INTRODUCTION In this report we assess whether an M&S Simply Food convenience store would be profitable when located in Complex Desjardins, Montreal. In the U. K. Simply Food possess a strong brand image and wide-variety of products that emphasize quality.
Although considered more expensive than competing stores To see if the chain will have the same level of success in Montreal, we first analyzed the fundamentals and competitive landscape of the industry. Once a gap in the market was identified, we used quantitative research practices to examine each of the marketing mix factors involved in establishing the store.Our findings will indicate whether the location and consumer pool under consideration will RESEARCH OBJECTIVES * Identify the M&S Simply Food products and services, and the factors that drive the chain’s success in the U. K. * Analyze the market fundamentals of the convenience store sector in Montreal, and identify whether a market gap for quality, high-end stores such as M&S Simply food exists * Assess whether M&S Simply Food will be profitable in Complex Desjardins based on the following factor: (i) Location (ii) Consumer Demographic (iii) Consumer Preferences (iv) Competition & Pricing Propose key operating and marketing strategies to ensure the success of M&S Simply food in Complex Desjardins. METHODOLOGY Industry Knowledge Exploratory research was employed to gain understanding of the U. K.
convenience market and lean how the M&S Simply Food chain is positioned. This involved a review of studies and data made available by leading international research institutions, as well as informal discussions with consumers who previously lived in London and are familiar with the brand. We applied the same methodologies when conducting a similar analysis of the Montreal convenience market.In this stage of our research we were able to apply more formal approaches, such as conducting in-depth interviews with store managers.
After all the necessary information was acquired, a qualitative comparison of the industries was made to determine whether opportunities existed for M&S Simply Food in Montreal and whether a repositioning of products would be needed. Target Market From our previous analysis we establish a target market: consumers at the Complex Desjardins. This location is one of the main attractions in Montreal, at a vast 4 million square feet.Roughly 30,000 people come to the complex and its surroundings daily to work, shop, eat and/or enjoy the activities surrounding the Central Square. The Central Square inside the building has a surface of 15,000 square feet and is surrounded by a commercial gallery of 100 stores and restaurants. Thus, this location was chosen because of its notoriety and large exposure to residents and tourists. Survey and Sample Size To determine whether consumers at Complex Desjardins would be willing to purchase M&S Simple Food products we conducted an anonymous survey on food services within the complex.The survey was a questionnaire made up variety of formats designed to draw out information about the location, demographic, consumer preferences, surrounding competition, pricing comparisons and consumers’ willingness to pay.
Interviews were conducted at the Complex Desjardins, as well as within a 500m radius of its surroundings which comprised of Complexe Guy-Favreau, Bleury Street, Place Des Arts and Boulevard Saint-Laurent. We classified qualified respondents as consumers that came through the complex at least 3 times a week.In total, we interviewed 96 people, considering a variability of 50% and a 10% acceptable sampling error at 95% level of confidence. Assuming the total population under observation here is 30,000, it is evident that a 5% confidence interval is well above 96.
Thus, no more readjustments are needed due to small sampling size. FINDINGS Convenience Market (1) U. K. Industry The U. K. convenience store market was valued at ? 30.
9 billion in the 12 months to April 2010, representing a 6. 3% increase on the previous year. The value of the market continued to grow despite a 0. 5% in store numbers. With he total U. K.
Food and Grocery market expanding at a slower rate of 4. 1% in the same period, it is evident that the convenience sector is accelerating at a faster pace than the overall market. Thus, its market share has risen to 20.
5%. The factors driving the sector are the rising number of single person households, a growing population, increasing number of women in the work place and longer working weeks. The sector is also propelled forward by improved operational standards, greater awareness of shopper trends and more modern, tailored convenience solutions. (2) M&S Simply Food PositioningThe convenience sector is highly fragmented, with store operators divided into the following segments: co-operative, forecourts, multiples, symbols & franchise, and non-affiliated independents. M&S Simply Food is part of the franchise segment, which recorded the fastest growth in the previous year. This expansion was driven by additional stores, increased promotional activity and improved value for money. M&S Simply Food specializes in selling ready-made meals: salads, sandwiches, desserts, snacks, and microwavable dishes.
