Reed supermarket analysis - Case Study Example

The case in question deals with the efforts of Reed Supermarkets to position itself as a retailer of choice among different es of consumers in Columbus, Ohio where it has 25 stores. The background to the case is that Reed Supermarkets is a decades old supermarket chain which grew from humble beginnings in 1939 as a grocery store to the present day where it has a chain of 192 retail stores and 21,000 employees on its rolls. The fact that it is an established chain means it would be able to leverage upon brand recall and the associated values of reliability and dependability which established stores evoke in consumers.

However, as the case highlights Reed Supermarkets is facing stiff competition from newer entrants which because of their nimbleness and ability to offer steep discounts (at a discount 1 to 5% from the prices at Reeds) combined with better management of logistics have ensured that the market share of Reed Supermarkets (currently at 14%) is steadily eroding. The point to note is that Reed Supermarkets has positioned itself to cater to quality conscious customer rather than cost a conscious customer which makes for eminent business sense given the demographics of Columbus where the number of people earning more than the national average income is high.

Further, Reeds scores heavily in the quality index of consumer perceptions (consistently averaging around 8.3%) whereas it scores lower in the price index (averaging around 4.3%). This is the crucial aspect of the case i.e. Reeds is perceived as a place to get high quality goods but not at an attractive price. Though a combination of high quality and low price is something that is a bit of a paradox, the fact that other retailers have been able to wean away the cost conscious consumers with their discounts and bigger floor areas means that Reeds needs to seriously rethink its strategy as it is faced with the problem of holding on to its market share and worse, losing ground to other retailers as well.

The suggestion that is being offered is that Reeds can stock different varieties of products at all price bands and also ensure economies of scale which other retailers seem to be doing. In this way, it would be able to cater to all segments of consumers as well as derive savings in costs that accrue from leveraging upon economies of scale. As the statistics point out, price is the major determinant which is followed by range of products and location and ease of shopping. If Reeds is able to circumvent these factors, then it would be in a position to take on its competitors head on and ensure that it does not lose further market share.

Finally, Reeds must also undergo a rebranding exercise aimed at persuading consumers that it is not a store only for the wealthy. While it need not position itself as a Wal-Mart or Costco clone, it can market itself in a way where consumers perceive it as a cost effective yet quality offering store.