18A comparative analysis between Dunkin’ Donuts and Baskin Robbins .... General information The founding period: 1948 - 2004: Dunkin’ Donuts LLC, also known as Dunkin, is an American mul
Overview of Dunkin’ Donuts
General information
The founding period: (1948 - 2004): Dunkin’ Donuts LLC, also known as Dunkin, is an American multinational coffee and donut company, as well as a quick service restaurant By 1950, Dunkin was founded by Bill Rosenberg in Quincy, Massachusetts, United States The business was so successful that Rosenberg sold franchises to others in 1955 The chain was acquired by Baskin-Robbins's holding company Allied Lyons in
1990 Dunkin expanded by the 1990s by buying out two rival chains that are Mister Donut and Dawn Donuts
Success years in management (2004 - now): In 2004, the company headquartered in Canton, Massachusetts Since 2018, other than in-store serving, Dunkin began to develop more take-out options, pick-up lines for mobiles ordering inside and in the drive-thru After a few milestones, in October 2020, Dunkin’ Brands was negotiating to sell the business to Inspire Brands for $11.3 billion The acquisition process was done by December 2020, marking that Dunkin' Brands ceased to exist as a separate company, with Dunkin', Baskin-Robbins, and the trademark management of Mister Donut, becoming part of Inspire Brands So far, Dunkin has made its appearance to 43 countries over the world
SWOT analysis
Over-reliance on US market Poor targeting outside of US Insufficient variety Financial resources
Over-reliance on US market Poor targeting outside of US Insufficient variety Financial resources
Dunkin’s in India
Founding and development of Dunkin’ Donuts in India
Founded in 1950, Dunkin' Donut is America's favorite all-day, everyday stop for coffee and baked goods Dunkin' has earned a No 1 ranking for customer loyalty in the coffee category by Brand Keys for 14 years operating The company has approximately 12,900 locations in 42 countries worldwide Dunkin' is part of the Inspire Brands family of restaurants
Dunkin’ Donut entered the Indian market in 2012 with a comparative thought which they followed in the USA They were about to launch its brand in India, corporating with fast-food operator Jubilant Foodworks Ltd, an Indian food service company According to Nigel Travis, expansion to India is an integral part of Dunkin' Donuts' international growth plan "As one of the world's fastest-growing economies and the second most populous country, India presents a tremendous growth opportunity for Dunkin' Donuts” The Indian fast-food sector is growing at roughly 25 to 30 percent a year as an economy expanding at nearly 9 percent boosts purchasing power of the middle
5 class Dunkin’ Donuts, known primarily as a breakfast chain in the United States, will offer an all-day dining experience to Indians, said the president of the company The brand was about to set up 8 to 10 stores this financial year — all in Delhi In their development, Dunkin had 36 stores across the country within 2 years, and 77 stores in total in 2017.
Products
For more than 20 years, Dunkin’ Donuts has focused on continuous improvement of menu offerings, striving to deliver the best experience Dunkin' is the world's leading baked goods and coffee chain Their offerings have more than 50 varieties of donuts, but you can also enjoy premium beverages, breakfast sandwiches, bagels, and other baked goods They have a signature series of high-quality coffee Dunkin’ coffee can be enjoyed with a variety of delicious flavors, including classic flavors like caramel and seasonal favorites like the ever-popular pumpkin
Specially, to cater to the Indian taste, Dunkin’s localized their menu due to customer insight and India’s culture Their offerings include non-vegetarian and vegetarian options In addition, for the first time, they decided to put burgers with Indian spices on the menu in order to adapt to the new market Dunkin’ Donuts also provided a wide range of localized flavors such as mango, litchy, saffron, etc
Macro environment
Political factor
India is a democratic republic The general public and the political parties accept the nomination and respect the political election process Because of the fair election process, it enjoys a stable political environment The country's stability has helped it attract a large amount of FDI (foreign direct investment)
India’s government is loosely modeled on the British Westminster system It consists of a president as head of state; an executive headed by the prime minister; a legislature consisting of a parliament with an upper and lower house (the Rajya Sabha and Lok Sabha); and a judiciary with a supreme court at its head
“With a robust and working democratic system, India is a federal republic where the bulk of executive power rests with the prime minister and his or her cabinets As a nation state, India presents a vast mosaic of hundreds of different ethnic groups, religious sects, and social castes About one third of population lives in urban areas; an overwhelming majority of the remainder is engaged in the agricultural sector.” (Michael F Martin and K Alan Kronstadt, August 31, 2007) An Indian is so politically aware or connected that it is not unreasonable to assume that every Indian views himself or herself as a politician in some way As a result, every political event in India has a significant impact on the Indian consumer markets
Applied to the Dunkin Donuts case: Dunkin Donuts is accused of giving a large sum of money to Democrats in recent elections It's a dangerous approach because customers who support republicans and share their views and values may disapprove of the company's support for the Democratic Party and altogether boycott Dunkin Donuts
