Hello! Today we'll be discussing a case about a grocery retail chain facing decreased profits. Please take a moment to understand the problem statement, and let me know if you have any questions.

Our client is a grocery retail chain owner who is facing a decrease in profits. They need us to find the root cause and provide recommendations.

Please proceed with your thoughts.

Go ahead with your questions.

The chain is located Pan-India.

The issue is particular to one store.

The client has been facing this issue for the past 6 months.

Yes, we are facing decreased revenue.

The average value of order has gone down.

The total quantity being supplied has remained the same.

(Note: This implies that while average order value has decreased, the volume of items being sold hasn't changed)

Let me clarify something - this issue is specifically being faced in the fresh fruits and vegetables category.

Yes, that's correct. The issue is specific to the fresh fruits and vegetables category, other categories are unaffected.

Actually no - the same quantity is being supplied and sold. The issue is with the revenue despite selling the same quantity.

No - both the number of customers and quantity sold remain the same. The issue is with the revenue/average order value.

The customers are perceiving the goods to be expensive. There appears to be an issue with the price tags.

That's correct! Since these are perishable goods, the price keeps changing and the store management is not changing the tags simultaneously. Let me now close this case and provide you with feedback.

Good morning! How are you today? Are you ready to begin the case interview?

Great! Here is the case problem for you:

Your client is a grocery retail chain owner and is facing a decrease in profits. He needs you to find the root cause and provide recommendations for the same.

Feel free to take a moment to gather your thoughts and let me know if you need any clarifications or if you're ready to proceed with your analysis.

Good to hear! Would you like to begin by reiterating your understanding of the problem statement, or do you have any specific clarification questions you want to ask right away?

That's correct. Just to clarify, the company is facing a decrease in profits, not necessarily running into losses. You need to find the root cause and provide recommendations.

Would you like to ask any specific clarification questions before diving into the analysis?

Those are good questions to help understand the context better. However, let's start with some fundamental clarifications to narrow down the problem.

Would it be okay if we focused first on understanding a few broader areas such as the timeline of the issue, geographic impact, and whether it's an industry-wide issue?

Sure, understanding the customer demographics can be important. Just to help you structure your analysis more effectively, it might be beneficial to start with some broad clarifications.

But let's proceed with your approach. The major customer segment for the grocery retail chain is typically families and working professionals aged between 25-50 years.

Would you like to move forward with more questions or start analyzing the problem?

Great, focusing on the product categories can provide insights. The customers usually buy a mix of both perishable and non-perishable items, including fresh fruits and vegetables, dairy products, packaged foods, household essentials, and other grocery items.

Do you have any other questions, or would you like to analyze a particular aspect of the problem?

That's a valid hypothesis. However, to ensure we are thorough in our analysis, it might be useful to go back to the basics and structure our approach.

Would you like to confirm if the issue is across all product categories or focused on specific ones? This can help us narrow down our analysis.

Good question. The decrease in profits is particularly being faced in the fresh fruits and vegetables category.

Would you like to proceed with your analysis based on this information?

That's an interesting point to consider seasonality. However, it's still important to structure the problem and analyze all potential aspects comprehensively.

Since we know the issue is with fresh fruits and vegetables, would you like to know if the issue is due to decreasing revenues or increasing costs, or perhaps explore other areas first?

That's a plausible hypothesis. However, let's ensure we have a structured approach to identifying the root cause.

Would you like to gather more information on whether the issue is due to increasing costs or decreasing revenues for fresh fruits and vegetables? This can help us narrow down the precise cause.

Sure, I can provide that information. The issue here is primarily due to decreased revenues rather than increased costs.

Would you like to proceed by understanding the specific factors affecting the revenue for fresh fruits and vegetables?

No problem, let's break it down further.

Revenue can be affected by three main factors:

1. Number of customers visiting the store
2. Percentage of customers buying fresh fruits and vegetables
3. Average value of purchase for fresh fruits and vegetables

Which of these factors would you like to examine first to understand why the revenue has decreased?

That’s a good angle to explore. However, it might be more efficient to confirm if the overall store traffic has changed before diving into potential accessibility issues.

