reeds super market
TRANSCRIPT
History...... Established in 1939
Kalamazoo, Michigan, USA
192 retail stores
2 regional distribution centre
21000 employees
Features
Attractive store
High end product
Well known for maintaining high quality
Exceptionally attentive customer service
REEDs in Columbus .. Considered as market leader when it comes to product quality & customer service
High End grocery store
Sales of $660 million in 2010 (exhibit 1),Current market share 14% [2010]
Reeds average value per transaction was higher than national supermarket average
Customers: older,affluent,had a smaller household size than the typical consumer
Objectives. . .
Focus to grab 16% in 2011 without expanding new location.
Understand customer feedack
Impact of Dollar special campaign
Prepare marketing strategy
Threat posed by Dollar stores & Aldi..... Small market share : Aldi (1.62%) & Dollar (1.80%) where as Reeds (14.00%)
Operating profit :Reed (2.1) and that of Aldi (1.5) while dollar store (3+) is 8.5
different customer segment
Reeds quality index is very high compare to Aldi & Dollar Store
Strategies……Maintain current Brand position
serving high end customer with high quality product
customer service , long hours, clean store, convenient location
faster check out
Community service(philanthoropy)
Special bucket thanks
giving New product
testing
Homeless/jobless: x-mas bucket
seasonal gifts
Customer loyalty program weekly loyalty
member exclusive discount
bonus point at sign up
Earn point on purchase
appreciation sales
on line ordering benefit [ free delivery]
Strategies,,,Integreted market campaign
facebook especially offer chance to stay in the front of customers mind
youtube still attracts a younger
smartphone apps
Improve product mix
introduce more private label “healthy reed”
increase organic and prepared food
expand line of organic pet food
product specification
In store Reed Café{try it B4 buy it]
serve food that was prepared using items within the store
will feature a bar to capitalized on growth in alcohol purchases
Should collin continue the dollar special campaign??
Does’nt help to improve Reeds high
price perception
not consistent with brand equity and
loss on each discount item.
Net operating loss on each
discount item.
Decrease the net operating
profit.NO!
The financial impact
Thus, because the dollar specials campaign, is losing morning for Reed’s and isn’t driving sales of higher-margin items to compensate, it should be discontinued.
base price$2.70
margin 22.7%
COGS $2.09 selling items
at $1.50,
Reed’s is seeing a loss of $0.59 for each good sold and a gross margin of -39.3%.
With a total expense of 0.56, net profit for the discounted products are -1.15 and net profit margin is -76.7%.
Goal of 16%
Reeds
• Sales $660 million 2010
• 5% decrease from 2005-2010
• gross margin 22.7%, net 2.1%
• Aldi 1.5%
Reeds
• current market share 14%
• total supermarket sales area $4.7
• increase sales $94.3 million= 2% market share
• $3.8 million per store
Reeds
• average revenue increase 1-2% year
• sales per store increase 5800 customers
• $71000 per store =25 store
• Net profit increase of $1.9 million
Action plan…• Discontinue dollar special campaign
•Increase sales target : it should set to 775 million for 2011
•Maintain current target segment
•Maintain cuurent location
•Maintain brand position