GDP growth: India is among the fastest growing economies in the world India’s GDP growth is forecasted to expand from 7-9%, as a result, it is definitely an important market to many businesses
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Income per capita: The sales forecast for the American market is not optimistic, as people are becoming more health concerned At a time when domestic sales are stagnant, the rising prosperity of people in Asian countries has generated a lot of opportunities for Dunkin Donuts Particularly, India provides a wonderful chance for the corporation to build its business because this country has the world's fastest economies, and as people's incomes increase, their eating preferences change, which will benefit the country
There is currently a relaxed political situation for FDIs However, companies are frequently disrupted by unwanted political demonstrations and events On any hot
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8 subject, opposing national political parties usually call for nationwide strikes (called bandh in Indian dialect) The entire economic process is disrupted, resulting in massive losses for corporations and other enterprises For example, “on July 5, India went on strike The country closed down at several places after opposition parties protested an increase in the price of petrol or gasoline (In India, the government controls petrol prices) The Associated Chamber of Commerce and Industry estimated that nationwide strikes caused a production loss of US $ 2.8 billion” (Human Resources, July 29, 2010)
The Indian economy is also badly bitten by the inflationary bug Even basic basics have gotten more expensive for the general populace Ordinary people find it difficult to set aside money for luxury Still, luxuries such as vehicles and international holidays are sold at prices that equal those of other countries' economies However, this is a phenomenon unique to urban India, where black marketing and corruption are commonplace Corrupt politicians and businesspeople increase their wealth in an ugly manner Economic growth in India has brought up its middle class to the forefront; and at the same time rural poor are largely isolated from the achievements of growth
There is no doubt that the Indian economy is growing, but this growth is lopsided Infrastructure growth is lagging behind in terms of what is required This has created a significant bottleneck for long-term economic growth and expansion This information is crucial for Dunkin Donuts to determine its target industry as well as the sort of market in India for their goods and services Because India is a free economy, many Western multinational corporations, including Dunkin Donuts are raising a portion of their capital investment from India
Caste system: India is a high powered distant society India’s caste system, a hierarchical social structure, divides the Hindu majority into groups, with ‘Brahmins’ at the top and ‘Dalits’ at the bottom of society A person's last name generally indicates the caste they belong to Although many larger towns in India have moved away from such a severe caste impact, the system is still quite popular in villages throughout the country, defining who can live where, what employment they can have, who they can
9 speak to, and even what human rights they have It's a system so firmly ingrained in the country's culture that its principles and consequences will be felt for many years to come
Large consumer market: With 1.4 billion people, India is the world's second largest consumer market Foreign multinational enterprises might take advantage of the enormous consumer market to sell their products and services That is why the Indian market has piqued the curiosity of many investors and businesses Most significantly, it offers foreign corporations a large number of inexpensive labor Naturally, Dunkin Donuts can take advantage of the availability of an educated labor force at reduced prices to boost their total profitability
Demography: India is a multilingual, multiethnic, and multi religious country with over 447 different spoken languages There have been some disputes between different groups of society on occasion The Indian Bollywood film business, on the other hand, has an international reputation Hockey and cricket are popular among her people, and the Indian Premier League (IPL) has attracted a lot of talent over the years The young people of India have proven to be more welcoming and courteous than their Western counterparts Because educated young people have a strong command of the English language, it is simple and inexpensive to persuade customers to buy the goods sold by Dunkin Donuts
Lifestyle: For the past few years, India's economy has been expanding, and the middle class has expanded as well As a result, people's standard of living is improving Moreover, in reality, traditional food is still Indian people’s first choice as they are much healthier and richer in flavor, and eating habits of the Indian culture are still based on culinary traditions Most dishes feature meat or vegetables mixed with sauce and rice Many Indians are vegetarian, so eating habits are often based on a diet that excludes all meat When meat is incorporated in dishes, it is most commonly in the form of chicken, beef or lamb, and sometimes seafood, such as prawns The majority of the Indian population is Hindu, so beef and pork are often excluded from Indian dishes due to religious requirements
Applied to Dunkin Donuts case: Dunkin Donuts thrives through connecting with societies and people who want to commemorate a special occasion Customers' eating
