REED

SUPERMARKETS :
A NEW WAVE FOR
COMPETITORS
Presented By: Junaid
Rashid
Ahsan
Javed
Waqar
Abbas

SCHEME OF PRESENTATION
Introduction
Situational

analysis
SWOT Analysis
Proposed Solutions
Tasks assigned by the Instructor

INTRODUCTION
Mid

sized regional grocery store

Established
192

in 1939 by William Reed

retail stores

regional distribution centers

alongwith 21000 employees

Attractive

stores, long hours,

exceptionally attentive customer
service

INTRODUCTION

TOP LEVEL MANAGEMENT

Founded
CEO:
VP

by :

William Reed

Jack Morrissey

Marketing:

Meredith Collins

GEOGRAPHICAL AREA IN
FOCUS
Case

study focuses on city of

Columbus

Capital

and largest city of the U.S.

stateofOhio

Population:
Average

2 million

income - $52000

Household

income is 11.6% higher

than state average
Intense competition in Grocery

GEOGRAPHICAL AREA IN
FOCUS
Low

unemployment rate

Intense

competition in Grocery
supermarket sector

SITUATIONAL ANALYSIS
Strategic Issues &
Problems

Fortunately or unfortunately, Reed

Supermarkets is high quality but
consumers are expecting value

Goal to
capture
2%
Market
share in
Columb
us
Region

Less loyal consumers

Low spending customers on each

visit

SITUATIONAL ANALYSIS
Area:

2 Million people with 52Kdollat median

Consumer

desire better price and discount but

Reed has high quality index and low price index

Direct

Competitors

Galaxy and Top Val

18 Delfina stores ( very much like Reed)
22 Family dollar stores
3 whole food markets
Wal Mart

SWOT ANALYSIS
Strengths:

Well recognised & reputed brand

High and variety Products
2nd highest Market share
25 stores in 2010
Located in populated areas

SWOT ANALYSIS
Weaknesses:
Small poll attraction in market
Third lowest in price index
Dollar special confuse and question
quality standard
Low Margin of gross sales i.e 2.1% to
competitors

SWOT ANALYSIS
Opportunities:

Potential growth
Trend of health conscious consumers
2nd highest Market share
Growth rate of private labels

SWOT ANALYSIS
Threats:

Competitors:

Dollar stores
Aldi
Wal-Mart
Sams Club
Whole Food Market

PROPOSED SOLUTION
Objective:

Increase Market share from

14 to 16%
Problem:

Lost Market share and threat

to loose further

Options

considered by Meredith Collins

Do more to value to customers
Compete more aggressively on price
Consider other strategies

PROPOSED SOLUTION
Options given to Meredith Collins by her team
Option1:

Terminate dollar and return to normal sales -

merchandise director
Give another six months for change Advertising
& production manager
Option2:
High margins on food products - merchandise
director
Increase Margin , not share Advertising &
production manager

PROPOSED SOLUTION
Option3:

Increase Low price specials and

introduce private labels and double

couponing operation director
Option4:
Everything should be on table CEO
Morissery

What is REEDs position in

Columbus Market? How
does a super market makes
money?

REEDs POSITION IN
COLUMBUS MARKET
Reed

is considered as market leaders

when it comes to product quality and
they are high-end grocery store.
Competition is present in the Columbus
market with Reeds market share
distributed on multiple levels.

REEDs POSITION IN
COLUMBUS MARKET
Reed

is considered as market leaders

when it comes to product quality and
they are high-end grocery store.
Competition is present in the Columbus
market with Reeds market share
distributed on multiple levels.

What strategy would be

most effective for Reed
moving forward? Is the
strategy defensible?

MOST EFFECTIVE FOR REED

MOVING FORWARD

21

What strategy would be

most effective for reed
moving forward? Is this
strategy defensible.

MOST EFFECTIVE FOR REED

MOVING FORWARD
Strategy

should be work on profit

margin using the strength & using
them fairly difference.
Reed has large no of stores so bulk
offer should be make.
Aggressive marketing is also good
way to move forward.
In last few year the moving forward
strategy of reeds is successful show
in the next slide though index rate.
23

MOST EFFECTIVE FOR REED

MOVING FORWARD
In

my opinion the strategy should be to work on the profit margin. Using

the strengths and using them fairly can make a difference. The $ coupon
is not a greatest idea for the firm who deals in the top and upper segment
of the grocery stores, where quality is the key not the price. There is a
very strong chance that Reed can loose the brand image and the
reputation of being top class grocery store, which can lead the clients to
leave the brand loyalty. Instead of $ discount and concentrate on:
1.Customer focus and satisfaction
2.Product verity
3.Product Specifications
4.Product Quality
5.Locations
6.Store layout
7.Concentrate on Whole Food/ Delfina
Of course customers must see all the efforts Reed is putting in getting
them and the way to do it is Aggressive Marketing Champagne is a way
to move forward.
24