Shall we first check if the number of customers visiting the store has decreased? This can help us determine whether to focus on external factors like accessibility or internal factors within the store.

The number of customers visiting the store has remained the same.

Given that the number of customers hasn't decreased, it might be helpful to look at the other two factors: the percentage of customers buying fresh fruits and vegetables or the average value of those purchases.

Which one would you like to investigate next?

Great question. By "average value," I mean the average amount of money each customer spends on fresh fruits and vegetables during a store visit. It can be influenced by both the price of the items and the quantity of items purchased by customers.

Would you like to see if the percentage of customers buying fresh fruits and vegetables has changed, or if the average amount they are spending has changed?

You are onto an interesting point regarding perceived expense. However, to be thorough with our analysis, we should confirm whether the issue is that customers are buying fewer items or if the price they're willing to pay has decreased.

Would it be alright to focus on whether the average value of the orders for fresh fruits and vegetables has indeed gone down? This can help us solidify our findings.

Certainly! Let's clarify both angles to ensure we cover all bases:

1. Average Value of Order: This relates to how much, on average, each customer spends on fresh fruits and vegetables per visit.
2. Percentage of Customers Buying: This determines what proportion of store visitors decide to purchase fresh fruits and vegetables.

Given that the number of customers visiting the store has remained the same, it would be logical to examine the average value of the order. If the average value has decreased, it suggests that customers may be buying less or perceiving prices to be too high.

Shall we proceed to check if the average value of the orders for fresh fruits and vegetables has gone down?

Yes, the information confirms that the average value of orders for fresh fruits and vegetables has gone down.

Given that the average value of the orders has decreased, it indicates that while customers are still buying fresh fruits and vegetables, they are spending less on these products.

What would you like to investigate next to understand why this might be happening?

I understand you're looking for a direct answer, but in a case interview setting, it's important to show your structured approach to problem-solving.

Let's narrow it down further. Considering that the average value of the orders has decreased and we haven't observed any changes in customer numbers, the issue could lie in how customers perceive the prices of fresh fruits and vegetables.

Think about these possible next steps:

1. Are the prices being perceived as too high?
2. Has there been a change in how prices are displayed (e.g., incorrect pricetags)?
3. Are there external factors affecting customers' willingness to spend?

Would you like to explore if there's an issue with how prices are displayed or perceived?

That's a good hypothesis. Issues with incorrect pricetags could indeed lead customers to perceive the products as more expensive, thereby reducing their willingness to buy as much as they used to.

To confirm this, let's consider:

1. Has there been any change in how the pricetags are managed?
2. Are the pricetags accurately reflecting the current prices of the products?

Would you like to investigate if there have been changes or issues with the management of pricetags for fresh fruits and vegetables?

That's a solid hypothesis. If pricetags are not being updated, customers may perceive the prices to be incorrect or too high, which could directly affect their purchasing behavior.

To confirm and conclude:

1. Fresh fruits and vegetables are perishable goods, where prices often fluctuate.
2. If the pricetags aren't updated in real-time to reflect these changes, it can easily lead to customers perceiving the prices as incorrect or higher than expected.

So, it seems the root cause is indeed that the pricetags are not being updated in alignment with the actual prices of the products. This results in a perception of higher prices, thereby reducing the average value of orders.

Would you like to provide a recommendation to solve this issue?

Actually, there are several recommendations that can address the issue of pricetags not being updated, and help improve customer perception and thereby increase revenue.

Here are a few actionable recommendations:

1. Implement a Robust System for Updating Prices:
   • Utilize digital pricetags that can be updated in real-time directly from a central system. This eliminates the need for manual updates and ensures that prices are always accurate.
2. Regular Monitoring and Audit:
   • Conduct regular audits to ensure that the pricetags on display match the actual prices in the system. Staff training to regularly check and update physical tags if digital solutions aren't feasible right away.
3. Staff Training:
   • Train staff on the importance of maintaining accurate pricetags and establish clear processes for updating prices swiftly and correctly.
4. Customer Communication:
   • Display notices explaining that prices of fresh fruits and vegetables fluctuate and recommend customers to check with staff if they find any discrepancies. This transparency can help build trust.
5. Promotions and Discounts:
   • Introduce promotions or discounts for perishable items close to the end of their shelf life. This can help clear stock at optimal prices and address the perception of high prices.