10 habits are rapidly changing as businesses encourage them to consume more snacks and ready-to-eat items In developing countries like India, where only traditional foods were regarded as appealing 20 years ago, people's preferences are rapidly changing, and they are now consuming an increasing amount of snacks and fast foods India presents a significant opportunity for the corporation because 60 percent of India's population, or around 700,000,000 people, are under the age of 35 Dunkin Donuts companies can easily wow these age groups by introducing different products specifically catering to their preferences One problem that is arising is that many people nowadays are becoming more and more conscious about their health and they view these fast foods and snacks detrimental to their health Meanwhile, traditional Indian food is considered to be very healthy as Indian people are known for producing mustard oil, peanut oil, coconut oil, and groundnut oil—all of which contain health advantages when used as a base for cooking traditional Indian dishes
Micro environment
Competitors
The Quick Service Industry is one of the world's fastest expanding industries In Fiscal 2019, the market for Quick Service Restaurant (QSR) in India was valued at
₹30,700 million and is expected to increase at a 19% CAGR to ₹74,200 million by Fiscal
2024 According to India Brand Equity Foundation, the F&B industry contributes for approximately 18% of India’s GDP and is the country’s single largest employer with over 7.3 million employees This has encouraged numerous Multinational Corporations (MNCs) in the food business to enter the Indian market Hence, a number of brands, including Dunkin’ Donuts, tried their luck in such a demanding market In other words, Dunkin had been facing many rivals
Domino first entered India in 1996 with a store located in New Delhi Domino's Pizza India has stayed committed to providing great-tasting pizzas and sides, high- quality service, and good value for money Domino’s has become the biggest QSR in
India based on revenue market share which is 22% After 2 decades, Domino’s chain is dominating India with over 1250 stores all over the country
Dunkin’ and Domino are both operated by Jubilant FoodWorks, which is a master franchise in India However, they are as different as chalk and cheese Domino’s India is under the complete control of Jubilant, not different store owners like other markets, resulting in successful centralized management Due to Jubilant’s aggressive expansion, India is now the second biggest market outside the US for Domino’s Acknowledging that Indian people are mostly vegetarian and their first choice of meat is chicken, Domino adapted the menu to this specific market but still be able to preserve its characteristics When compared to the next quick-serve pizza brand in India, they have 5x the interaction on social media This is due to 2 factors: Handling customer messages and Aggressive daily pizza orders Domino's India is offering some of the cheapest pizza in the world, in an attempt to undercut the competition
For the past 25 years, McDonald's has been associated with burgers in India The golden arches initially opened in India in 1996 and remained the uncontested burger leader until 2014, when its rival Burger King opened its first outlet in Delhi McDonald's, on the other hand, had dominated the market by that time McDonald's has stood the test of time, surviving several burger wars, economic crises, and pandemics
It has managed to earn 12% of market revenue share in India
McDonalds knew that they could not bring Big Mac beef burger, which is its signature product, to a vegetarian market back then Hence, McDonald's India's beginning point was to identify itself as Indian, to reflect family values and culture, and to promote itself as comfortable and easy while still maintaining global values McDonald's tastefully Indianized its worldwide menu, and Indians couldn't get enough of its iconic burgers McDonald's began focusing on developing itself as a FoodTech platform after localizing the menu and providing reasonable specials
The fast-food giant opened its first outlet in November 2014, and since then, it has carefully selected a growing number of urban areas Joining the India market 2 years later than Dunkin’ Donuts, Burger King still managed to beat Dunkin’ and became the fifth biggest QSR in India Burger King India has worked to improve its supply chain, promote innovation, and preserve its fundamental principles of flavor, quality, and affordability as it strives to become the country's largest fast food restaurant Similar to any other brand, Burger King also had to adapt its brand, especially the menu for such a vegetarian market Burger King India created roughly 18 unique burgers for the Indian market that are not available anywhere else in the globe, which were designed locally and blind tasted by local customers This is due in great part to the brand's suppliers and practices such as the supplier-led innovation program (SLIP), which allows vendors to create new menu items Burger King India has devised a careful strategy to invest in research and development, system processes, and people competence, as well as to build capacity ahead of schedule through new and enhanced technologies and maintain cost leadership
India is known for its rich multi-food cuisine, which is offered in a huge number of restaurants and hotel resorts and symbolizes unity in variety India has a totally different food culture from the rest of the world not only in taste but also in cooking methods Therefore, it is obvious that Indian residents might stick to their food culture as a habit Some of the outstanding habits are: the everyday thaali, using spices, savoring food with hands, etc Indian food culture also varies region to region, such as: North India, West India, Indian eaters also pay attention to their health and hygiene standards Although the modern Indian food culture has been influenced and renewed by numerous civilizations and globalization, MNCs in F&B sector still find it challenging to survive in this market.
