Reed Supermarkets - New Wave of Competitors - Essay Example

Reed Supermarkets: A New Wave of Competitors SWOT ANALYSIS FOR REED Strengths Reed Supermarkets possesses around 192 retail outlets with almost 21,000 employees operating in the United States. Reed also has two distributions centers for meeting the demand of customer effectively. Reed offers a wide range of products which include groceries, meats, paper goods, baked goods, seafood, pharmaceutical products along with health and beauty care products. Reed seeks that quality products are provided to customers. The outlets of Reed Supermarkets are attractive and offer services for long hours. Moreover, the outlets are decorated with well-designed serving-case displays. Reed also adopted various promotional activities in order to improve its attractiveness amid customers. The employees of Reed are well-trained and the organization followed a high-staffing level which ensured that customers are provided with quality services. Weaknesses The customers of the market segment of Columbus are observed to be less loyal towards a particular product or company and thus Reed may not be able to acquire a permanent base of customers. The customers of the food retail industry are price sensitive and are inclined towards low-priced products. These factors may affect the performance of Reed as the products offered are highly priced. The locations of Reed outlets are observed to be affecting its operations as its stores are far from customer reach. The marketing strategies of Reed are ineffective as it was unable to operate its operations proficiently at the time of recession during the year 2008-10. Opportunities The stabilized market conditions of Columbus will assist Reed to operate its business operations successfully. The customers are perceived to be health-conscious and demand more for organic food. Reed has an opportunity of enhancing its business operations and performances as it focuses more on quality and organic products. The demand for retail food products has increased in Columbus and this aspect will aid Reed to enlarge its business operations. Political/legal The US political and legal system is stable as well as strong which may assist Reed to operate its business functions efficiently without much government intervention. The political and legal system of the US is favorable towards various business expansion strategies. In this context, the US attracts corporate sector and foreign investment which may assist in improving the economic condition. Economic The US has faced recession during the year 2008-2010 but the economy revived from such crisis situations rapidly which increased the spending of customers. After the recession period, the spending on grocery items is observed to be around US$5,200. In this respect, the performance of Reed can improve with better profitability margin (Quelch and Carlson, “Reed Supermarkets: A New Wave of Competitors”). The disposable income for household is around US$52,000 in Columbus which increased the spending of customers for grocery and food products amid food retailing industry. This factor will assist Reed to perform with better profit margin. Socio-cultural The customers are observed to be more concerned about health and demand for more organic products. Reed is mainly concerned about offering quality and health conscious products to customers. The customers are attracted towards stores offering a wide range of product line. This change will assist Reed in attracting additional customers as it offers a wide variety of products. Technological The development of technological factors have facilitated to introduce frozen products and refrigerated food dairy products. Reed with the assistance of refrigerators will be able to increase its product range and meet the demand of customers effectively. Environmental The development and growth of the food retail industry in the market segment of Columbus will assist Reed to perform its operations successfully. Threats In the market segment of Columbus, there are intense competitions amid food retailing companies. Reed is observed to face intense competitions from Delfina, the Galaxy chain (Supervalu), TopVal and Dollar stores among others. The demand for private label products has increased in an immense manner in the market segment of Columbus. The private label products tend to pose threat for the branded products which are offered by Reed. Political/legal The political and legal system of the US is favorable in attracting foreign companies and investment. These factors have increased competition in the market segment of Columbus. Economic The financial crisis and recession situation in the US is the major threat for the food retail industry and it hampered the performance of Reed by a significant extent as the prices of its products are higher as compared to other food retailing stores. The customers have been observed to be price sensitive and spend more on value added products due to declined economic condition of the US. Reed offers products at high prices which reduced its profitability ratio. Socio-economic The preferences of customers have changed in an immense manner and there has been a decline in customer loyalty which has affected the business operations of Reed as customer preferences are unpredictable. The customers are more concerned about shopping in stores which are situated nearby. This changing attitude of the customers has affected the performance of Reed due to location problem. The development of near-national brands including Supervalu and Kroger among others has affected the regional food retailing stores such as Reed. Moreover, customers are observed to be more attracted towards warehouse club and supercenters as compared to supermarkets due to better availability of a variety of products and quality services. Technological The competitors of Reed which include Dollar stores have introduced frozen and refrigerated products in the market segment of Columbus which has intensified the market atmosphere. Environmental The competitive market conditions and recessionary situations have adversely affected the operations and performances of Reed and may affect at any time in future as well. Greatest Threat Reed is perceived to face intense competitions from national and international food retailing companies. The development of the food retailing industry in the US has facilitated companies to enter the national market segment in an efficient manner with better and innovative products. Moreover, the companies have entered the market segment with an assortment of marketing strategies which include a mixture of private label, national along with international products with the objective of creating a better impact amid customers with better innovative products in the market segment of Columbus. Moreover, these companies have offered products at a low cost or price as compared to Reed. In this regard, competitors are the greatest threat for Reed which is hampering its competitive position and profit margin (Quelch and Carlson, “Reed Supermarkets: A New Wave of Competitors”). Dollar Specials Reed has adopted a marketing campaign which is identified as ‘dollar specials’ with the intention of combating with its image of a high priced product offering company. Reed offers around 250 food items at discount rate for attracting and building a larger customer base. The campaign is promoted with the assistance of online advertising, print and broadcast medium in order to develop loyalty amid customers for ensuring better customer retention. Moreover, this campaign is determined to be closely related with the marketing strategies of dollar stores. The campaign has assisted Reed in attracting new along with existing customers amid various chains in the different market segments of the US. Additionally, this campaign will assist Reed to improve competitiveness and to execute operations effectively with better profitability margin. The management of Reed with the assistance of this campaign will be able to create better awareness amid consumers about products offered at low price. In this context, the campaign should continue to acquire more customer base (Quelch and Carlson, “Reed Supermarkets: A New Wave of Competitors”). Strategic Options In order to improve its operational performance, competitive position and profitability margin Reed is required to adopt certain strategies with the objective of developing its business. In this regard, Reed has offered customers with various special offers in relation to low-priced products with the motive of attracting more customers and ascertaining greater level of satisfaction. Reed has also adopted strategies of expanding its product line in terms of private branded products which are in great demand in the market segments. Additionally, Reed has acquired a ‘double couponing’ strategy with the aim of targeting price-sensitive customers. In accordance with this strategy, Reed will offer additional coupon discount to customers. These are the various strategies which are adopted by Reed with objective of improving its customer base and competitive position. The ‘double couponing’ strategy will be the most appropriate strategy for Reed in order to improve its business operations and profitability margin as with the assistance of this strategy Reed will be able to target price-sensitive customers (Hess and Gerstner, “Double Couponing: Pricing and Consumer Perspective”). Works Cited Hess, James D. and Eitan Gerstner. “Double Couponing: Pricing and Consumer Perspective.” Marketing Letters 4.2 (1993): 153-163. Print. Quelch, John A. and Carole Carlson. “Reed Supermarkets: A New Wave of Competitors.” Harvard Business School (2011): 1-12. Print. Read More