REED SUPERMARKETS: A

NEW WAVE OF
COMPETITORS

Submitted by:
Prajna Alva 13728
Pranesh Guptha 13729
Prerna Saluja13730
Rahul R M 13733
Roshan 13735
Sai Kumar 13736
Shagun Tibrewal 13740
Pranesh 13729
Prerna 13730
Rahul R M 13733
Roshan 13735

1) What are the main dimensions of competition in the Columbus Ohio Supermarket?
The main dimensions of competition are:

Price
Price is an important consideration factor when people shop. People are becoming more
price sensitive and moving to retail outlets with lower prices. Store formats like Dollar
stores, Warehouse stores offer prices upto 20% lower than the conventional supermarkets.
They offer no frills services.

Quality
Quality depends on the brands that a retail store houses. The quality standards that are
maintained at the retail stores offer an advantage. In terms of perishables it is more
important to maintain high quality standards.

Level of service
Service level varies greatly in different formats of retail. It is defined on the dimensions such
as access, communication, competence, courtesy, credibility, reliability, responsiveness,
security, tangibles and understanding/knowing the customer

Product assortment
This dimension considers the different product categories the retail format has along with
the number of SKUs. The two major components of an assortment strategy are the depth of
products offered (how many variations of a particular product a store carries), and the
width of the product variety (how many different types of products a store carries).

Location
People preferred stores within 1-3 mile of the radius as it offered convenience of shopping.
But during difficult times consumer tend to opt value over convenience

2) Where are the competitors clustered along these dimensions?

Competitors

Product

Service

Prices

Size

Average

170,000

SKU

Assortment
Walmart/Target Broad and Limited
Deep
Costco/Sams

Broad and No
Shallow

frills Low(up

low

100-

to 20%)

150,000

Low

7000-

20000

service
Dollar Stores

Narrow and Limited

Shallow

Aldi/ Trader Joe

Narrow and Modest

10000
Low

Shallow-

8000-

1500-

12000

Specialty

Mainly

and

Privately

Imported

labeled

items

brands

Majorly the market is divided on the basis of Prices

During recession people become price sensitive. Factors like value become more important than
convenience. And switching of retail stores also occur with Warehouses and Dollar stores becoming
preferred shopping destination. Therefore it shoes Price is the most important factor and hence cannot
be ignored.

3) What explains Reed's success?

The Success factors of Reed Supermarkets are contributed to various factors. Please find the details
below.

The product quality offered by Reed supermarkets are of great standards and it has special
emphasis on organic produce.
Since the store is being operational for more than 80 years, it has various advantages in terms of
purchasing, distribution and marketing of its products.

Because of its higher quality products and the price of its products, it is considered as high end
in the Super market business. Hence their strength was getting a better base for High income
consumers. Reed supermarkets address the needs of the above mentioned customers by
providing natural, healthy food supported by their specialization in organic and seafood
category.
Reed supermarkets had top class excellence in terms of store management which is difficult for
its competitors to replicate. It had attractive stores, Long hours, elegant serving case displays,
and exceptionally attentive customer service. Moreover, the checkout clerks wore distinctive
red aprons, greeters offered free cookies to customers on the weekend, high staffing levels
ensured shorter checkout times and runners shuttled bags to customers cars. This ensured that
proper service is being offered to its customers so that they become loyal to the store.
Customer loyalty plays a crucial role in determining the success of a particular store.
Analysing the success or strengths, according to Porters five force model, the threat of new
entrants is medium as huge investments is required to match the number of stores that are
being currently offered by Reed supermarkets.
The bargaining power of buyers is also low because the quality offered by the supermarket is of
very high level. As we know that there is an increase in the health conscious customers, they
would like to purchase products that are of this quality levels.

4) What threatens Reed's success?

The major threat for Reed supermarkets is the diminishing market share in Columbia. The
increasing number of dollar stores and limited selection stores are a major concern as they
take away the market share from Reed Supermarkets.
Among the existing customers, those who below to the lower margin might be price sensitive
and thus could shift from Reed supermarkets to others such as dollar stores or Aldi where the
prices are low comparatively. From the exhibits on price index, we could see that Reed has a
lower value as compared to Aldi and Dollar stores.
Another threat might be the fact that there is no proper coordination or consensus among the
top management on what strategy needs to be implemented to ensure market share growth.
Lack of private labels may be another threat and this could be minimised by introducing more
private labels and by having a new category of organic and natural foods which in turn will be
helpful in increasing the consumer base.
Another threat to the success of Reed supermarket would be linked to Economic downturn.
Once the recession is high, then the customers spending capability will decrease and hence they
will begin to shift to other alternatives. This might impact Reed supermarkets as there would be
a dip in the market share for them.
5) Is it necessary for Reed's to reposition itself? Why or why not?
The primary focus of Reed supermarkets are high end customers and Healthy concern
customers. As we know that the percentage of healthy conscious people is increasing in the
recent past, this shows a better signal for the supermarket.

Currently, with having 25 stores in the Columbia locality, the customers would feel convenient in
reaching the stores and getting the products. It is increased further by providing a one stop
shopping point by offering full range of products.
Hence, we believe that Reed supermarkets should maintain the current product position of
offering high quality organic and natural products and maintain its high levels of customer
satisfaction by providing efficient and adequate customer service.
Hence, they should not go ahead in decreasing the price of its products due to the prices in
various other stores such as dollar or Aldi. Hence, current pricing strategy should be followed by
them in the future as well.
Reed supermarkets can go ahead and increase the private label and also provide seasonal gifts
to its customers to increase the customer loyalty towards this brand.
They should stop the dollar special program as this is not consistent with the brand positioning
of Reed.
Collins should also try to allocate more budgets for marketing purposes. These funds could be
used to realign Reed and its customers with the strengths of Reed.
In order to improve the level of store management, special training and development programs
can be provided to the employees to increase the customer satisfaction levels. Store layout also
plays a crucial role in store management.

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