Reed Supermarkets

REED SUPERMARKET: A NEW WAVE OF COMPETITION

1.) What is Reed’s Position in the Columbus Market? How does a supermarket market money?

In 2010, Reed was the lead food retailer in the Columbus area with a 14% market share which is a little 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 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.

2.) What strategy would be most effective for Reed moving forward?

Reed may continue with the dollar specials program and wait for an increase in customer base and in revenues guessing that the customers may alter the perception about Reed being a high priced store. However, I believe that dollar specials should be very limited and sold on specific dates. In addition to above strategy, Reed markets may want to focus more on wider discounts because it seems like customer’s main focus at the market is discounts. With discounts implemented to the prices Reed Supermarkets also should stress out its quality, product variety with advertisement campaigns to tell the customers “they offer discounts with same quality that they always offer”. When the perception changed, Reed may gain the targeted market share.

3. How serious is the threat posed by dollar stores and Aldi?

Firstly we have to realize that Dollar stores and Aldi is serving different segments of the market. Aldi has low product variety (selling only private label), lower prices than Reed and their store size is smaller than Reed. Even though, these are huge disadvantages against Reed, Aldi mitigated these disadvantages with its low...