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Case Analysis Reed

Supermarkets
Ajay Chandar DM 16103
Shorya Umang Jain - DM 16143
Prateek Sharma DM 16160
Hiranya Garbha Deshmukh

Situation Analysis

The case is about Reed Supermarkets, established in 1939 in Michigan. The


grocery store, which later expanded into a chain of supermarkets in the Midwest, was well known for its quality and emphasis on organic produce. It further
differentiated itself by offering wonderful experience through attentive
customer service, cool displays, long shopping hour, etc.

But the main emphasis of the Reed Supermarkets was to grow the market share
in the intensely competitive Columbus, market. This was the area where both
household income and population was above the average and still growing.
Thus, this area reflected the changes occurring in the US Food retailing
industry. Despite this, Reed continued to attract shoppers with median income
12% higher than the area household average.

Several key trends were shaping the industry Traditional markets could no
longer count on the loyalty, as more and more shoppers preferred to shop

from the store which gave them better deals. Besides, Americans were
becoming more health-conscious and were preferring organic and healthy foods,
thus enabling stores like Whole foods and Reed to expand.This trend was
affecting entire America.

Also, due to economic downturn tensions had emerged as supermarkets pressed


manufacturers to reduce prices to improve customer retention while
manufacturers promoted innovation in an attempt to increase share while
maintaining margins.

Problem
Reed Supermarket is facing competition from new stores in the Columbus area.
This competition is from different store formats, such as the dollar store, low
cost food retailers like Aldi, and higher-end food retailers like Whole Foods.
Although the company leads the food retail market in Columbus with a 14%
market share, this is down from 16%.
Reed had lost many of its customers to cheaper food retailers during the
downturn of 2008-10, and it is expected that these retailers will retain much of
this customer base even when the economy revived.

Solution
With Reed Supermarket losing ground to cheaper competitors such as Aldi
and the dollar stores - in Columbus, Ohio, it is important that the company
reinvent itself.

However, running dollar specials would detract from Reeds image of quality, as
the customers that the company generally caters to are more affluent than the
ones who shop at dollar stores.
Reed should focus on retaining and staying relevant to its existing customer
base, and not go after the customers that are currently shopping at Aldi and
cheaper stores.
However, the company must also ensure that its existing customers do not
switch over to other brands.
Therefore, Reed should take the following steps:
1. Instead of running dollar promotions, Reed could adopt an Everyday Low
Price model, and run an advertising campaign to convince shoppers that it
offers high-quality products (for which it is already known) at affordable
prices.
2. Reed should expand the product ranges it sells under its own store brand,
as it is easier for Reed to offer discounts on these products.
3. Through promotional campaigns, Reed should distinguish itself from its
competitors as a supermarket providing high-quality products. This
would help the brand retain its existing customer base and acquire new
customers.