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Operation Management of Centrepoint in UAE

Introduction

Centrepoint is one of the world’s best one-stop shops that house Beautybay, Lifestyle, Splash, Shoe Mart, and Babyshop under one roof. It has become the first choice for families that desire to do shopping across the whole Middle East. It has shaped the perceptions of most customers with regard to the products that the company provides to the retail section by constantly adding worth to the brands and ensuring growth. The Centrepoint Company has its origin in Kuwait, being established in the year 2005.

Most of the company’s centers are in Dubai and the Northern Emirates, Abu Dhabi, and Alain regions. By 2014, the company had 56 stores in Saudi Arabia and 15 in the UAE. It has stores in Egypt, Saudi Arabia, the UAE, Jordan, Kuwait, Bahrain, Qatar, Lebanon, and Oman. According to CEO Vinod Talreja, plans are underway to spread its stores to more African countries, especially Kenya, Nigeria, Angola, and Tanzania, to have a share of the African market. The company has a total of 118 stores distributed in the Middle East. Centrepoint Company operates a retail space of 3.3 million square feet.

In the year 2013, the company performed as per the expectations in the mid-market segment compared to the luxury brand, registering 12 percent annual growth that was a better turnover than the previous year. In order to achieve such performance, the Centrepoint Director and Babyshop CEO Vinod Talreja confirmed that the company did not lower or increase the prices but added special offers and value to the items after acknowledging that the market was searching for bargains. The company identified the best market niche that is a mid-market segment and has developed plans for it. The company sales are high during the summer; this is the time when people tend to spend more as a result of a high number of tourists.

Concerning the operational expenses management, the company asked the mall owners to strategize and develop promotions aimed at bringing more people to the malls. The company referred to this strategy as ‘footfall.’ The Centrepoint Company developed plans to increase the number of outlets from 64 to 71 by the end of 2011. Each Centrepoint store, according to Vinod Talreja, costs between $7 and $8 million, which is equivalent to Dh25.69 million. A lot of improvement has been realized so far with the store's number now being 118.

Company’s Strategies

The company has had strategies that have ensured consistent growth and improvement in terms of business operation. The management has ventured into the trade with marketing plans and mechanisms to boost the profits. The company has strategized to open 20 new stores in the Gulf Cooperation Council (GCC) and in the wider Middle East in a bid to expand its markets and increase profitability. The company intended to execute these plans in its July 2015-June 2016 Financial Year. The stores are based in Kuwait, Saudi Arabia, Qatar, and UAE countries.

The rate of growth for the market was expected to reduce as a result of oil prices fall by almost 50 percent in 2014. Most people also decreased their expenditures due to weaker Rouble and Euro. According to Vinod Talreja, the company’s business strategy is to open 15 to 20 new stores every year in the Middle East and across the Gulf Cooperation Council. The newly established stores are planned to span 30,000 to 60,000 square feet in area and will house brands mostly mid-tier such as Lifestyle, Splash, Babyshop, and some global brands. The Gulf Cooperation Council retail market registered the growth of 10.5 percent in the year 2013 and 11.3 percent in 2014. The company projects that the market will have a growth of 7 to 8 percent by 2015 and 2020.

The major strategies that the corporation has established include opening one outlet in Dubai in 2015 that will have its location at Me’aisem City Center. This destination is considered to be a fair footfall destination. Dubai is known to house mid-market malls with a lot of space whose leasing rates are good and the consumer demands are high (Schulte, 2010). The brand has strategically planned to expand in the region and open 100 more stores in the next five years with the investment worth over Dh1 billion. It has already entered Iraq with a store in Sulaymaniyah and plans to open four more by 2016. The company has guaranteed a measure of the productivity of annual growth rates, the establishment of new stores, and the fresh intake of employees. While this is a better performance index, the company’s productivity should be based on the measurement of profits generated per employee.

Forecasting

The choice of forecasting technique depends on some factors that need proper consideration and the ability of the forecaster to make good use of the available company data. These factors include whether historical data is available, the forecasting context, the required accuracy, the period that needs forecasting, the benefit or cost of the forecast that the company would get, and the availability of time for the analysis. There are three main types of forecasting approaches causal models, qualitative techniques, time-series studies, and projection (Evans, 2003).

The qualitative method uses data that is qualitative in nature such as an opinion of an expert and general information on special events. This approach may fail to consider the past; however, it can re-evaluate the past depending on the forecaster. Time-series study and the projection approach majorly focus on patterns as well as pattern adjustments; therefore, they completely rely on the company’s historical data. The causal model's approach employs specific company information that is highly refined. This technique considers the past and is a great measure that takes special events into account during the analysis.

