Reed Supermarkets Assignment
How would you describe Reed’s position in the Columbus market? How do their customers differ from the competitors and where are they satisfying and dissatisfying them?
Reed Supermarkets (RSM) currently has an established position in the Columbus market with 25 total stores that hold 14% of the market share, the highest of all of its competitors. Their current sales, as of 2010, are $660 million (slightly lower than in 2009) and they are currently maintaining a profit margin of 2.1%. The RSM brand is known for being high quality in terms of the store atmosphere and for its food products. It is also known for charging very high prices relative to its competitors. This is reflected in the average RSM customer as they are typically older, more affluent, pet owners, and usually have a smaller household. Lower priced competitors, like Dollar General, cater to lower-income customers that are likely priced out of stores like RSM. Below is a chart created using 2010 survey data that shows where RSM stacks up against competitors in terms of customer perception of both quality and price.
It can be seen that RSM’s main competition, in terms of its current customer base, is most likely with other high quality brands like Whole Foods and Delfina. While RSM’s customers appear to be pleased with their quality of products and stores, but the relative high price is giving them angst. Surveys data indicates that current RSM customers value low prices and sales above all else, and non-RSM shoppers site price as the biggest reason for not shopping at RSM.
How serious is the threat from Dollar Stores and Aldi?
Both Aldi and the Dollar Stores present a very minor, but not entirely insignificant threat to RSM. Dollar Stores currently have a Columbus area market share of about 1.8% and are rapidly expanding nationally. Their operating model is structured around their merchandise being bought “on-deal” from suppliers which resulted in the stores being a cheap “fill-in” rather than a full
Reed Supermarkets (RSM) currently has an established position in the Columbus market with 25 total stores that hold 14% of the market share, the highest of all of its competitors. Their current sales, as of 2010, are $660 million (slightly lower than in 2009) and they are currently maintaining a profit margin of 2.1%. The RSM brand is known for being high quality in terms of the store atmosphere and for its food products. It is also known for charging very high prices relative to its competitors. This is reflected in the average RSM customer as they are typically older, more affluent, pet owners, and usually have a smaller household. Lower priced competitors, like Dollar General, cater to lower-income customers that are likely priced out of stores like RSM. Below is a chart created using 2010 survey data that shows where RSM stacks up against competitors in terms of customer perception of both quality and price.
It can be seen that RSM’s main competition, in terms of its current customer base, is most likely with other high quality brands like Whole Foods and Delfina. While RSM’s customers appear to be pleased with their quality of products and stores, but the relative high price is giving them angst. Surveys data indicates that current RSM customers value low prices and sales above all else, and non-RSM shoppers site price as the biggest reason for not shopping at RSM.
How serious is the threat from Dollar Stores and Aldi?
Both Aldi and the Dollar Stores present a very minor, but not entirely insignificant threat to RSM. Dollar Stores currently have a Columbus area market share of about 1.8% and are rapidly expanding nationally. Their operating model is structured around their merchandise being bought “on-deal” from suppliers which resulted in the stores being a cheap “fill-in” rather than a full