariq) and Emm (Moin). Mr. Tariq Raheem is an investor and
businessman, experienced in handling retail chain in United States for over 10 years. On the other
hand, Moin Khan is former captain and legendary cricketer, who have over the years invested in
many properties in defense housing authority phase VIII. He owns his huge DHA Sports Club/
Moin Khan Academy just along the road behind Creek Vista, where Tee-Emm Mart and The Place
mall is located.

The store was inaugurated on 14 August 2010, and was functional in September 2010. Tee-Emm
Mart is a standalone supermarket store located a few steps from The Place mall (Home to
Neuplex Cinema and other retail outlets) and behind the huge Creek Vista, first premium project
in the vicinity. The area is vacant with a very limited population till date. In 2014, a branch at
Khayaban-e-Bukhari was opened to facilitate customers. (Further History and timeline in Exhibit
1)

Retailing Strategy

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According to Mr. Tariq Raheem, Tee-Emm Mart was a passion that made him start the business.
He was inspired by Walmart store format and thereby wanted to imitate a business similar to that
in Karachi. “The location, at the time it was started, looked haunted.” He said. “There was no
other store, nor any business nearby. Our only customers were 6-7 families living in Creek Vista
and around.” The main strategy that the store revolved around was providing extraordinary
services to each and every customer entering the store. “Every customer to us is a premium
customer. Our store aims to fulfill every need of customer and create a greater shopping
experience in the way they desire.”

 Target Market

The target market of Tee-Emm Mart is the household in the area of DHA Phase VIII mainly along
Khayaban-e-Ittehad, Khyaban-e-Shaheen, Khayaban-e-Ghalib, Khayaban-e-Roomi, Khyaban-e-
Iqbal, Zulfiqar Commercial Streets and other related area in the zone. The market it extended to
people as far as Clifton and Korangi. “Our target market is unlimited. We try to cater to people all
over the Karachi. However, the main customers are those of Defence and Clifton.”

The persona of the customer as captured by the owner, as he says, are high profile, wealthy
people, with lot of money to spend (high purchasing power) and are quite educated in their
choices. They look for one-stop shopping solution and convenience.

 Retail Format

The retail format of Tee-Emm mart is that of a supermarket store, where the categories are divided
and assorted as per customer basket pattern. (Store Layout in Exhibit 5) Both local and foreign
merchandise are stocked with all types of SKUs. Prices are competitive and below average (10-
11% lower than retail price) as compared to the retailors in the location.

In October 2014, an outlet in Khyaban-e-Bukhari has been inaugurated to provide convenience to


the customers in the vicinity. The store is at nascent stage and has yet to build Bakery and
Pharmacy corner. The outlay of both the stores is similar, though assortment is limited in recently
launched Khyaban-e-Bukhari branch.

 Building Sustainable Competitive Advantage

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Tee-Emm Mart believes that offering products of all sorts and providing every customer that
enters the store with excellent customer service i.e. home delivery, discount offers, credit
payments and creating a shopping experience at the location. This has helped them maintain
customer loyalty and a larger basket size.

Location

When Tee-Emm mart opened, its biggest risk was the location. It had little or no customer base
and almost no competition at all. But with time the area developed and so did the opportunities.
Exhibit 4 shows the view of mart from google map highlighting key locations.

DHA golf club was present before the creation of Tee-Emm mart, and it had an opportunity to
gain a bit of customers out of the members who would usually cross to reach the club. DA School
for O and A Levels, DHA Early Learning Center and Moin Khan Academy are the other eminent
locations in the area, which can attract customer on the go especially to buy snacks and grocery
while travelling to and fro the mart.

The major advantage was that of Creek vista building residents, all of whom almost became
permanent customers. The Place and Nueplex Cinema has added on to create awareness about the
mart and hence the trickle-down effect of the customers again impacting in a positive manner.

Recently, there is a Shell petrol station that has opened, with a select mart, but so far it barely
been able to pose any threat to the already huge customer base that Tee-Emm mart has been able
to create with time.

Product Assortment

The owner aims at providing one stop solution to its customer at the store. Thus, at Tee-Eem Mart
you will find all the category starting from Baby care, Bakery, Dairy and Fresh Juices, Food to go,
Groceries, Health & Beauty, Household & Kitchenware, Pet care to cosmetics and pharmacy in
the store. Tee Eem Mart believes in providing a wide variety within a category to its customers so
that they can choose whichever brand they want. Details of products are mentioned in Exhibit 7.

Along with the local brands it also keeps international brands but the assortment of imported
products is limited. Also, it does not hold any private labels anymore, after once being
unsuccessful due to customer perception and causing damage to other products in warehouse.