Having found little information about the Centrepoint Corporation, the forecasting method, commenting on forecasting, and the horizon time would prove difficult; however, since the company mostly deals with fashion sales, the best and recommended forecasting methods are time series study and the projection technique. In the past, the company used a time horizon of one year, for example, the mentioned July 2015-June 2016. The appropriateness of this method to the company is that the approach focuses on patterns and pattern changes in different aspects, such as sales. The forecaster would use past sales data to project the future company performance in relation to the possible volume of sales and profits made in a specified time horizon, such as one year. The company would receive critical information for accurate decision-making.

Capacity Planning and Management

Capacity planning is the process that an organization uses to discover the level of production required to match the ever-changing demand for its products and services. Capacity management refers to the management of the organization’s resources utility in the production process; such resources comprise labor, office space, inventory, raw materials, technology, and equipment. The Centrepoint Company has performed well in its capacity planning. It has been able to establish more stores in different countries and places with the intention of increasing the production to satisfy the demand, with the latest stores being opened this year at Al Ghurair Centre, Dubai. The company also increased its labor force by additional 10,000 new staff members when its completed nine stores in the UAE became operational in 2014. The company has just started realizing its growth and should continue to expand its capacity to spread to most countries. The planned move to establish stores in Africa and thus enter the African market is a constructive strategy that would boost its sales and consequently the profits.

The Centrepoint Company needs to acquire more equipment and embrace technology at the same rate at which it is establishing stores. The process would increase online shopping that is not active at the moment. There are many avenues for the company to expand its capacity. It should spread its marketing strategies to different counties and decentralize from the Middle East. Shyam Sunder, the Head of Marketing and General Manager, confirmed that the company embarked on its strategy of differentiating its products and brand to enable them to stand out among the competitor products. The company has put mechanisms to lift its face to an internationally recognized brand. The management will continue to ensure that the product receives a new face every time to remain relevant to the market.

Process Selection and Facility Layout

Process selection is the most important component in the management system of an organization’s design of operation and production. It enables a firm to provide a reliable and safe product and service through practical design and efficient capacity planning (Stevenson, Ness & Stevenson, 2001). The process, combined with capacity planning, enables the organization to devise various approaches aimed at satisfying the customers’ demand.

The company has continued to use a warehouse/storage plan. It has strategically continued to use this design in all of its outlets. The layout best fits the operations of the company, especially the sales services that it offers to the customers. Different fashion brands are placed strategically in the stores for the customers that walk in, thus facilitating the order picking. The workers may put a new design at the entrance of the store so that any customer who walks in sees it first before getting to the intended item. Such an arrangement influences the attitude of the customers and their buying habits. It is the best layout for a company such as Centrepoint.

The company has various processes in its operation. The management orders fashion items from the manufacturing companies. Upon arrival, the fashion designs are transported to different stores for the arrangement. Prices that are determined by the appropriate department's factor in operational costs and determine the marginal profits. The product tag is attached to an item that stores all its details, including the retail price. These processes are not one-day arrangements and may take several days. Some of the processes require very minimal human involvement. Human effort is required the most when it comes to the packaging of commodities such as footwear.

Product and Service Design

Among the brands under the Centrepoint, there is a company called Shoe Mart. This shop has the footwear products. The company has stocked all its outlets with different designs of shoes according to the gender requirements. The brands come in different sizes that can fit various people from diverse age groups. The shoes are designed to satisfy different tastes in form, color, texture, material, and size.

The shoe design for ladies has incorporated the challenging and changing world trends according to style preferences among the ladies. The company has continued to embrace technology to provide the manufacturer with different styles of ladies' shoes that have become trendy at a high pace over the last years. The pricing of the shoes in the entire Shoe Mart has been satisfactory for the customers. They are simply affordable; the pricing is consistent with the quality. The availability of different colors enables women and girls alike, who have had the opportunity to buy footwear in one of the stores, match the colors of their clothes to that of their shoes.

The Nike brand found in the Dubai Mall has provided men with the greatest quality of shoes. They are produced from a great material and come in colors that are mostly preferred by men. The brandy shoes offered by the company are of high quality and may not require major redesigning since the company’s design is continually improving and the quality of the product is usually consistent. Since the company’s inception in 2005, the product quality of Centrepoint Company goods released to the market has stood out. The company has been able to win competitions from related brands due to its excellent quality. The increment in the number of stores all over the UAE was facilitated by the high demand from the customers.