Consumers
A study on Indian consumer preference on fast food outlets reveals that 64% of the respondents visit fast food outlets once in a week and majority of the respondents spent more than 15% of their monthly income on fast food and the most favorite cuisine
14 preferred by the respondents is western junk foods Fast food restaurants are famous to young people due to their quick serve, low prices, and convenience It is rather reasonable for Dunkin’ to target urban consumers below 35 years old However, Dunkin’ seems not to understand their Indian customers that deeply:
Indian people prefer enjoying meals with their family members than out-of-home breakfast since Indian cultural traditions place a premium on family Breakfast with people gathering around a table which is full of homemade food could easily prevail over Dunkin’ Donuts - a brand serving fast food as breakfast
Indian breakfast is often filled with nutritious traditional dishes such as: rice, egg, vegetable, roti, etc Meanwhile, Dunkin’ serves customers sweet donuts, which could cause indigestion, at the beginning of a day Apparently, Indian eaters would not want such sweet things for their first meal of the day
In contrast to Western eaters, who are coffee lovers, Indian residents adopt a habit of consuming green tea or chai tea Dunkin’ joined India with its signature drinks being coffee and frost tea which means providing Indian eaters with things they are not interested in
Dunkin’ is kind of ignoring their coffee which Indian people are not used to This, unintentionally, made Dunkin’ become a luxury dessert brand instead of a daily breakfast supplier in the eyes of the Indian This is not so ideal for its target consumers - urban people under 35 since they watch their calories intake quite carefully.
Suppliers
Basically, Dunkin’ Donuts’ suppliers are mostly food ingredients ones who provide inputs such as: flour, wheat, sugar, milk, fruit, etc In this aspect, Dunkin’ made the right decision choosing India as its new market India is known to be in top 10 agricultural producing countries in the world India ranked first in the production of milk, second in dry fruits, third in fish production, fourth in egg, and fifth in poultry production worldwide India, additionally, is the world’s biggest wheat-producing country Especially, Dunkin’ tried to localize its menu to the Indian market by adding Indian exclusive ingredients such as: chili, saffron, tropical fruits, etc
As a result, Dunkin’ India is able to reach low-cost and diversified and rich ingredients sources Using local inputs could help Dunkin’ to supervise the quality and, in turn, to serve customers with good quality-and-conditioned food Emerging agricultural corporational competition and advanced technologies in India might be a positive signal to Indian agricultural potential Hence, Dunkin’ India would be experiencing a great deal of food ingredients in the near future
Drivers behind Dunkin’ Donuts’s Failure
Dramatic changes in menu
In the penetration to India, Dunkin’ Donuts had realized that many Indians just don’t like doughnuts, and even the ones that like them are unlikely to buy them by the dozen They have had to seriously rework its menu in India and rebrand itself through an advertising campaign, which provided all-day dining to customers instead of breakfast served as in America, to show India’s consumers that it offers more than a sweetened bake and coffee
Dunkin donuts presented to India with a diversified menu, although the donuts were the same, they ‘Indianised’ their flavors by introducing mango, litchi, grated coconut, And to celebrate Diwali, the Hindu festival of lights, Dunkin' Donuts just launched some new flavors, to name a few, a Kesar Badam (saffron-inflected almond milk) doughnut, topped with saffron cream, blanched almonds, and crushed pistachios; a Soan Papdi (flaky pastry) doughnut coated with chickpea flour;a milk cake doughnut filled with rice pudding; and a white chocolate doughnut topped with guava and chili
