Case Analysis

Reed Supermarket: A new Wave of Competitors

Zara Bagramian
Veronica Robayo

Brand Strategy BMK 710

Robert Carroll
 Reed Supermarkets is losing its distinguishing competitive position in food retail industry.

Reed Supermarket lost 1% of

Stores openings from 2005 to Market share.
2010
Whole Foods Market 2 Last two years of market share
Walmart 1 has been flat.
Target 1
Total
Dollar General 4
openings
Dollar Tree 5 19 Reed market share
Family Dollar 3
Market share
Trader Joe’s/ Aldi 1

15%

Recession produced 14%

14%
Lower household income which
made consumers: 2006 2009 2010

- Look for cheaper options.

- Less loyal to brands.
 In order to increase sales Reed’s supermarket should increase the average spending per customer by
offering in-store sales promotions, expanding private label and focusing on core high-margin products

Fits the chosen Positive influence in brand Fits with our current business
positioning image model

No. People will start

Continue with dollar Yes. Our business model allows
No compering our store with
promotion us to give “dollar special” deals
dollar stores

No. Low price stores have big

volume of products, basic
Decrease overall No. High quality entails high
No customer service and poor
prices of the products prices in consumer minds
ambience that allow them to
keep low prices

Increase of in-store
sales promotions Yes. Will provide opportunity
to buy product with lower Yes. Our business model allows
Yes
prices than regular prices but us to give “dollar special” deals
will not tarnish price image

Yes. Gives more options for

customers who are looking Yes. Currently Reed is producing
Expand private label Yes for a slightly cheaper prices private labels but the range of
but still concerned about products is limited.
quality

Strategy:

By increasing in-stores promotions Reed will induce its current customers to spent more which will increase “ticket shopping size”.

By expanding private labels, Reed will attract new customers (Galaxy’s) because it will offer slightly lower prices with the same high quality
Case scenario 1: Reed supermarket is growing its sales by 10% along with competitors. As a result, the market share of
Reed and its competitors remains the same.

Estimated 2010 Total Sales Estimated 2011 Market Share in Market Share with sales
(millions) Sales Increase 2010 increase in 2011
Reed 660 726 10% 14% 14.00%
Delfina 451.8 496.98 10% 9.58% 9.58%
Galaxy (Supervalu) 474.6 522.06 10% 10.07% 10.07%
TopVal 482.4 530.64 10% 10.23% 10.23%
Other Supermarkets 784 862.4 10% 16.63% 16.63%
Whole Foods market 57.3 63.03 10% 1.22% 1.22%
WalMart 212.5 233.75 10% 4.51% 4.51%
Target 120.8 132.88 10% 2.56% 2.56%
Costco 301.2 331.32 10% 6.39% 6.39%
Sam's Club 132.2 145.42 10% 2.80% 2.80%
Dollar General 28.8 31.68 10% 0.61% 0.61%
Dollar Tree 19 20.9 10% 0.40% 0.40%
Family Dollar 37.4 41.14 10% 0.79% 0.79%
Trader Joe's/Aldi 76.5 84.15 10% 1.62% 1.62%
Other (drugs, convenience, etc.) 876 963.6 10% 18.58% 18.58%
Total 4714.5 5185.95 100% 100%
Case scenario 2: Reed Supermarket is growing its sales by 15%: additional 5% acquired from Galaxy Supermarket that is
planning to close the stores in 2012. As a result the market share of Reed Supermarket will grow.

Estimated 2010 Total Sales Estimated 2011 Market Share in Market Share with sales
(millions) Sales Increase 2010 increase in 2011
Reed 660 759 15.00% 14.00% 14.61%
Delfina 451.8 496.98 10.00% 9.58% 9.57%
Galaxy (Supervalu) 474.6 498.33 5.00% 10.07% 9.59%
TopVal 482.4 530.64 10.00% 10.23% 10.21%
Other Supermarkets 784 862.4 10.00% 16.63% 16.60%
Whole Foods market 57.3 63.03 10.00% 1.22% 1.21%
WalMart 212.5 233.75 10.00% 4.51% 4.50%
Target 120.8 132.88 10.00% 2.56% 2.56%
Costco 301.2 331.32 10.00% 6.39% 6.38%
Sam's Club 132.2 145.42 10.00% 2.80% 2.80%
Dollar General 28.8 31.68 10.00% 0.61% 0.61%
Dollar Tree 19 20.9 10.00% 0.40% 0.40%
Family Dollar 37.4 41.14 10.00% 0.79% 0.79%
Trader Joe's/Aldi 76.5 84.15 10.00% 1.62% 1.62%
Other (drugs, convenience, 876 963.6 10.00% 18.58% 18.55%
etc.)
Total 4714.5 5195.22 100% 100%
 The majority of revenue of Reed supermarket comes from foods sales category

Local food brands

Food Imported food

Private label

Prepared Food

Health & Beauty

Products Organic Food
Revenue
Baked Goods
Pharmachy
Profit
Fresh meat and sea food

Paper Goods
Service -
Employees

Ambiance
Expences Reed’s Strengths
Supplies
High margin & core
products
Others
 Reed’s positioning: High -end supermarket with high quality, fresh products, excellent
customer service and exceptional shopping experience

• Customer Profile:
• Looking for the best deals
Low price • Not loyal to any supermarket
supermarket • Care about quality but it is not the main driver
when chossing where to buy.

Reed Supermarket customer

profile:
• Customer Profile:
• Health concious => looking for healthy options
High price (organic & fresh products) to themselves and - Median income is 12%

=
supermarket families such as organic and fresh products. higher than the area
• Looking for pleasant shopping experience household average.
• High quality is the main priority - Looking for high quality
and variety of brands
- Expect high customer
service.
The main competitors of Reed Supermarket are Whole Foods and Delfina according to the benefits they
provide to the same audience.

Aldi &
Dollar Whole Walmart Costco Reed
Top Val Trade Delfina Galaxy
Stores Foods & Target & Sam's Supermarkets
Joe's
Low price     
High diversity of
brands      
High service and
pleasant    
ambiance
Quality Low High Medium Medium Medium Medium High Medium High

Prepared &
  
organic goods

Main Competitors – Same Offerings