Company’s Location

Centrepoint Company has four brands all under its roof. Splash, Babyshop, Shoe Mart, and Style are the main brands. The stores are located in the UAE, Qatar, Saudi Arabia, Egypt, Kuwait, Oman, Jordan, Lebanon, Libya, and Bahrain (Jeffreys, 2011). The location of the company is influenced by some factors. The management of a corporation must analyze these factors before deciding on where to put it. These factors include the availability of raw materials, accessibility of the region, infrastructural network, availability of labor, availability of ready market, and government policies.

The management of Centrepoint Company considered the ease of access to the stores when they were determining their location. Through experience, the company has known that sales are high during summer seasons, especially when tourism activities are at their peak. Tourists usually need well-defined and maintained roads when moving around to access such shops. The availability of well-maintained road networks along with the presence of the airways etc. influences the location of the stores in the regions such as Saudi Arabia, Kuwait, and Qatar.

The stores located in African countries, such as Libya and Egypt, considered a mixture of factors. The company recognized the availability of the market. The company realized that African countries had more potential and high purchasing power for the products; therefore, they brought the services to Africa to have a market share. Another factor considered when the company management decided to take the store to Africa was political friendship and goodwill. In the case of Libya and Egypt being majorly Arab states, it was easy to agree with their respective governments since the company also originated from the Arab nation.

Governments play a big role in the location of industries and companies. The policies of a given government may determine the location of a business. A government may stop a company from operating somewhere due to environmental issues, such as pollution, or social problems. The Centrepoint Company stores might have had such a government influence in their location distribution, especially in big cities or close to water bodies where pollution is an issue.

Quality Management

During the manufacturing of products, companies must consider the quality of the items under production. It is because there is a lot of competition from similar items produced by other enterprises. The items must conform to certain standards to get high customer approval. These qualities must always appear in a brand for its marketability.

The following qualities are to be considered:

1. Service after delivery. It is the extent to which goods and services can get adjusted, replaced, re-evaluated, or reclaimed in this category. Products that are designed with such features are of high quality. Customers would always go for commodities that are worth their money. If the replacement of a given product is easy, doing some adjustment does not require much effort, and it is easy to repair when it develops minor problems, then the product passes the test of quality.

2. Ease of use. A commodity with good appearance and easy usability can score high to the customer as far as quality is concerned Most clients do not want items that present a lot of difficulties and problems when they want to use them. Some of the customers would choose an item based on how easy they can employ it. When manufacturing products, it is normally advisable to consider the ease of use to ensure high sales.

3. Conformity. During the manufacture of products, the designer of that item normally has in mind how that commodity will look. There is always a deviation from the proposed design. The deviation degree may differ, but those items that do not deviate significantly from the original intended design are of high quality. The variation may arise as a result of a machine or human fault during processing. Such errors that create differences need to be minimized so that every item manufactured attains the qualities intended by the designer.

4. Design. Some designers decide to include or exclude features from the product. These features influence the quality of a commodity. Customers find some of the characteristics appealing to their eyes. They may buy them depending on the features as they add quality to the brand (Weiss & Kucera, 2015).

All these quality determinants make use of inspection as the item has to be scrutinized first before passing judgment on its quality. The quality of the products can also be increased by conducting market research and getting the views of the customers on the additional features that they may wish to include to the brand to improve the quality of the products.

If I were to benchmark a company, I would choose the Centrepoint Company. The company has excelled in the market and has almost the fastest growth around the globe. I would choose the footwear. The company has performed well, producing high-quality shoes that are favorable to the consumers

Conclusion

Centrepoint Company is a fast-growing company, and it is likely to be all over the globe in a few years to come. The company must stick to its marketing strategies that have seen them steadily rise and increase their number of stores in the UAE and Africa. These strategies seem to work well for the company.

In the world of competition like this, the company must continually and consistently improve their product quality through value additions. They must also continue with promotions in their various stores to attract more people and thus acquire high sales. Centrepoint Company is a company destined to have stores almost in every country of the world with the uppermost number of employees.

With the steady growth, it is necessary and advisable for the top management to develop another brand that can do well in the market. This would ensure that the company grows to have the fifth brand under the same roof. Doing this would have a direct effect on the scale of business, the level of operation, and the profit margin. The aim is to increase the company’s profitability in the future.