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In 2014, after what he envisions the success of Creek Vista store, a branch at Bukhari was also
opened. The assortments at the store and format were similar, except for bakery and pharmacy
section in the store, which they plan to add very soon.

Pricing

Tee-Eem Mart offer price that are 10-11% lower than retail price of the product. He has been
inspired by Walmart store offering of Everyday low Pricing. He believes charging low price is not
a sustainable competitive advantage, especially in the area where the residents are high profile
and have high purchasing power. However, he still believes that offering customers with low price
offerings along with some premium products can maintain a good image to the customer. The
prices have been kept lower.However, the price decrease has not been marketed to consumer
because it threatens to dilute the perceived image of the mart. Thus, he trade off with keeping low
price products against customer satisfaction and loyalty.

Warehousing and Distribution

Like any other modern day retail store operating at a relatively large scale, Tee-Emm mart also
has its own warehouse and storage facility. Under each of the two outlets the mart has a huge
basement with all the storage facilities needed for the mart. Although there is ample storage
capacity, there are a few other management problems that Tee-Emm mart faces with the storing
facility. It faced a few water bottle leaks that led to inventory damage and late discontinuation of a
private labeled 19 litre bottles. Tee-Emm marts warehousing is up to date with and similar to most
modern outlets in Pakistan.

Inventory turnover differs from product to product. It depends on the expiry, expected sales,
change in demand or flaws in the products. Tee-Emm mart tries to implement the 5R’s to the
inventory management1 system. A simple supply chain model as identified by the owner is
mentioned in Exhibit 8. Distribution system is both electronic & manual. In electronic, GRN
(Good Receiving Note) system is used. For the supplies there are around 250-300 vendors who
are responsible for the supplies the largest ones include Burque Corporation and Abudawood
Pakistan(ADP).

Human Resources:
1 Efforts made to place an order at the right time with the right source to acquire the right quantity at the right price
and right quality.
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Currently, Tee-Emm Mart is managed by 2 store managers, and 19-20 cashiers. The managerial
hierarchy is shown by the store organogram in Exhibit 2. The employees’ typical working hours
are from 9.30 am till 6 pm. Certain employees join the store late and hence, have working hours
from 2.30 pm-12 am.

Mr. Tariq believes in deeming store managers as store directors and empowering them to make
the right retail mix decisions. Everyone from cashiers to store managers is viewed as leader with
pursuit of providing premium customer service and thus improving the store’s bottom-line results.

Customer Service:

Tee-Emm Mart reinforces philosophy of ‘Customer is King’ by providing premium customer


service i.e. Home delivery (esp. for Creek Vista customers), discount offers, credit payments and
creating a shopping experience at the location.

A store’s high quality customer service is difficult and costly to imitate which acts as sustainable
competitive advantage. Hence, the Tee-Emm Mart focuses heavily on building a strong customer
relationship through superior customer service. It provides wide range of product assortment so
much so that upon customer feedback, it is planning to open DVD & Photocopier section to
promptly adapt to customer needs & wants.

Competition

For Mr. Tariq, there is no direct competitor in both the branches that shares their customer
footfall. The indirect competitors include standalone & mall-based retail outlets of any retail
format type in the Defense & Clifton vicinity as it provides the similar services to its current and
potential customers. Interestingly, he welcomes direct competitors to enhance customer traffic
which has started picking up in its main Creek Vista branch owing to The New Place mall.

What sets this standalone retail store apart from other standalone stores is the unique availability
of captive audience that resides in Creek Vista and Defense residences. Their target market looks
for one stop shopping solution and convenience. Thereby the store brand aims to outperform the
indirect competitors by providing premium customer services i.e. speedy home delivery, discount
offers, credit payments.

Future Prospects and Concerns

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After being in the retail landscape for about 4 years, Tee-Emm mart has established a clear brand
image in the mind of customers. “People often associate shopping experience to the store,
generally a stop by after a movie at Neuplex cinema, going or returning from school or sport
academy, or a special visit to buy fresh grocery in the morning.”

The supermarket is the only one in the location, and hence will continue to add convenience to the
residence, increasing customer loyalty and value over time. The opportunity of shopping for all
variety such as clothing, eating out, entertainment, shopping, and beauty and then a retail outlet
(Tee-Emm Mart) increases the probability of buying from the nearest store. Mr. Tariq also
believes that “The Place” is a gift to us.

With this brand image, the owner expanded the outlet to another store at Khayaban-e-Bukhari in
2014. The new store, is smaller than the first one, but has similar assortments with a few missing.
The location of the store has, however, attracted a greater footfall in the past few months, and
contributed to high sales and large basket value. Moreover, the store has been able to attract a
number of people due to the retail persona established over the years.