The self-service store also sells fresh produce, possessing wide selection of fruit and vegetables.Being high-end oriented, the franchise targets working professionals not only looking for a fast, healthy meal, but also willing and able to pay an additional expense for high quality food. For the added premium, customers have access to more adventurous recipes, better packaging and fresher ingredients.
These value –added services, alongside the modern layout of the stores, give the brand a competitive edge in the market and allow it to capture a significant share of consumers. A negative sentiment expressed by consumers was attributed to the experience of purchasing at M&S Simply Food stores.Due to brand’s high popularity, long queues often form inhibiting browsing by other potential customers and causing feeling of frustrations by professionals that are time-sensitive. (3) Montreal Industry The convenience sector in Montreal is made of Canadian chains and independents. Family-run depanneurs cater to local neighborhoods and immigrant populations, offering specialty foods and discount long-distance calling cards alongside the usual convenience-store fare. Others offer a wider variety of services such as Canada Post, Western Union transfers, Internet access, and home-delivery of groceries.However, the market is dominated by a large Canadian chain known as Couch-Tard Inc. The chain offers a quality assortment of freshly brewed coffee, frozen/iced beverages, fresh sandwiches and other fresh food items that are marked under proprietary brands.
Arguing that most convenience stores are too cluttered, the Couche-Tard company introduced a new concept called “Store 2000”. These stores have wider layouts, brighter lighting, modern decor and often have Quick-Service Restaurants (QSR) located within them. The new concept was a success and the results were integrated into upgrades for all stores. 4) M&S Simply Food Expanding to Montreal It is evident from our research that the U. K. has a more diverse group of convenience stores with different positioning catering to all consumer income brackets.
However, in Montreal we see that Couche-Tard owns the majority of the market and is designed to target the average consumer, thereby not competing with deppaneurs immigrant pool. This also illustrates a gap in the Montreal convenience market: value-added stores aimed at consumers from a higher income bracket. M&S Simply Food’s positioning in U.
K. onvenience markets makes it an ideal candidate. Survey Results (1) Location The statistical analysis of the questionnaire revealed that over 85% of the respondents visited the Complex Desjardins and its surrounding area at least 3 times a week. In Table below it is evident that the number of times a week respondents enjoy meals at the complex is greater in frequency towards higher values, with the overall average at 2. 7 times. This illustrates that the location receives a great deal of foot traffic, and is a popular food services venue.
Table 1: How Often Consumers Eat at Complex Desjardins | Frequency| Percent| Valid Percent| Cumulative Percent| Valid| Never| 2| 2. 1| 2. 7| 2.
7| | Once a month| 2| 2. 1| 2. 7| 5. 4| | Biweekly| 4| 4. 3| 5. 4| 10.
8| | Once a week| 7| 7. 4| 9. 5| 20. 3| | Twice a week| 13| 13. 8| 17. 6| 37. 8| | Three times a week| 20| 21. 3| 27| 64.
9| | Four times a week| 16| 17| 21. 6| 86. 5| | Five times a week| 10| 10. 6| 13.
5| 100| | Total| 74| 78. 7| 100| | Missing| System| 20| 21. 3| | | Total| 94| 100| | | Furthermore, findings indicate that respondents favor particular designated areas within the complex and its surroundings when eating.With response rates of 38% and 34% respectively, the most popular areas are the food court and restaurants/cafes on the adjacent Saint-Catherine Streets. Diagram 1: Preferred Food Locations (2) Consumer Demographic In Table 2 we see the sample size under consideration reflects the social demographic profile of the area: professionals, local residents or students studying nearby.
There is a fairly even distribution between male and female respondents, with males slightly ahead at 51%, conveying that the area equally attracts both sexes. Table 2:Social Demographic Profile of Complex Desjardins Based on Sample Statistics| | | I work at or close to Complexe Desjardins| I live at or close to Complexe Deskardins| I study at or close to Complexe Desjardins| None of the above| N| Valid| 36| 28| 21| 3| | Missing| 58| 66| 73| 91| | Mean| 1| 1| 1| 1| | Median| 1| 1| 1| 1| | Mode| 1| 1| 1| 1| | | | | | | I work at or close to Complex Desjardins| | | Frequency| Percent| Valid Percent| Cumulative Percent| Valid| Yes| 36| 38. 3| 100| 100| Missing| System| 58| 61. 7| | | Total| 94| 100| | |I live at or close to Complex Desjardins| | | Frequency| Percent| Valid Percent| Cumulative Percent| Valid| Yes| 28| 29. 8| 100| 100| Missing| System| 66| 70.
