Reed SupermarketsBackground and Situational AnalysisReed Supermarkets was founded in 1939 by William H. Reed. It started as a small and low-end retailer but now Reed has grown to be onsidered high-end in the supermarket business. Itnow has 19! retail stores" two regional distribution enters and !1"### employees in fi$e states inthe %idwestern &nited States. In addition to a full assortment of standard groeries" a typialReed'sfeaturedaseletionofmostlyfreshseafood" inludingli$elobstersandrabs. Reedimported pakaged goods ranging from !( kinds of mustard to three different brands of snails)and an array of !# different prepared entrees a$ailable for takeaway. *he hain was well-knownfor the +uality of its produe and its emphasis on organi produe. Reed also differentiated itselfby offering attrati$e stores" long hours" elegant ,and often reati$e- ser$ing-ase displays" ande.eptionally attenti$e ustomer ser$ie. /ompetition is present in the /olumbus market withReed's market share distributed on multiple le$els and the fight for market share among groeryretailers in /olumbus is intense. Reed's management was smart and did the right thing by goingout and doing a suffiient amount of market researh regarding the reent trends in thesupermarket business. Sine sales were delining and there was inreasing ompetition in the/olumbus area" Reed needed to find out how and why they were losing ustomers. *he mostimportant researh that they did in my opinion was the analysis on their ustomers sur$ey" sur$eyonpeoplewhodonot shopat Reed" omparisonofprieswithothersupermarketsandtheestimation of operating osts for their main ompetitors. Strategic Options*here are four main strategi options that Reed ould do to bring bak the ustomers andinrease market share.0o nothing. Reed is atually not performing terribly. *he estimated total sales hangefrom!##1to!#1#isonly-#.#12omparedtoitsmainompetitor 0elfina-#.#32,4.hibit 1-. 5lso" the ompany is still produing positi$e profit. *he derease on saleswas mainly aused by the eonomi downturn) some onsumers were looking and goingforbetterpriingoptions. 6neeonomyisreo$ered" theustomerswillgobakto+uality produts beause /olumbus's household inome is abo$e the a$erage. *herefore"Reed should be patient and 7ust maintain what they ha$e been doing. 6penmorestores. *hisisimportant forReedtoapturemoreustomers" espeiallythosewholi$efarfromthesupermarkets" toinreasesalesaswell asmarket share./ustomers mostly go to stores where are only 1 to 3 miles away from their house forgroery ,page 8-. *hus" Reed should open more store if they an afford. 9owerthepries. Reedhaslostustomersbeausethereha$ebeenmoreandmoredollar stores enter the market. *hose dollar stores attrat onsumers by offering reallylow pries. If Reed an afford to lower its pries there would be a good hane to bringbak its old ustomers and also new ustomers. Impro$e %arketing) keep the urrent model and make some hanges. Sales an inreasewithout loweringthepries andopeningmorestores if marketingis well doneandimplemented orretly.RecommendationIn my opinion" Reed should in$est more in its marketing to gain the !2. 9ooking at !#1#sales data" if e$ery other ompany had flat sales in !#11" Reed would need an e.tra 93 million insales" oraninreaseof182.*hatisahugegaptofillwhentherearenonewstoresbeingopened. Reedneedstostikwiththeirurrentmodelandontinuetoaddpremiumprivatelabels, create loyalty programs, expand current customer base, and shut down the dollarcampaignto ompete with stores like *rader :oe's and Whole ;oods. Introduce new private labels: Reed should introdue more pri$ate label produts as an alternati$e to on$entional name brands. fill-in? shopping. Shoppers are making more trips to the groery store for less items rather than make few large >all-in-one? stops. /on$eniently ha$ing all potential produts a$ailable will allow Reed to ater to this trend. *he e.pansion of these produts should also oinide with the e.pansion of Reed's health food aisle@department. 5s 5merian onsumers are beoming more health-onsious" stores like Whole ;oods are gaining market share. Ha$ing a higher proportion of healthy and organi labels should help to retain Reed's ustomer base.xpanding current customer baseA Reed's urrent ustomer base onsists of older" more affluent people. 6n a$erage" the Reed shopper has an annual household inome that is 1!2 than the a$erage /olumbus resident. Howe$er the a$erage Reed ustomer spends less per groery transation than the a$erage &S shopper. If the a$erage person in the &S spends B1"!## per year on groeries and makes" on a$erage" !.1 trips per week to the groery store" then the a$erage transation amount in the &S is B8(.3! per trip" whih is far more than the a$erage Reed transation amount of B31.1C. Darrowing this disrepany would ha$e a signifiant ontribution towards obtaining a 132 market share. *o put this into perspeti$e" if transation amount were toinrease 7ust 18.32 to B33.#9 per trip ,still well under the national a$erage-" this would result in total sales inrease of B98 million" whih would bring Reed to their goal of obtaining 132 market share.!oyalty programes: Reed an keep their urrent ustomer base and grab new ustomers by adding oupons and loyalty programes. *he loyalty program would inlude signing up for a ard and either getting disounts on items at hekout) orbuilding up points with e$ery purhase and getting ash bak. If they an make small hanges like this while adding to their premium pri$atelabels they an take share away from other stores that are based on pri$ate labels and position themsel$es for growth.Shut down dollar campaign:Reed should stay away from low prie models beause it willruin their image and it will not differentiate them as a ompany. /urrently they are not fightingagainst these low end stores for market share and this is pro$en in that 1#2 of the urrent storesthat were opened in the last 1 years ha$e been low prie $alue stores and rather than take awaysales from Reed's" who only lost .#1" they took it away from Eala.y" the largest $alue store wholost 112 and one store.