Sobeys stores in Canada- Empire SBU Case Study Solution
Introduction
Sobeys is a diverse chain of superstores, which operates in different markets, catering different customer with separate needs and demands. The Company is headed by Empire Corporations (EMPIRE) that,acquires small superstore businesses in Canadian market, to increase the market share, and to grab more sales out of the same customer. Sobeys operate in staple food like meat, vegetables and some of its private label products, to target the particular segment of the market.
Sobeys has six different market segments, in which it operates through separate offerings. It started the business, by initiating with a Grocery store.Followed by Fuel, Wholesale, Liquor, real estate and Pharmacy, to expand and diversify the portfolio.In order, to sustain the business and market share in the chaotic market situation. The flow of operations remains smooth over the period of time, until the company acquired “Safeway’s,” another superstore of Canada, with large customer base.Which is mainly regarded as the discount store.
As soon the company acquired Safeway’s, it started facing problem in managing the customer experience, and retention with Safe ways and Sobeys both. The company landed in by adopting a disrupted and fast paced strategy, which deteriorated the whole customer value chain, and hence affected the sales of the stores.
The major mistakes the company has made in acquiring the new SBU was the pace of adopting, and transforming the customers’ expectations from stores. In doing so, the company at initial discontinues the loyalty programs, which agitated the client's expectation and spread bad word of mouth against the store. Also, since many customers had a significant number of loyalty points saved to consume later, the moves to discontinue the program, immediately hurt the customer base, making them spread bad word of mouth and switching to other stores.Leading to low sales and negative brand image.
The second strategic decision was to raise the prices of the goods which aggravated the customer again, since Safeway’s has always been a discount store,which offered discounts to the customer through different programs and points system. The sudden rise in price significantly criticized the strategy of the Sobeys,and distracted many of the major customers to other convenience stores.
The third strategic issue, Sobeys faced was from Private label customer base. The company removed all the private-labeled products of Safeway’s, and introduced the Sobeys product. The quick and immediate move after acquisition significantly fuelled the whole scenario, as these private-label products offered the value proposition to the store. So changing these private labeled products greatly hurt the loyalty of the customer towards the stores.Hence,affected the sales margin of store and brand image in the market.
Also, the company failed to keep up with the pace of inventory management.In doing so, the company neglected to meet the market demand, and thus procured less inventory. This lead to high replenishment time, leaving the shelves empty, leading to customer dissatisfaction and switching to another store. Since,safe ways had the initial customer data and managed the inventory accordingly, the company at the time of acquisition failed to analyze the results.
Lastly, the company hired few of the staff to fill the shelves on time, leaving shelf empty and failing not to offer the products and goods that are mentioned in the brochures of Sobeys. Thus, driving the customer away, affecting the sales and revenues of the company.
The company took some of the quick, yet wrong administrative decisions.In which the company integrated the SAP following file with the Safeway’s, which grumbled the data and turned it into a complex puzzle to resolve.Then allocate resource and inventory accordingly, taking more time, thus delaying the supply chain.By doing this, the employees also felt disgruntle and panic, due to pressure and this lead to high turnover.While the one who left has low morale, leading to low productivity,and hence efficiency and performance of the store. In addition, the company also imitated to cut the cost of operation, making the employees work for less amount of money for longer hours of time, affecting the productivity and effectiveness of the work. It also leads to low ownership, thus delivering cheap customer service.Therefore, weakening the Customer relationship Bond with the company.
B- Alternatives
In order to deal with the issues, the company must adopt any one of the following Alternative to counter the problems, and to control the business for harvesting more in sales and market share.
Alternative: 1- The Company should employ separate SAP system in Safe way acquisition and employ digital technology automated Checkouts to create a value proposition in the market.
Pros:
- The separate SAP system will first allow the company to manage the data separately and efficiently, that will allow the company to forecast the exact sales order for a particular period. Hence, allowing the company to reduce there plenishment time, and offer the availability of the product in time.
- This will lessen the frustration of employees to manage the data, hence lowering the pressure of managing the work that will lead to low turnovers, hence high retention.
- The automated checkouts will allow the company, to reduce the operating cost (salaries).It will also remove the lead time, in collecting the grocery and reaching the Cash counter.
- It will allow the company to identify the prioritized product of the customer base,and hence will allow making the inventory accordingly.(Happiest Minds, 2015)
- This will offer the competitive advantage to the company, as the operating cost will reduce, due to automated checkouts.Therefore, allowing the company to re-frame its pricing strategy.Thus,providing a combo deal of efficiency and cost-effectiveness to the customer.(Mckinsey, 2014)....................
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