REED SUPERMARKETS

A NEW WAVE OF COMPETITORS

RETAIL MANAGEMENT-SECTION A- GROUP 2

P.Soumya M174-20

Aswini Puppala M147-20

Akanksha Nikita Khalkho M138-20

Shweta Ray M059-20

Ankith N M143-20

Venus Gera M132-20

Tanya Suhasini M195-20

 CONTENTS

CASE QUESTION
SUMMARY 1 QUESTION 2
What strategy would be most
What is Reed's position in the
effective for Reed moving
Columbus market? How does a
forward? Is this strategy
supermarket make money?
defensible?

QUESTION QUESTION
3 4 QUESTION 5
How serious is the threat posed Should Collins continue the What should Collin's action
by dollar stores and Aldi? dollar special campaign? plan be for Reed for 2011?
Case Summary

● 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.

● 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.

● 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.
 Q1. What is Reed's position in the Columbus market?
How does a supermarket make money?

● Reed’s competitive position was challenging, but the company continued grow revenues by an average of 1% to 2%
● Reed had food retailers in Columbus area with a 14% market share. This number remained stable for two years but it
was slightly lower than the 15% which Reed had held five years earlier
● Reed’s CEO had set a Columbus market share of 16% by 2011
● Collin’s described Reed’s positioning strategy in the Columbus market :” We have always emphasised quality and
service in our operations and advertising. Our problem is that, as a result, many consumers perceive our prices to be
high”
● Reed’s sale value per transaction of $31.48 was 18% higher than the national supermarket average

● The first method supermarkets generate money is through partnering with other businesses.
● Brand advertising is another key source of money for the grocer.
 Q2. What strategy would be most effective for Reed moving
forward?
RECOMMENDED STRATEGY FOR REED
Compete in the high-quality, high-price segment.
MARKETING TACTICS
Brand Image
✅ ● Direct competition with low-end
Modification of ‘Dollar Special’ or dollar stores.
● With lower price the quality of
the product will also be perceived
❌ Lowering the price structure low.
● Allow consumer to buy the
products at lower prices without
✅ Increase of in-store sales promotion affecting the high-end brand
image.
✅ ● Low-priced but maintaining high
Offer more private label brands quality.
Rationale
● Modify the Dollar Special campaign
to fit the recommended strategy
● The average price reduction was from
$2.70 to $1.50, which lowered the
overall margin. Reed cannot afford
lower margins.
● Not miss-out the mid-segment market
share and at the same time allows
catering to the affluent customer
base.
● They have become the increasing
trend.
● Low cost involved in them, with a
higher yield margin
● Can increase foot traffic
 Q2. Is this strategy defensible? (1)

Exhibit 1: Not many retailers position themselves as high in price & quality.
 Q2. Is this strategy defensible? (2)

Exhibit 3: Only Delfina and Whole Foods Market are showing a price index and quality index which are close to that
of Reed. Reed has been able to maintain high price index and quality index from 2008-2010. Hence, Reed can defend
its high quality-high price strategy by competing against fewer competitors.
 Q2. Is this strategy defensible? (3)
Factors Reed Supermarket Whole Foods Market Delfina

High Quality ✅ ✅ ✅ Reed: buyers’ persona

● Median Income is 12%
Higher Price ✅ ✅ ✅ higher than average
households.
High no. of brands ✅ ✅ ✅ ● They need high quality and
customer service
Prepared food ✅ ✅ ✅ ● Health conscious, pet
owners. => Maintain a
Organic food ✅ ✅ ✅ lifestyle
● Hence, Reed should target
High In-store ✅ ✅ ✅ the high price segment.
customer experience

The above table represents the points of parity between Reed and its competitors. Reed can differentiate itself by
focusing on its private brands mix, in-store promotions and altering its Dollar Special Campaign. Hence, it will be
able to defend its strategy.
 Q.3. How serious is the threat posed by Dollar stores and Aldi?
(1)

● Dollar Stores and Aldi cater to a completely different market, namely

low-income individuals
● Consumers today are increasingly price conscious and willing to shop
around for the greatest bargain
● Customers have evolved from faithful weekly customers to sophisticated
shoppers on the lookout for bargains
● Customers are more inclined towards Private Label products
● They will surely take price-sensitive customers from Reed
● Dollar Stores increased their market share from 2008 to 2012, however
their total market share remains at 1.8 percent
● Despite the fact that Aldi and dollar stores only have a small percentage
of the market,they nonetheless pose a danger to Reed's due to the
current economic downturn
 Q.3. How serious is the threat posed by Dollar stores and Aldi?
(2)
● Dollar Stores and Aldi provide largely private label items and can
offer consumers lower pricing than Reed's. However, their range is
limited
● Consumers place a higher priority on pricing than supermarket
convenience, making it difficult for Reed to compete on price
● Reed's, on the other hand, has a much higher perceived quality than
either dollar stores or Aldi
● If it can adjust its strategy to better serve the current consumer,
it will have a much better position
● So, as of now, Dollar Stores and Aldi don’t pose a direct and
lethal threat to Reed
● However, if Reed does not change its strategy in the long run, the
situation will tilt in their favour
 Q.4. Should Collins continue the dollar special campaign?

Reed supermarkets should modify the dollar special campaign by replacing the
branded items with the private label equivalent

● Data mining to determine the most frequently purchased items

● Allow this data to guide the production of “Healthy reeds” products
● Helps to calm executive concerns of cheapening brand image by using “Dollar
Specials”
● It will rather improve the brand image as private labelled products will have
quality ingredients focusing on the both quality and cost conscious consumers.
Q5. What should Collin's action plan be for Reed for 2011?
(1)
Action Plan for 2011
● Creating a private label offering: “Healthy Reeds”. Making use of lot of organic components to
capitalise on current trends.
● Replace branded items with private label equivalents under the "Dollar Deal" strategy.
● Use data mining to figure out which items are the most commonly purchased. Allow this
information to direct the development of "Healthy Reeds" items. Assists in alleviating executive
concerns about "Dollar Deals" tarnishing the brand's reputation.
● Put all "Dollar Deals" in the back of the store, with their own signs.
● Allows Reed to increase market share by supplying high quality food at lower rates
● Allows Reed to compete on price with 'Quality Segment' competitors by selling the private
label Customers of Delfina and Galaxy, as well as the cheap shopper with a desire for quality,
should be targeted.
● Create a "Reed's Café" in the store to allow customers to "test it out" before they "purchase it."
● Reed's Café will only serve dishes prepared with store-bought ingredients.
 Q5. What should Collin's action plan be for Reed for 2011?
(2)

● Take advantage of the 20% higher average of customers who own pets by creating a
"one-stop shop" for groceries and pet food.
● Increased foot traffic past the most often purchased products due to the placement of
"Dollar Deals" Increased foot traffic past the most frequently bought items
● Expand the selection and promotion of prepared dishes in the 'Ready to Eat' section
Target affluent, busy, on-the-go families
● Create a "Curbside Pickup" service that allow busy shoppers to browse faster, purchase
online, and skip long lineups.
● Offering is in line with the present "extraordinary service" model.
● Add satellite gas stations to the mix.
● Reward points earned in-store can be used to get gas station discounts.
THANK YOU