2| | | Total| 94| 100| | | I study at or close to Complex Desjardins| | | Frequency| Percent| Valid Percent| Cumulative Percent| Valid| Yes| 21| 22. 3| 100| 100| Missing| System| 73| 77. 7| | | Total| 94| 100| | | None of the above| | | Frequency| Percent| Valid Percent| Cumulative Percent| Valid| Yes| 3| 3. 2| 100| 100| Missing| System| 91| 96. 8| | | Total| 94| 100| | | | | | | | |Consumers in the area tend to be well educated, with 63% of respondents having completed a college degree. This, alongside results that show 41% of respondents are between the ages18-24, indicates that complex attracts a great deal of young professionals. However, Diagram 2 below also illustrates that another 48% of respondents are between the ages of 25-40.
Furthermore, the average household is occupied by 2. 8 residents and generates roughly CAN37,600 a year. These findings highlight another consumer profile, that of local residents; classifying them as small family units in the middle-to-high income bracket.Thus, our findings conclude that the consumer pool at Complex Diagram 2: Income levels (3) Consumer Preferences Our statistical analysis of the questionnaire revealed that the consumer preferences of the sample pool are aligned with M&S Simply Food’s products and services. Roughly 61% of respondents stated that they would purchase food from a convenience store specializing in quality. Their main justifications for purchase included the reliability of quality food, the convenience of ready-made meals, the ability to enjoy restaurant quality food at lower prices, and the chance to maintain a healthy diet.
Furthermore, the study revealed that when faced between the choices of picking up their own food or having it served to them, respondents were equally divided. These factors encompass the overall message, products and services of M&S Simply Food value-added services. Table 3 analyzes the relationship between price and healthiness of food in terms of their importance to the end consumer. The cross tabulation clearly reflects the two variables are integral in the decision making process of the consumer: the more emphasis placed on the healthiness of food, the more significant pricing becomes.
We can also conclude from the chi squared test that the relationship between the two variables is statistically significant. Unfortunately, our findings proved inconclusive when determining whether consumers would be willing to pay more for healthier, higher quality food. This limitation was due to the lack of responses to the particular question in the survey. Table 3: Relationship Between Price and Health in Consumer’s Decision-Making Process Healthy food on the menu * Price Cross Tabulation| Count| | | | | | | | | | | | | | Price| | Least| 2| 3| 5| 6| 7| 8| 9| Most important| Total| Healthy food on the menu| Least important| 1| 0| 0| 0| 0| 0| 0| 0| 0| 1| | 3| 0| 1| 0| 0| 0| 0| 1| 1| 0| 3| | 4| 0| 0| 0| 0| 0| 1| 0| 0| 1| 2| | 5| 0| 0| 0| 0| 1| 2| 0| 0| 0| 3| | 6| 0| 0| 0| 0| 2| 1| 3| 2| 0| 8| | 7| 0| 0| 0| 1| 1| 3| 3| 4| 3| 15| | 8| 0| 0| 0| 0| 1| 3| 8| 2| 4| 18| | 8| 0| 0| 1| 2| 1| 2| 0| 2| 0| 8| | Most important| 0| 0| 0| 0| 4| 0| 2| 2| 7| 15| | Total| 1| 1| 1| 3| 10| 12| 17| 13| 15| 73| | | | | | | | | | | | | Chi-Square Tests| | | | | | | | | | | Value| df| Asymp. Sig. 2-sided)| | | | | | | | Pearson Chi-Square| 1. 52E+02| 64| 0| | | | | | | | Likelihood Ratio| 72.
