Reed Supermarkets – Action Plan
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Reed Supermarket – Case Analysis
Problem Statement : Meridith Collins, VP of marketing of Reed Supermarkets, is asked to increase the current market share of 14%(2010) to 16% by 2011.The following constraints are evident :
1. The market is fragmented with multiple players.
2. The operating margin is merely 2.1%, no scope of any error.
3. No investment plan for increasing the no. Of stores.
1. Increase margin/increase revenue – It will increase profitability.
2. Introduce Niche products – Healthy food items, organic products.
3. Increase operating efficiency – It will lower the operating cost.
4. Loyalty programs – It will help in retaining the customers.
5. Introduce mid-range products – It will attract non-affluent consumers.
6. Make tie-ups with corporate houses/ partners – It will add to the consumer base that may remain loyal.
7. Convert to Dollar store/ open dollar ...view middle of the document...
3. Mix products- Increase in the mix of products, especially private levels and healthy products will actually improve the operating margin. These products can be introduced as an alternate to high end products.
4. The sales target needs to be stretched to achieve the 16% market share.
Case Analysis: Reed Supermarkets: A New Wave of Competitor
Introduction & Problem Definition
This case involves a mid-sized, regional grocery store chain called Reed Supermarkets. Reed has 192 retail stores, two regional distribution centers and 21,000 employees in five states in the Midwest of the United States. This case discusses Reed’s market strategy for the Columbus, Ohio, market in particular, which is one of Reed’s largest markets. The Columbus market has grown slightly over the past five years, while Reed’s market share has dwindled slightly in the market. Reed has watched their market share stagnate with the entrance of new competitors (10% growth in stores) and a dramatic shift in customer preferences to value or quality. Reed’s CEO has tasked his executives to come up with a strategy that will growth revenues by 2% in the coming year. The main problem Reed faces is how do they grow revenues without compromising their customers’ perception of them as a high-end brand.
Over the past three decades, the U.S. food retailing industry has experienced significant changes. The most significant change has been in the trends and preferences of its customers, as customer loyalty has dwindled significantly and customers have focused their decision making on price almost exclusively. This is not an impermanent movement and it has created new segments of retailers within the food retailing industry. Over the past two decades, three new segments have either begun or grown considerably. These industries are supercenter stores (WalMart and Target), warehouse clubs (BJs and Costco) and dollar/limited selection stores (Family Dollar and Trader Joe’s), which is the most recent growth segment. These segments have quickly moved to take a significant market share from their more established grocery store counterparts. Each segment offers different aspects that appeal to customers, but the one characteristic that is common