However, the new store has limited the number of customer, as the two stores cannibalize the
sales of each other. Located in the same region, the customer base remained the same and so did
the target market. Hence, this has resulted in customer shifting to new store for their convenience,
reducing the sale of the old store.

There is no such specialty product in the store that helps in attracting customers to the store and in
building sustainable competitive advantage. The products provided by the Tee Eem Mart are also
available at other stores. The only differentiating factor in products is that it provides a lot of
variety within each category thus customer has the option to choose from a variety of brands.

The pricing strategy of Tee-Emm Mart doesn’t resonate well with the profile of target audience.
The customers in the area seek convenience at the store. They look for good service, quality and
one stop solution for all. Paying a premium against a tradeoff of offerings that appeal them is
what they will be happily willing to barter. However, charging a low price for the product gives an
initial impression of the product having defects or of low quality. Moreover, the store is still
losing out opportunity to earn high. Even, if the store is not highlighting it, at some point it will
eventually become a threat, impacting the sales.

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The introduction of mobile application for the customer and use of e-commerce in the market are
positive signs of growth,capturing a wider audience from all over Karachi. Also, this has created
awareness about the store presence to people, generally unaware about the outlet.

However, despite wide assortments, technological advancements and excellent customer service,
is the store successful in creating enough footfall and revenue? Do the figures justify it? How
much has decision of locating behind Creek Vista, proved wise? Will the store sustain for next 5
years? 10 years? And above all, is the decision of opening to stores nearby and allowing
cannibalization an effective decision?

Recommendations

In view of the above problems identified and quoted in various areas of the case, the underlying
problem lies in the location of the store. Although, the main concept regarding location is quite
crisp, however, the store strategy and expansion are not aligned with regard to the area. Have the
shopping mall and cinema not been there, the store would have difficulty surviving in the
location. Under the circumstances, we would recommend the following considerations:

 The location of the second store in Bukhari is not a well-planned decision, as we see
today. The location of the second store should be at least as far as Clifton, Saddar and
other areas. This would have enabled to get more customers and hence increase sales
figure immensely. Thus for its future expansion comprehensive, location analysis should
be carried out. Rather than cannibalizing the sales of its own stores it should focus on
locating in areas where it can capture the sales of its competitors and where there is
enough footfall.
 Pricing of the store does not fit to the premium image and profile of the customers. Price
decreases are not sustainable in long run.
 The main focus should remain on extending customer service, such as android app, online
order placement and delivery, cash on delivery, credits and feedbacks.It should market
these offerings in collaboration with The New Place Mall that has recently increased
customer traffic.
 There is still not much awareness of the outlet to the target audience. People living in
Defense are not aware of the store. Certain measures need to be taken to increase

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awareness and market the offerings. For this, Neuplex, The Place and Moin Khan
Academy image and awareness can be taken as support.
 Tee Eem Mart should keep specialty products which are not available at other nearby
shops. This will increase the footfall at Tee Eem Mart and people coming to buy the
specialty products will purchase other things too thus it would lead to increase in sales as
well.
 Tee Eem Mart should consider introducing Loyalty cards as it will help in boosting sales
and maintaining customer loyalty. Through Loyalty cards customer will gain points for the
purchases they make and after achieving certain points they will be awarded will discounts
and gifts which will increase the store loyalty. It is a better way for retaining and attracting
customers than providing everyday low pricing or direct discounts.
 It should experiment on e-retailing channel to capture untapped customer base that extends
as far as Clifton, Saddar and other areas.It would compensate the location drawbacks and
would minimize threat of competitor entrance that could capture the share of wallet from
its existing and potential customers.

In light of above recommendation, location is a fixed investment and huge cost, which is not easy
to liquidate. Thus, focus should be more on marketing and increasing sales revenue figures such
that the supermarket becomes top of the mind recall in terms of customer service, product display
and offerings and their range.

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Appendix

Exhibit 1:

History:

When Mr. Tariq Raheem returned from US in 2010, after 15 years; He had a passion to run a retail
mart, just like a retail chain in the United States. During his visit to DHA Phase VIII, he saw
massive projects underway. Finding it a prospect of immense growth and an ideal investment
opportunity, he set out to deal with the proceedings of buying the property for commercial aspect.
He met Moin Khan and shared his view and passion towards retail chain. Moin Khan took keen
interest the plan and agreed to provide support for it. He identified possible locations for the site.
Mr. Tariq Raheem and Moin Khan agreed upon investing at Khayaban-e-Shaheen.