GRAPHICAL VIEW
Chart Title

10
8
6

2010

4
2

2009

0
Price index

2008
Quality index
2008

2009

2010
25

QUESTION # 01
Focused

customer satisfaction

through:
Attractive stores
Long working hours
Exceptionally attentive customer service
Elegant and creative serving-case

displays
High staffing levels on weekends
No tippings

How serious is threat posed

by Dollar Stores and Aldi?

QUESTION # 03
What are Dollar Stores?
It

is aretail store that sells a wide

range of inexpensive household goods

Often

sells all goods at a single price

Smallprofit

margins

Three

main Dollar Stores mentioned in

case study

Dollar General
Dollar Tree
Family Dollar

28

DOLLAR GENERAL
Dollar

General
is
aUnited
Stateschain ofvariety of stores

Operates

over
40U.S. states

Basically

11,500

stores

in

a discount retailer

Founded

in 1939 by Cal Turner Sr.

and his father J.L. Turner

Formerly

called J.L. Turner and Sons

Wholesale
29

QUESTION # 03
CEO:

Mr. Todd Vasos

30

DOLLAR TREE
Dollar

Treeis anAmericanchain of
discount variety stores that sells items
for $1 or less
Competes in low-end retail markets
Stocks a variety of products including
national, regional, and private-label
brands
Retail

stores at 13,600 locations

31

QUESTION # 03
CEO:

Bob Sasser

32

FAMILY DOLLAR
Americanvariety

storechain
in
theUnited States with 8,100 locations

Founded

in 1959 byLeon Levine

33

QUESTION # 03
CEO:

Howard R. Levine

34

ALDI
Established
Low

first store in 1913

Price High Quality

Awarded
Better

Best Super Market in 2012

customer retention policies

Focused

attention

on

customer

satisfaction

35

THREATS POSED BY DOLLAR

STORES & ALDI
Dollar

Stores and Aldi are serving a

totally
different
segment
of
the
customers i.e, low end customers

Customers

posses high sensitivity to

prices
Customers

have moved from loyal weekly

consumers to savvy consumers

Search
As

for deals

per case study, prices in industry

36

THREATS POSED BY DOLLAR

STORES & ALDI
Customers

are more inclined towards

Private Label products being offered

They

will surely take

customers from Reed

price-sensitive

Dollar

Stores gained some Market Share

in 2008-12

However,

1.8%

still combined Market Share is

37

THREATS POSED BY DOLLAR

STORES & ALDI
Market Share in 2010
16%
14%
12%
10%
8%
6%
4%
2%
0%

Market Share in 2010

38

THREATS POSED BY DOLLAR

STORES & ALDI
Although,

Aldi and the dollar stores only

have a small percent of market share

They

still present a threat to Reeds

because of the recession of economy

Current

consumers are more price

sensitive and willing to go to multiple
stores to find the best deal.

39

THREATS POSED BY DOLLAR

STORES & ALDI

Dollar Stores and Aldi sell mostly private label, they

are able to offer consumers lower prices than Reeds

But they provide smaller selection

Consumers value price much more than the

convenience of a supermarket, it will become difficult
for Reed to compete against their prices

However, Reeds does have a significantly better

quality perception than either the dollar stores or Aldi.

If it can adjust its strategy to better serve the current

consumer, it will have a much better position
40

THREATS POSED BY DOLLAR

STORES & ALDI
So,

as of now, Dollar Stores and Aldi

dont pose a direct and lethal threat to
Reed.

However,

scenario will shift into their

favor if Reed doesnt alter its strategy in
long term

41

THREATS POSED BY DOLLAR

STORES & ALDI
Total Sales in 2010 (Millions)
700
600
500
400
300
200
100
0

Total Sales in 2010

(Millions)

42

COMPARATIVE OPERATING
STATEMENT (% OF GROSS SALES)
35
30
25
20
15
10
5

Reed
Dollar Stores
Aldi

43

PRICE INDEX
8
7
6
5
Reed
Dollar Stores
Walmart

4
3
2
1
0

2009

2010
44

QUALITY INDEX
9
8
7
6
5

Reed
Dollar Stores
Walmart

4
3
2
1
0

2009

2010
45

COMPARISON OF EVERYDAY
PRICES
102
100
98
96
94
92
90
88
86
84
82

Reed (Taken as base)

Walmart

Aldi
46