Reed Supermarkets: A new wave of Competitors Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

Reed Supermarkets is a high-end supermarket chain, well known for the quality and exceptionally attentive customer service, with operations in several states of Midwestern United States. A Reed customer was somewhat older more affluent, and had a smaller household than the typical customer. The median income of a Reed shopper was 12% higher than the typical customer.

The Columbus market (with largest share) was relatively stable, but Reed had experienced modest share declines in the past. Reed is facing new threats to its position as a leader among the region’s supermarkets and from the competitors like dollar stores and limited-selection stores offering very low, appealing price points.

In 2010, Reed led food retailers in the Columbus area with a 14% market share which is slightly lower than the 15% Reed had five years earlier. The company had continued to grow revenues by an average of 1% to 2% per year across its markets. Reed had worked hard to maintain its margin over the past decade by adding specialty items, widening the selection of higher-end prepared foods, increasing the private label mix, and using weekly promotional specials to drive traffic.

In Columbus, 25 Reed stores were located and the company had added no new stores and none were planned. Reed’s CEO had set a Columbus market share target of 16% by 2011. Reed's market research shows that as a result of the economic downturn (2008-2010), customer loyalty is dwindling and consumers are willing to go to multiple stores to get the best deals.

In US, the growth of warehouse and superstores had attracted bulk-buying budget shoppers, while the low priced promotions drew consumers to specific supermarkets, discount merchandisers and dollar stores. The private label goods had higher margin potential, and retailers were reasonably effective at shedding the lower quality image of those goods. Also, the American consumers had become more health conscious which enabled the growth of stores like Whole Foods

Problem Statement

Reed Supermarkets is a high-end supermarket chain with operations in several Midwestern states. Meredith Collins, vice president of marketing, often visits stores located in Columbus, Ohio, an important region with the largest market and the greatest impact on revenue growth. She is concerned about increased competition from dollar stores and limited-assortment stores offering very low, appealing price points.

Reed's market research shows that as a result of the economic downturn, customer loyalty is dwindling and consumers are willing to go to multiple stores to get the best deals. Collins must decide whether to change the current marketing and positioning plan in an effort to increase market share to meet challenging corporate targets.

Her options include retreating from price competition and focusing on quality or embracing more private-label brands and competing more aggressively on price. She can also maintain the current positioning and appeal to customers looking for a quality shopping experience.

Question 01: What is Reed’s positioning in the Columbus market? Is the chain doing well?

Reed’s Regional Supermarkets’ Chain has been considered as high end in the supermarket food retail industry, since the past two decades. They have managed to steadily acquire 14-15 % of the intensely competitive Columbus market share throughout the past five years, with a good strongly competitive edge, yet still a challengeable position with all those new market entries & evolving generations of rivalry competitors (1st generation large size, near national brands and 2nd generation small size, limited inventory, low end retail chain) .

Reed Supermarkets A new wave of Competitors Case Solution

Whereby, they influenced their differentiation advantage throughout the supermarket retail industry by adhering to their high products’ quality, emphasis on specialty items as organic food and private label selection of high end products, endorsing attractively elegant stores & displays & unique attentive customer care through long hours, short check out times and shuttle runners.

Question 02: How serious is the threat posed by the dollar stores, limited selection stores and supercenter stores

The threat posed by dollar stores is a serious threat and posses threat to other players in the market. The prices offered by dollar stores are much lower than that of Reed Supermarket. This therefore is the major method of attracting customers. Moreover, different stores such as the supercenters stores, the limited selection stores have also been located ideally with large number of stores across the country. Therefore, this has been a severe threat to the industry players. $-Store and Aldi are service provides in a totally different segment of the customers and that is niche market. Nevertheless, they will surely take customers from Reed, mainly the customers who are on the lower margin and could become very price sensitive and fall back to the $-Store and Aldi. In other words, the threat is not they significant.................

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