Although their long-term strategy was to promote a donut eating culture in India, they initially launched new localized products In India, the chain brands itself as "Dunkin' Donuts and More." It included spicy chicken sandwiches which was a drastic difference from their primary core and it was a risk they took only in the Indian market Another Dunkin’s decision is to put burgers on the menu for the first time with an aim to adapt to cultural differences Dunkin’ Donut now has almost as many burgers on the menu as McDonald’s All Dunkin’ burgers in India are beef-free Moreover, with these changes, Dunkin’ Donuts concentrated more on selling burgers instead of doughnuts as the result of their sales increased rapidly
Dunkin’ donuts was planning on renaming the brand as Dunkin This was because they sold more coffee than donuts However true it is, their brand differentiation was famous for offering both of these products Rejecting that differentiation would have affected the brand Providing the combination of good quality donuts, baked goods and coffee at affordable prices have been a differentiating factor for Dunkin donuts, this is their lead attribute Denying this and focusing on a diversified menu would be a bad
17 decision Though they can increase sales after changing the menu, Dunkin’ had lost their signature essence, their brand name faded as instead of highlighting their differentiation, they focused on satisfying customers by culturally localizing products.
Irrational pricing strategy
Dunkin’ Donut’s price of product is quite an issue to Indian people This is one of the reasons why Dunkin’ might not become popular in India The average salary in India is about RS31.000 (Indian Rupees) per month, which is equivalent to $420 in the United States In addition, according to Zomato, the average cost for two in Dunkin’ Donuts in India can be around Rs.600 — which is quite overpriced when compared to the budgeted price of an average salary individual While, if we take a look at doughnuts of Mad Over Donuts, fresh, gourmet donuts founded in Singapore, the cost for two ranges from Rs.300 to Rs.450, which is less expensive than that of Dunkin Donuts In any case, the ’ idea of both the brands is extraordinary and the way of life of having doughnuts in India is unique as considering it to be a sweet dish not a morning meal feast Along these lines, in the wake of choosing between the cost of both the brands, the ordinary worker will go with the less expensive one.
Hasty market penetration
Another Dunkin Donuts mistake was ’ the speed of market approach The company entered the market with an ambitious desire of opening up as many stores as possible
As from Business Standard articlein 2012: “The company… plans to set up eight to 10 stores this financial year — all in Delhi That, it says, would earmark its journey to slowly turn out to be a pan-India player with about 100 stores in the country in the next five years.” Eventually, the brand expanded too quickly, having 36 stores across the country within 2 years, and 77 stores in total in 2017 The overwhelming store coverage had led to an adverse effect in a market with not a high demand for the product
To make the situation worse, the store locations were too big and those huge retail spaces translated into high operational cost, putting a lot of burden on the sales of
Dunkin’ in India Dunkin’ Donuts strategy of extensively expanding instead of intensively and desire to penetrate and dominate the market at a breakneck pace had left it with no space for in-depth research of consumer’s actual needs, habits and attitude such as the day-by-day gratitude towards healthy lifestyle or rising health consciousness of the Indians.