529| 64| 0. 217| | | | | | | | Linear-by-Linear Association| 6. 593| 1| 0. 01| | | | | | | | N of Valid Cases| 73| | | | | | | | | | a. 81 cells (100. 0%) have expected count less than 5. The minimum expected count is .
01. | | | | | | | | | | | | | | | | Correlations| | | | | | | | | | | | Healthy food on the menu| Price| | | | | | | | Healthy food on the menu| Pearson Correlation| 1| . 303**| | | | | | | | | Sig. (2-tailed)| | 0. 09| | | | | | | | | N| 74| 73| | | | | | | | Price| Pearson Correlation| . 303**| 1| | | | | | | | | Sig. (2-tailed)| 0.
009| | | | | | | | | | N| 73| 73| | | | | | | | **. Correlation is significant at the 0. 01 level (2-tailed). | | | | How appealing varying food items are to the sample pool is illustrated in the table below through the mean value of each product; with the number 1 representing very little appeal and the number 10 great appeal.
The relatively stronger desire for salads and sandwiches over desserts reflects the health conscious nature of the consumer.Furthermore, the high frequency of fruit’s appeal suggests consumers’ eagerness for diversity in menu options. Thus, it is evident that the taste preferences of the consumers are in line with some of the Simply Food products.
However, the absence of responses concerning vegetables and microwavable meals suggest a lack of demand for such items. Table 4: Appeal of Food Products | | Salads| Sandwiches| Desserts| Juices| Fruits| N| Valid| 74| 73| 74| 73| 74| | Missing| 20| 21| 20| 21| 20| | Mean| 7. 35| 7. 95| 6. 41| 7. 37| 6.
95| | Median| 8| 8| 7| 8| 7| | Mode| 7a| 9| 9| 8| 7| a. Multiple modes exist.The smallest value is shown| | (4) Competition and Pricing Several questions in the survey were designed to size the level of competition M&S Simply Food would face in Complex Desjardins. Our findings concluded that respondents favored a combination of restaurants and food court stations, with the top two in each respective category being: (1) Eggspectation and Baton Rouge; and (2) A&W and Subway. This gives M&S Simply Food a competitive advantage as its high quality food gives consumers the restaurant feel, while its ready-made, self-service concept mimics the convenience of the food court.Despite the popularity of some competitors, 63% of respondents stated that they do not have a preferred food chain. The results indicated that bad service and poor quality of food were the main deterrents of brand loyalty.
However, nearly half of respondents expressed boredom with current food chain alternatives and eagerness to try new venues. When asked about sentiments regarding a new chain called “Simply Food”, 42% of respondents said that the name appealed to them. Also, Diagram 3 illustrates the styles of cuisines respondents believe are missing in the complex. Diagram 3: Styles of Cuisine Missing in Complex DesjardinsThe frequency below illustrates that 47% of respondents spend between CAN10. 00 to CAN14. 99 on a meal in Complex Desjardins, with the overall average meal costing CAN11. 80.
In comparison, M&S Simply Food individual products range on average from CA2. 00 to CAN4. 50. However, in Table 5 below we see that the brand’s luxury meals cost significantly more, averaging CAN22. 00. Taking into consideration the average expenditure of respondents, the findings suggest that consumers in Complex Desjardins are more likely to purchase individual food items, rather than an entire luxury meal.Table 5: M&S Simply Food Prices | Cost in Pounds (GBP)| Cost in Canadian Dollars (CAN)| Average Cost of Salads| 2. 77| 4.
34| Average Cost of Ready-Made Meals| 2. 64| 4. 13| Average Cost of Fruit| 2. 81| 4. 40| Average Cost of Dessert| 1. 31| 2.
05| Average Cost of Luxury Meals| 14. 11| 22. 08| Correlations By running a series of correlation tests, we discover whether the demand for food within the complex is influenced by the income level of the respondents, the price of food, types of food chains available and consumers’ taste preferences.Table 6 below shows that the only 2 variables that are correlated are the number of times respondents eat at Complex Desjardins and the annual income levels.