By implementing these recommendations, the grocery retail chain can ensure that pricetags are always accurate, thereby improving customer perception and increasing the average value of orders in the fresh fruits and vegetables category.

Is there anything else you would like to discuss or explore further in this case?

You're welcome! You did a good job working through the problem. Remember, structuring your approach and asking clarifying questions are key components in case interviews.

Good luck with your future case interviews! If you have any more questions or need further practice, feel free to reach out. Have a great day!

Summary of Your Performance

1. Clarifications:
   • You initially asked about the customer segment and typical products, which was good but not directly aligned with the problem at hand.
2. Hypotheses:
   • You hypothesized that certain products (like packaged foods) might be affecting revenue without first narrowing down the specific category in decline.
3. Focus:
   • Once it was narrowed down to fresh fruits and vegetables, you jumped quickly to assumptions (like seasonal unavailability of mangoes) without confirming key metrics on revenues or costs.
4. Analysis:
   • You understood the importance of examining different components of revenue (like average value of orders) after some nudging.
5. Conclusion:
   • You ultimately suggested problems with pricetags but needed several prompts to consider updating processes and systems.

Areas to Improve

1. Structured Approach:
   • Start with broad clarifications to narrow down the issue. It's often better to understand the timeline, geography, and specific product categories before diving into detailed segmentation like customer age groups.
2. Formulating Hypotheses:
   • Before jumping to conclusions, ensure you systematically evaluate potential factors affecting profits. Consider both cost and revenue side metrics systematically.
3. Asking the Right Questions:
   • Focus your questions on understanding key metrics directly impacting the problem. For instance, clarifying if the issue is with decreasing revenues or increasing costs could have been your first step.
4. Drilling Down:
   • Once you know revenue is the issue, break it down further (number of customers, percentage buying, average order value) to identify the root cause.
5. Recommendations:
   • Be ready with actionable solutions once you identify the root cause. Consider practical measures the business can implement to tackle the identified problems.

Feedback:

1. Initial Steps:
   • Always start by restating the problem to ensure you and the interviewer are aligned.
   • Ask broader clarifying questions first to gather essential context.
2. Hypothesis Testing:
   • Approach hypotheses logically and methodically, testing one factor at a time based on available data.
3. Flexibility:
   • Be open to revisiting your approach if new information emerges that doesn't align with your current hypothesis.

Focusing on these areas will help ensure a more structured and thorough analysis in future case interviews. Great effort and best of luck with your preparation!

Based on your performance in this case, I would rate your performance at around 2.5 out of 5. Here's a brief breakdown of the rating:

Strengths (2.5 Points)

1. Effort and Engagement:
   • You actively engaged with the case and put forth multiple hypotheses.
   • You were willing to revisit your approach when nudged in the right direction.
2. Critical Thinking:
   • You demonstrated the ability to think critically about potential causes of the issue (e.g., perceived high prices).

Areas for Improvement (2.5 Points)

1. Structured Approach:
   • There were moments where your approach lacked structure, leading to some confusion and a need for nudging. Starting with broader questions could improve clarity.
2. Hypothesis Formulation:
   • Jumping to specific conclusions (like the unavailability of mangoes) without first verifying broader metrics can derail the analysis.
3. Details and Clarifications:
   • Focusing on detailed aspects like customer age before understanding the broader problem context can be counterproductive.
4. Recommendations:
   • While you identified a potential root cause, offering clear, actionable recommendations required prompting.

Recommendations for Improvement:

1. Structure and Framework:
   • Use structured frameworks to ensure you cover all relevant aspects systematically.
2. Clarifications:
   • Start with broader clarifications to narrow down the problem effectively.
3. Step-by-Step Analysis:
   • Break down the issue step-by-step before jumping to conclusions.
4. Final Recommendations:
   • Be prepared to suggest actionable recommendations based on your findings.

Improving these areas will significantly enhance your performance in future case interviews. Keep practicing, and good luck!