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Sundaram Stores operated in a gated community, situated about 30 Kilometers…

XAT 2025 · Decision Making · 3 questions

Sundaram Stores operated in a gated community, situated about 30 Kilometers away from the main town. The store owner Mr. Sundareswaran Pichaimuthu, or Sundaram as he was called by everyone, secured a space in the gated society through a competitive bidding process. The residents' association, led by Mr. Thangamoorthy Selvaganapathy, selected Sundaram over three other bidders, based on his willingness to pay the highest rent. Desperate to augment his post-retirement income, Sundaram agreed to pay a very high rent, banking on the prospect of generating exceptional revenue from the gated community. Sundaram was awarded the contract to establish the store, with provisions for a review every three years. Feeling elated during the meeting with the residents' association to finalize the contract, he enthusiastically committed to offering a 15% discount on all groceries and stationary, cementing goodwill and reinforcing the partnership established through the contract. The association was delightedly taken aback by his generous assurance. Sundaram hoped to make up the difference through volume. Although his sales were strong during the initial months, he soon realized that the SUV-owning residents of the gated community primarily made their purchases at large, branded retail chains in the main town. These stores offered deeper discounts, which he could not afford to compete with. However, gradually, Sundaram store became their go-to store for daily essentials and occasional urgent big purchases such as replacing a broken mixer-grinder.

Question 1

While reviewing his monthly accounts, Sundaram realized that he was barely breaking even, primarily due to the substantial rent he was paying to the residents' association. He realized that while his sales were stagnated, the rental costs were contractually scheduled to increase every three years. He was determined to do something to increase his profits. Which of the following will be the MOST sustainable way to increase Sundaram's profits?
  1. A. He should meet with the residents' association to negotiate a lower rent.
  2. B. He should advertise about his shop through a leaflet in the gated community.
  3. C. He should remove all the discounts he was offering and sell at the maximum retail price.
  4. D. He should offer to procure items unavailable at his shop from the town on residents' demand.
  5. E. He should introduce "cheap Wednesdays" where he will sell groceries at 40% discount.

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Question 2

To increase his profits, Sundaram diversified into selling vegetables. Earlier, a vegetable vendor used to visit the gated community once every week. The vendor, after seeing dismal sales ever since Sundaram started selling vegetables, stopped visiting the gated community. The residents' association did not like losing the rent they were receiving from the vendor. Additionally, the maintenance staff of the gated community benefitted from receiving vegetables either for free or at extremely low prices, as the vendor, reluctant to take back the unsold stock, chose to distribute them at little to no cost. This enabled the residents' association to retain maintenance staff whose attrition rate was increasing with more gated communities coming up in the nearby area. Which of the following options will BEST address the concerns of the residents' association arising out of Sundaram getting into selling vegetables?
  1. A. The residents' association should request for bids from various shop owners to open another grocery store in the vacant place.
  2. B. The residents' association should ask Sundaram to use the erstwhile space for selling vegetables and pay rent for the same.
  3. C. The residents' association should impose a fine on Sundaram since he was not contracted to sell vegetables.
  4. D. The residents' association should discount the rent for the vegetable vendor to increase competition and ask him to continue.
  5. E. The residents' association should ask Sundaram to give a specific quantity of vegetables to the maintenance staff for free.

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Question 3

Sundaram is a happy man now. He has managed to get contracts with two more nearby gated communities. He feels like the grocery king of the suburb. However, his happiness is short-lived as Rush'em, a new startup, begins making waves among gated communities. This app-based startup promises to deliver any grocery item within 15 minutes, leveraging its own large warehouses. Earlier, Rush'em was confined to the main town, but now, the startup has expanded its delivery services to the suburbs, including gated communities where Sundaram operates. Of course, for the suburbs, Rush'em promises delivery within 60 minutes, given the distance. Though not an official slogan, the rumour in the market is that Rush'em's founder inspired her employees by shouting "Rush'em or Crash'em, but Push'em through that door!" Sundaram started losing business to Rush'em. He felt rushed, pushed, and was wondering if his business would come crashing. What should Sundaram BEST do to ensure that his revenues do not come down due to Rush'em?
  1. A. Sundaram should not bother since the nearest town is 30 kilometers away.
  2. B. Sundaram should explore starting his own delivery startup Finish'em, dedicated to the suburb, competing with Rush'em.
  3. C. Sundaram should employ a few helpers who will do home delivery of his products within 10 minutes across the three gated communities.
  4. D. Sundaram should demand that his rent be reduced to one-third since Rush'em has free access to these societies
  5. E. Sundaram should start giving discounts on every product he sells.

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