Meredith Collins, VP of Marketing for Reed Supermarket
Dollar stores are increasing competitorThe Dollar General (DG), , Family dollar, Aldi poses threat due to its remarkable low price,
Jack Morrissey, CEO of Reed Supermarket
Other supermarkets like Wal-Mart, Costco
Food manufacturers—aldi, trader joe’s, sell mostly private label merchandise
Limited selection stores
a) The main problem or two key problems.
Declining shares in the past in the Columbus, Ohio market—the fight for market share is very intense due to large supermarkets, small regional chains, independents that include lower priced TopVal, mid-range Galaxy (owned by Supervalu), and top-range Delfina, three Whole Foods Market—Wal-Mart Supercenters, four Target Superstores, and one regional chain, Five Warehouse outlets—three Costco and two Sam’s, low-end channels like drug stores and gas stations (COMPETITORS)
Unite States’ consumer price index is flat—customer are not loyal, they have become savvy customers who shop at different stores for a best deal, Warehouse has attract consumer bulk buying shoppers, the growth of private label foods, American consumers has become health conscious—benefiting whole food stores, Trader Joe and others like Reed,
The perceive customer believe that Reed’s products are expensive—and price is indeed higher, main problem pg 6
Dollar special campaign might tarnish the image of Reed because it is too close to dollar store offerings, it also lower margin but have a potential of increasing market share
b) Three (maximum) suggested solutions for either the main problem of for each of the key problems
Continue trying out the “special dollar” operation for a few more months, and make it a permanent operation if it capture more customers for Reed
Reposition Reed to continue having organic and high-end food products and also incorporate the operating and pricing strategies that limited selection stores like Aldi’s and Trader Joe’s operate on. This would be like how LAN Airlines added a low cost business model to their airline. This might help them capture some more of the market shares. This approach would capture the attention of customers who value quality over price and customers who are price conscious, which in turn might create some loyal customers. They might even pass the targeted 16% that the CEO Jack Morrissey has set up, which in turn might give them at least a temporary competitive advantage. (differentiate itself from the other supermarkets)
The company can continue on carrying organic products but they can also emphasize on the healthy aspect of the it, so they could meet the demands of the health conscious Americans.
c) Pros and Cons for each of the solutions.
The special dollar approach might confuse customers or tarnish Reed’s image and possibly lower margin as Collins is worried about, but it will help it might