Wrong choice of anchor product
First entering the Indian market, Dunkin’ Donuts had aimed to access the market with the donut and totally overlooked the coffee line – a wrong move by skipping the beverage Dunkin’ Donuts’ initial two anchor products were coffee and donuts, however, the coffee line was intentionally gotten rid of because of the fear that it cannot compete with traditional beverages of Indians such as Chai tea or green tea However, this has indeliberately made up a notion for the Indians of Dunkin’ Donuts as a luxurious dessert store to the local people where they rarely make a purchase on special occasions instead of a fast, convenient breakfast store
Despite the tense competition with traditional, familiar teas, coffee from Dunkin’ Donuts will have a more comparative advantage in terms of price, as Starbucks its – biggest, foremost rival in India in the field of coffee Starbucks has a higher COGS, which is passed on to the consumer through higher prices Another thing is that, it would have been easier to localize and diversify the beverage line by adding to the menu tea or other drinks similar to the traditional ones with more diverse flavors in order to fit the taste of the people and provide them with substitutes as the traditional drinks only have a fixed flavor and recipe
A comparative analysis between Dunkin’ Donuts and Baskin Robbins
From Dunkin’ Donuts success in America with the 2016 revenue of 608 million USD and still growing steadily every year, we can clearly see that the reason behind its failure in India didn’t come from the essence of the brand
Taking a comparative look into the operation in India of Baskin Robbins – “a branch from the same tree” with Dunkin’, has claimed itself as the largest ice cream chain in India, with a significant number of 725 in terms of store count within the country, and has been operating successfully in India now for the last 25 years
The ice cream industry has been and will be heating up in India (According to Mintel reports, the ice cream market in India exhibited a CAGR of 16.9% during 2011-2018 and the market is further expected to reach a value of Rs 375.8 Billion by 2024)
Making its way into the right market with the right demand, Baskin Robbins had done a great job in its way of just putting emphasis on the brand's signature product line
Its own identity along with a potential market with too many opportunities had created a launching pad, helping Baskin-Robbins to hold almost the entire ice cream industry here
Right market segment and adaptation
Besides the favorable market needs, Baskin Robbins also penetrated the market with innovations rooted in Indian taste, localizing the ice cream flavors and sticking to the insights of different customer segmentation rather than trying to expand to other product lines
Vegetarians: Knowing India is the country with the most vegetarians (this demographic segment accounts for 20% 39% of the whole population), Baskin Robbins has –
20 constantly tried to introduce many vegan flavors that are water-based (along with the cones are dairy-free and vegan)
Millennials: Baskin Robbins has always been a pioneer in introducing India to flavors like Blueberry Cheesecake, Caramel Chocolate Cheesecake, Peanut Butter, Cranberry, decadent White chocolate, Salted Caramel, etc… that have helped drive the palate and tastes of millennials in every nook and corner of the country
Children: Introduced Baskin Robbins Jumbles, an ice cream for all kids in two flavors
- Rainbow Fun and Bubble Gum as a combination of candy and ice cream in once
As from the brief analysis of Baskin Robbins' market penetration, the key driving factor that distinguished the story of Dunkin' Donuts with Baskin Robbins in India is depth of market research
Baskin Robbins walked into India - the right country with a ceaselessly increasing demand for ice cream, so they can make full use of the situation to develop their strengths, paving the way for expansion and domination
While in contrast, for Dunkin' Donuts, they failed completely when applying the same campaign of “quick breakfast strategy" as they did in the US for India, and necklaced the basis that donuts just basically not something Indian people are favorable of As from Dr Ashita Aggarwal - Head of Marketing department at S.P Jain Institute of Management and Research: the cultural distinctions were totally overlooked, as Indians mostly see donuts as a high-calorie dessert with a lot of assortment added onto It is more like a luxury, impulse kind of purchase which people will have when there is a special occasion or once in a while Indians who have a sweet tooth would be willing to purchase
As stated above, Dunkin’s Donuts tried to penetrate the Indian market by opening up as many stores as possible in the shortest amount of time Therefore, one recommendation proposed for the company is to reduce the store sizes and kiosks when attempting to enter new prospective markets
Dunkin’s Donuts may begin by creating a clear roadmap for market penetration, stipulating exactly what the target goals of the company within a specific time period are, as well as the means to achieve those goals, through the examination of its own financial statements (i.e balance sheet, profits, market analysis, etc), thereby coming to a conclusion on how much to invest in one store at a specific point in time
Instead of opening up large stores in large Indian cities, Dunkin’s Donuts can try developing smaller stores and scattering them throughout the urban areas where the population density is higher and thus have more demand for their products Specifically, they may attempt to scatter many small kiosks along apartment sites, residential areas, work areas, etc and focus on places where there is a plethora of young people (i.e students, office workers)
Therefore, the plan for a small kiosk needs to be considered in many aspects: Ease of traffic, location of competing brands around the site, distance from downtown areas, future of the site, etc All of this has to be well thought out by the management board before launching new stores into the market