 Brief Timeline of events:

Year Event
2009-10  Tariq Rahim Came back from US
Early 2010  Planned to open a store in defense area
 Searching for a suitable site
 Met Moin Khan, joined hands for the business
Late 2010  Set up first store behind Creek Vista
 Store Inauguration
2011  Satisfactory results from the customer living in the
vicinity
 Problems and delay in delivery of goods
 No Promotion or offerings on the store by company
2012  Launch of Private label as a test run- rice and bottle
 Leakage of bottle in the warehouse, result in damage
of other products
 Private label called off
2013  The Place shopping mall opened
 Neuplex Cinema opened opposite to the store.
 Increased customer footfall
 Companies started to take interest in activities on
store
2014  Opened a second outlet at Khayaban-e-Bukhari,
already had a warehouse there.

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Exhibit 2:
Tee-Emm Mart Organogram

(Owner & Founder)Tariq (Owner & Co-


Raheem Founder)Moin Khan

Phase 8- Phase 6-Store


Store Director Director

Cashiers(11) Cashiers(8-9)

Employees:
99% of the workforce is hired on full-time positions with monthly pay scale typically varying
from PKR 15,000-PKR 20,000 for cashiers .It at times crosses PKR 30,000 and even PKR
1,00,000 for store managers. These pay scales are not fixed and are closely tied to performance in
terms of service level, employee attitude & character.

Exhibit 3:
Logo of Tee-Emm Mart and Android Application page

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Exhibit 4:
Location on Google Map

The mart is situated at a single level and occupies a large floor space. The outlet basically caters to the residents of Creek Vista as one
its entrance opens up from Creek Vista itself to provide ease to the customers for access. Some of the customers are even delivered
their related items to door steps too. This practice has helped the management to maintain customer loyalty where customer places
their orders on call. On the downside this has led to fall in impulse purchases as the customers only order what they require a visit to
outlet is eliminated. The other Entrance opens up in front of Moin Khan Academy. The location of Phase 8 caters usually to shoppers
who reside there.

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Exhibit 5:
Store Layout

The store Layout for T-Emm Mart is designed which falls under category of supermarket category. This kind of stores usually are
larger than traditional grocery store with wider selection but smaller and more limited in range of merchandise than hypermarket, there
are self-servicing and provide a wide variety of food and household products, organized into aisles. Following the supermarkets
format T-Emm Mart has product categories under Meat, dairy, baked goods and other nonfood items like pharmacy, house cleaners,
and kitchen and pet products as well.
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Exhibit 6:
Store View

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Exhibit 7:
Product Assortments:

232 products in Baby care category, 57 products in Bakery category, 210 products in Dairy and
Fresh Juices Category, 32 products in Food to go category, 209 products in Groceries category,
889 products in Health and Beauty category, 229 products in Household & Kitchenware category
and 35 products in Pet care category.

List of Products Available:

 Baby care category: Aptamil, Aquafresh, Avent, B.Brite, Cadbury, Colgate, Cow &
Gate, Cussons, Disney, Enfagrow, Enfamil, Ensure, Gerber, Glucerna, Heinz, Horlicks,
Huggies, Johnsons, Kodomo, Loreal, Meiji, Millac, Milton, Morinaga, Mothercare,

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Nestle, Nutricia, Oral-B, Ovaltine, Pediasure, Pepsodent, Schwarzkopf, Sensodyne,
Similac, Sma, Tommee Tippee, Wyeth

 Bakery category: Bisconni, Britannia, Cadbury, Italiano, Krogers, Kugi, Munchys,


Novarino, Peki, Rossmoor, Tiffany, Ulker

 Dairy and Fresh Juices category: Caesar, Canderel, Francos, Fruitien, Jame Shereen,
Kellogg's, Lacnor, Lactasoy, Lipton, Masafi, Medicam, Mitchells, National, Nescafe,
Olpers, Shezan, Splenda, Sun Sip, Tang, Tapal, Tropicana Slim

 Food to go category: D'lish, Freshmate, Miaow miaow, Mitchells, Nongshim, Orville,


Tulip

 Health and Beauty Category: Adidas, Axe, Braun, Brut, Denim, Dettol, Dial, Dimples,
Dove, Dupas, Everyuth, Fa, Fair & Lovely, Garnier, Gillette, Head & Shoulders,
Himalaya, Insignia, Johnsons, Jolen, Jovan, Loreal, Lux, Malizia, Medicam, Mirage,
Nair, Nivea, Nova, Olay, Old Spicy, Palmers, Palmolive, Pantene, Pears, Playboy, Ponds,
Rexona, Safeguard, Schwarzkopf, Set Wet, Sunsilk, Toilette, Vaseline, Vatika, Veet,
Yardley, Zodiac