Although the value is not statistically significant to 0. 05, it is significant enough to display a relationship: that the frequency of visits, or rather demand, is determined by and proportional to the income levels of respondents. Table 6: Variables Correlated with the Demand for Food | | How often eaten at Complex Desjardins| Which area do you prefer to eat in| Educational Level| Income Level| How often eaten at Complex Desjardins| Pearson Correlation| 1| .
| . 343**| 0. 116| | Sig. (2-tailed)| | .
| 0. 003| 0. 332| | N| 74| 0| 72| 72| Where? | Pearson Correlation| . a| . a| .
a| . a| | Sig. (2-tailed)| . | | . | . | | N| 0| 0| 0| 0| Education| Pearson Correlation| .
343**| . a| 1| . 324**| | Sig.
(2-tailed)| 0. 003| . | | 0.
006| | N| 72| 0| 72| 70| Income| Pearson Correlation| 0. 116| . a| . 324**| 1| | Sig. (2-tailed)| 0. 332| .
| 0. 006| | | N| 72| 0| 70| 72| a. Cannot be computed because at least one of the variables is constant. | **. Correlation is significant at the 0. 01 level (2-tailed).
LIMITATIONS As in any research report, a number of limitations in the execution and analysis of our report occurred. The main issue we encountered was that of missing data, in which a number of questions in the questionnaire were left unanswered. As a result, many of our estimates were found statistically inefficient due to loss of information, while other estimates may be considered biased if the data from questions left vacant are systematically different.
In the future, we suggest increasing the sample size to ensure a more reliable and valid data set.Another common limitation is the subjectivity of surveys in that respondents often fail to answer questions truthfully and therefore skew the results. Efforts to ensure data is accurate would have required more expenditure; however budget restrained us from implementing such solutions. Budget constraints limited the sample size, and care should be exercised in the future to general these findings further. CONCLUSION & RECOMMENDATIONS After much assessment, we believe that M&S Simply Food will prove to successful if established in Complex Desjardins.Our findings conclude that the complex and its surrounding are the ideal location to for Simply Food to attract its target market. Consumers that purchase food at the complex are young professionals and local residents who fall into the middle-to-high income bracket, and therefore are able to afford brand’s higher priced products. Furthermore, consumers’ product preferences reflected strong desires for higher quality food and a wider variety of cuisine options.
Simply Food prides itself on offering its consumers premium quality meals made from adventurous recipes and fresh ingredients, and therefore will be able to capture this unmet demand.Although there is a great deal of competition in the Complex Desjardins, its consumers are open to change and are ever evolving their taste pallet. The unique style of M&S Simply Food enables it to provide consumers with quality restaurant food at the speed and convenience of food court service, thereby capturing a wider share of the market and competing with both food chain categories. The following is a list of recommendations we believe will ensure the profitability of M&S Simply Food in Complex Desjardins: * Locate the convenience store in the food court, as it attracts the greatest number of consumers.
The food court also compliments the self-service nature of the store, providing consumers with an adjacent seating area. * Ensure all advertisements of the brand strongly highlight the “Simply Food” name, as well as key phrases that reflect the stores value-added services: for example “High Quality Food”, “Adventurous Recipes”, “Variety of Cuisine Options”, and “A Healthy Meal Option”. This well help the brand appeal to consumers’ preferences.
* Limit products to ready-made meals, sandwiches, salads, fruits and beverages.Exclude the sale of vegetable produce and microwavable meals, as there does not seem to be a demand for such items. * To encourage the sale of more expensive luxury platter meals, we suggest holding discount promotions during the soft opening of the store. Reduce the price of platters to slightly below the average cost of meals in the complex, in order to entice consumers and build brand loyalty. * To compete with competitors, M&S Simply Food must build up its reputation as a quality food provider at a quick and convenient pace.To ensure this is done successfully, stores must be designed to provide adequate space for browsing, which is to be separated from the pay register. By doing so M&S Simply Food will not have the same queuing problem it encounters in the U. K.
, which often deters potential customers. REFERENCES IGD The Food and Grocery Experts. “Convenience Retailing Market Overview,” [On-line]. Available: http://www. igd. com/index. asp? id=1&fid=1&sid=7&tid=26&cid=91 [20/1/11] Marketing Week (2007, April).
“Assessing the M&S Simply Food Brand,” [On-line]. Available: