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Reed Supermarkets

UGBA 106: Group 4

Jinal Shah

Frank Shin

Zeeba Anvary

Agnieszka Anikin

Anthony DeLuna

Soojee Hahn

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Overview

Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Reed Supermarket Overview

Orientation Towards

  • Organic Products
  • Attractive Looking Stores
  • Open for long hours
  • Elegant Displays
  • Attentive Customer Service

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Focus On

  • Product Quality
  • Store Design
  • Convenient Hours
  • Good Service

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Competitors

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Main Problem

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

The Existing Reed Customer

The older, more affluent, smaller household size than the typical customer. Pet ownership was 20% higher than average among Reed customers.

Consumer Trends

Situation Analysis

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Main Problem

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Channels

Consumer Trends

Situation Analysis

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Consumer Trends in the Market

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1. Loyalty

  • Low - prices attract customers
  • Shoppers more likely to buy in different shops in search of best value

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2. Growth of Private Label Merchandise

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3. US consumer becomes more health-conscious

  • New competitors, such as Whole Foods
  • Expansion of health departments in supermarket

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Main Problem

Positioning that they have now – losing customers. What should the positioning be? To hold to loyal customers or non or new, etc. FIX THIS SLIDE

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POSITIONING MAP OF WHERE THEY ARE NOW AND WEHRE THEY WANT TO BE – perceived price level, assortment/quality/service. Where they are, where are competitors, etc?

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Solution Alternative 1

STATUS QUO

  • Target current segment
  • Maintain good quality service and products
  • Continue “dollar special” promotions

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Pros

  • Increase same-store traffic by 3%
  • Keeps high quality image, retain current segment
  • Attract “best-deal” shoppers
  • Satisfies customer demand for better prices

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Cons

  • “Dollar special” inconsistent with Reed’s brand equity and positioning
  • “Cherry-picking” customers
  • Even lower profit margin

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Solution Alternative 1

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Screenshot Exhibit 2 here! Please Zeeba ☺

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Solution Alternative 2

INCREASE QUALITY & VALUE, SAME PRICE

  • Price remains same, increase product/service quality
  • Keep targeting current segment – retain loyal customers
  • Attract health conscious and value seekers

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Pros

  • Save the positioning and brand equity
  • Give more value – justify high price
  • High profit margin and increase wallet share ( from 8.93% vs. 10% average share)
  • Expand variety to corner health conscious trend
  • Convenience – one stop shop

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Cons

  • High price image remains
  • Lose cost sensitive segment

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Solution Alternative 3

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DISCOUNT FOCUS

  • Storewide everyday discounts
  • Target the price sensitive and the savvy consumer

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Pros

  • Attracts the price-sensitive and savvy customer
  • Retain current customers who seek better prices
  • Combats the high-price image�

Cons

  • Goes against our brand equity and positioning
  • Territory of TopVal, Dollar Stores and other lower-price stores

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Solution Alternative 3

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Zeeba please screenshot Exhibit 6 HERE!

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Best Solution Alternative

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  • Alternative 2 poses the best solution

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  • Alternative 1- inconsistent with brand image, insignificant impact
    • “Dollar special” lowers overall margins

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  • Alternative 3- stepping outside of niche, competition with well-established, profitable discount stores

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Best Solution Alternative

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  • (Pnew-v)*Qnew-(Pold-v)*Qold>0

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  • Wallet share will increase from 8.9%
    • Increase in sales of higher-profit margins

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Implementation Plan

STP

Demographic Segment:

  • Somewhat older, more affluent, a smaller average household size (12% higher median income than the area household average)

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Targeting:

  • Current segment – retain and reward loyal shoppers plus attract value-seekers
  • Weekly ad campaign modified
    • Premium private-label items, organics products and freshly prepared meat and baked goods
  • Loyalty programs enhanced

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Positioning:

  • Differentiate with a high quality image, outstanding service and premium products
  • Remain a high-end grocery retailer by offering an shopping experience unmatched by its competitors

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Implementation Plan

Price

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  • Remains at 100 on the price index - perceived high prices offset by value in all aspects to target the loyal, convenience, and health conscious shopper

(Exhibit 4 in top-right corner)

  • Rewards program issues coupons at register and sent to home

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  • Private-label variety allows for better control over pricing to match and beat competitors prices
    • Increases revenues with high sales volume and efficient operations, to capture more market share to achieve a 16% goal

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Implementation Plan

Product

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  • Product offering expand significantly
    • Organic/ high-margin products replace low performing and low margin items

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  • Meat departments, bakeries, and flower shops
    • commitment to freshness, quality and service for the one stop shop and value-seeking customer

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  • Retraining staff and monthly meetings

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  • New Slogan, “Where freshness and quality exceed, shop Reed”

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Implementation Plan

Place

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  • Maintain relationship with manufacturers to ensure quality and quickly filled orders in private label endeavor

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  • Only current stores can be utilized
    • Capital expenditures capped for 2 years

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  • Galaxy stores cannot be acquired

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Implementation Plan

Promotion

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  • Drop "dollar specials" campaign, save 200k annually
  • Print, online, and broadcast advertising expands current customer base by comparison shoppers intrigued by low prices, organic offerings, fresh meat and produce, as well as the superior customer service provided
  • Relationship with community

�Long-term plan (6 months - 2 years)

  • Integrate C.R.M. system with the customer rewards program that can track and analyze progress
  • Open a new line of supermarkets to fit within customer segments

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Implementation Plan

Promotion

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  • Loyal = Shop at only one store for all their needs
  • Convenience = Will shop anywhere that it close to them or one stop shoppers (shops in a place with everything)
  • Savvy/ Cherry-pickers = will shop several stores for the “best deal”
  • Price-sensitive = React to store pricing dramatically
  • Value-seekers = Will pay any price as long as they feel they get their moneys worth
  • Health-conscious = Shop where the healthiest variety is offered, price is little issue

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Contingency Plan

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  • Implement a modified version of alternative 3
    • Weekly discount special on high-turnover items to cut losses from operating margin
    • Regain customer segment (savvy consumers) lost from removing “dollar special” program
    • Gain new cost-conscious customers from competitors high and low in retail positioning

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Consumer Trends

Main Problem

Situation Analysis

Competitors

Implementation Plan

Q&A

Solution Alternatives

Contingency Plan

Q & A

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