 Household & Kitchenware Category: Air Freshener, Air Wick, Ariel, Astonish, Charm,
Clorox, Colgate, Comfort, Dettol, Fairy, Faultless, Fresh air, Glade, Harpic, Himalaya,
Mortein, Mospel, Oral-B, Palmolive, Pepsodent, Sensodyne, Surf Excel, Yuppies

 Pet care: Friskies, Hartz, Me-o, Pedigree, Whiskas

Exhibit 8:

Supply Chain and Inventory Management

 For Fresh food

Mandi/ End
Distributor Retail Store
Source Customer

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For fresh fruits, vegetables, bread, dairy and bakery items, which have very low shelf life, the
products are distributed on a daily basis in the morning.

 For local products

Supplier Maunfacturer Distributor Retailer Customers

In case of local products, the retailer places an order when the inventory level has reached the
replenishing point. Usually, it takes an average of 5-10 days for order delivery depending
upon the order size, therefore the order is placed keeping in mind the consideration and time
lapse. Furthermore, Tee-Emm Mart has its own warehouse to store inventory. It keeps limited
number of products on shelf and stores the rest in warehouse, just below the store. Initially,
the distributors felt unsafe in the locality when the store was started. Hence, the distribution
got delayed frequently. But now, the delivery time has improved significantly, and the order
is delivered within 24-48 hours also.

 For Imported products

Importers Distributor Retailer Customer

For imported products, the order is placed on the basis of forecasted demand. Since, the
delivery takes 15-30 days depending upon the category and release, the order is given in bulk
to avoid extra charges to be paid for each delivery. Furthermore, Tee-Emm mart also orders
products directly from the retailers in the foreign countries due to strong relationship with the
owner.

Exhibit 9:

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SWOT Analysis

Quality of Customer Service


Strengths Wide Product Assortment

Location
Weaknesses Lack of Marketing Efforts
Lower Retail Prices

Use of Technology
Opportunities Untapped Customer Base

Threats Entrance of Direct Competitors


Increase in Crime Rate

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SWOT DESCRIPTION

STRENGTHS  Quality of Customer Service:It is focusing on high quality customer services, i.e. phone
delivery, discount offers, credit payments and creating a shopping experience at the
location to maintain customer loyalty and a larger basket size.
 Wide Product Assortment: Tee-Emm mart has wide range of product assortment
ranging from Baby care category, to Groceries category & Health and Beauty category,
Household & Kitchenware category ,Pet care category.This gives more choices to its
customers who look for convenience and one-stop shopping solution.

WEAKNESSES  Location: Though the store has a unique advantage of having a captive audience from
Creek Vista residence and The Plaza and Nueplex Cinema has increased footfall rate,yet
it hasn’t been sizeable enough to generate expected sales revenue since the store launch.
 Lack of Marketing Efforts: There is yet lack of awareness about the outlet amongst
the target audience.The apparent reason being that the communication mix is highly
underutilized,with lack of active social media ,online(website),SMS Marketing,and
minimal use of other marketing tools such as leaflets,brochures,print adverts,etc.
 Lower Retail Prices:The positioning of the store is that of premium offering to upper
class segment residing in Defence & Clifton.Hence,charging a low retail price(10-11%
lower than standard retail price) for the product gives an initial impression of the product
having defects or of low quality.

OPPORTUNITIES  Use of Technology:The store has definitely incorporated technology as it extended


customer services, of android application & online order placement and delivery.It can
further formally start e-retailing channel to compensate for fixated disadvantage of
location.
 Untapped Customer Base: The current customer base is limited and is not
sizeable.There is yet an opportunity to capture the untapped customer base that extends
as far as Clifton, Saddar and other areas.Such an opportunity can be availed through
experimenting with e-retailing channel. This would get more customers and hence
immensely increase the sales revenue.

THREATS  Entrance of Direct Competitors:Though the store welcomes entrance of direct


competitors,yet their entrance in especially The Place mall as a mall-based retail outlet
could potentially take share of wallet from TEE-Emm customers.The threat could be
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minimized if there is a contractual agreement with the mall regarding the entrance of
direct competitors and the store could launch e-retailing channel to utilize untapped
customer base.
 Increase in Crime Rate: D.H.A has been witnessing an increase in the crime rate that
ranges from mugging to kidnapping incidences. According to Mr. Tariq, the customers,
especially the ones who would like to buy monthly household goods are afraid & highly
cautious to visit the store, especially during late evening hours owing to the increase in
crime rate.Hence,the threat remains strong and puts location factor as drawback.

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