Reed Supermarkets

Reed Supermarkets/Lauren Rafi/Section A01

Position: Meredith Collins’s strategy for Reed Supermarkets in Columbus must increase market share from 14% to 16% by boosting total annual sales in this area by $94.3 million ($3.8 million per store). Responding to regional threats through specials programs, expanded private label merchandise and strategic partnerships will increase revenue and customer loyalty, and likely become a model for future competitive situations the firm may encounter. Failure to achieve this mandate will result in decreased profit margins and loss of market share to emerging competitors.

Analysis: Reed Supermarket’s most uncertain approach in competing against its supermarket rivals is the “dollar special” campaign, which is intended to decrease consumer perceptions of a high priced store without detracting from Reed’s high quality image over a six month period. This objective is clearly achievable in the given time period, as shown by the price index decrease of Delfina from 2009 to 2010. Thus, Reed should evaluate the performance of this program from June 2010 to December 2010 in terms of price and quality indexes of consumer perceptions. Despite lower profit margins, dollar specials reduce Reed’s vulnerability to rival dollar stores by offering comparable products with a higher quality shopping experience and increasing store traffic by 3%.

Reed Supermarkets is also competing in the organic foods and private label foods segment against rivals such as Aldi and Trader Joe’s. Although these types of stores only capture 3%-5% of market share, Reed’s can deter the threat of new entrants by continuing to diversify its private label product selection. By aggressively expanding its private label merchandise selection, Reed’s can maintain its image of high quality service and products and attract consumers that cited “selection of products/brands” as their reasoning for not shopping at Reed. Additionally, the firm can counteract the...