Case Analysis - Reed Supermarkets
Introduction & Problem Definition
This case involves a mid-sized, regional grocery store chain called Reed Supermarkets. Reed has 192 retail stores, two regional distribution centers and 21,000 employees in five states in the Midwest of the United States. This case discusses Reed’s market strategy for the Columbus, Ohio, market in particular, which is one of Reed’s largest markets. The Columbus market has grown slightly over the past five years, while Reed’s market share has dwindled slightly in the market. Reed has watched their market share stagnate with the entrance of new competitors (10% growth in stores) and a dramatic shift in customer preferences to value or …show more content…
There are two drawbacks to this strategy. The first is that customers may poach just those items on deep discount and significantly decrease margins storewide. The other negative is that a promotion of this kind could alter the perception of Reed being a high-end retailer, which could have a much more significant negative effect.
The second alternative is to move to an everyday low pricing model, which is employed by one of Reed’s main competitors. This could have a similar effect as the “dollar special” campaign and drive down Reed’s high-end perception among its customers.
The third alternative would be to fight for the high-end ground and offer little in the way of specials/discounts, but instead continue to focus on their core competencies: exceptional customer service and a large selection of products.
Based on the current economic environment, my recommendation would be to hold the high-end market and wait for customers to return to Reed’s superior product. Reed should continue to expand its premium private labels and higher-end prepared foods to compete with its high-end competitors. By not offering deep discount offers and keeping its margins in a correct position, Reed should be able to hold its share and growth its revenue. Smaller specials should be offered, but