Maangatt Consulting Group Business case presentation Reed Supermarket Business case presentation Submitted by: Akashdeep Mangat

Reed Supermarket is known for it high caliber in a market where customer is searching for value Company Overview US Food Retail Industry Normal family spend $5,200 every year on basic need and took 2.1 market trip week after week in 2010. Consumer buying behavior is changing as a result consumer price index for food is flat by 0.5%. People are becoming more health conscious Continuous increase in private label foods from 14% to 17%. Established in 1939- 1st Grocery store in Kalamazoo Michigan. By 2010-192 store 21,000 employee. High end with a vast variety of product & customer services. Periodically expanding & upgrading store. Owned Two medium-sized chains serving OHIO and Indiana & Illinois by 1980. Reasons for decline in market share Reed In Columbus Columbus Market Change in buying preference of customer. They are seeking more value for every dollar they spend Increase in number of competition due to open market. Modest decline in a share. 2 million people with average household income of 52k. Consumer are seeking good prices & better discount. Reed has a high-quality index but very low-priced index. Large number of competitors in the market. Intense market share 25 stores in Columbus region Competing against 3 major companies Reed did not add new stores and none were planned Moderate sale from 2005 to 2010 What strategic step should Reed implement to differentiate itself from its competitors in the Columbus market, to achieve 16% market share by 2011 ? 28/04/2019 MCG> Reed Super Market Business Case

To maintain an ideal position in the market, Reed Supermarket need to understand which of it competencies has a capability of being special to build its competiveness Competitors What they are offering How Reed is better Delfina High end, Vast Stores with a balance of conventional and organic items. Incredible customer service. Whole foods High end ,Organic & healthy. Convenient locations. Galaxy(Super value) Old, poorly located & only marginally profitable, reduction policy on selected item. Good location, Appealing store, customer service. TopVal Every day low pricing strategy, limited product. Better quality product, bigger store. High price Sensitive High consumer Involvement 14% 9.58% Delfina 10.07% Galaxy Reed 10.23% Top Val Reed customer is keeping pace with the statistic in Columbus and its customer doesn't mind paying a premium for quality item and administrations since normal salary is 12% higher than the territory family pay. Competencies VRIO Analysis Strength & Weakness Brand image Rare, valuable & cost to imitate Strength & sustainable competitive advantage Quality of product Rare, valuable Strength & competitive advantage Customer service Not rare, but valuable Strength Dollar Special program Not valuable neither rare Weakness Low price Sensitive Keeping in mind the end goal to fulfill the customer needs Reed should focus their top-notch mark picture of their brand image, quality of products & services to give best offer to their customers. 28/04/2019 MCG. Reed Super Market Business Case

Reed Super Market Business Case Expanding Reed's market share by 2% would mean expanding yearly sales by $94.29 million, which isn't doable Total sale are driven by number of store and estimated annual sale per store. Reed was only successful to build income by 1-2% every year over its market. With loss making in dollar sale & no further opening on new stores , increase of market share in the overall industry isn't conceivable. Increase of $6.6mn in total sales, resulting in 0.139% of market share gain. Amount in Millions(000’) Amount in millions(000’) Total market sales $ 4,714.5 Current market share 14%(Reed) $660 Expected Reed market share -16% $754 Sales needed (754-660)= $94 Increase in sales 1% (660*1%)=$6.6 Sales needed for 2% market share (94-6.6) =$87.4 Columbus current Market share 1% increase 2% increase which is not possible 14% 15% 16% Market Share 28/04/2019 MCG. Reed Super Market Business Case

Reed Super Market Business Case Dollar Special Program should be suspended as its not right methodology to contend in the market because it is creating loss of $9,478 per store each week and additionally it doesn't accomplish the target of 16% market share Dollar Program 1. Increase sale. 2. Increase store traffic & attract dollar store customer into our store. 3.Re-inforce store loyalty among its customer. 1.Created misconception among the target market about the read image was an exclusive high end retailer. 2. Result in foot traffic's of wrong customers. 3. Every unit is sold for a loss of $0.59cents. Expectations Actual Result 2% expansion of market share represent $94 million over all sales i.e. 14 times the current sales of Reed. Dollar special program With dollar program Without dollar program Selling price per unit 2.7 1.5 Gross margin % 22.70% -39.14% cogs 2.09 Gross Margin $ 0.61 -0.59 Dollar special program is increasing the sale the by 3% but every store is facing a loss of $9,478 mm each weak. 28/04/2019 MCG. Reed Super Market Business Case

Reed Super Market Business Case In order to increase the customer experience, Reed must implement the combination of strategies to realign its position in the market. Alternative Loyalty Private label Low prices everyday Expand prepared food section Increase prices of product Premium customer services Customer view point Customer are rewarded with points with every dollar on products, Offering special offers on personal events I.e. birthday, anniversary etc. It will help the customer to reduce the shopping time. It also fulfill customer demand of good products at low prices & increase sales margin. Customer will be attracted with the low prices. It will also increase the foot traffic of customer but eventually decrease the sale. Customer have more variety to choose product. Consumer are shifting towards more healthier products.   Decrease the foot traffics. Customer like to be treated as a premium body. They want their every problems to be solved in quick time. Company view point Increase customer retention & reduce the churn rate. More data about shopper purchasing propensities can be uncovered and can be used to customize projects to individual buyers. Profit will increase because more premium customer will enter the store. Brand image will be endorsed. Reed cannot afford this because this doesn’t suit with their brand image. It will help Reed supermarket to retain its existing customer and become a complete house for all shopping product under one roof. It will help Reed to compete against their superior competitors i.e. is Delfina. Offering these type of services to customer will add brand image in the market which help them to increase their market share. From whom Reed steeling the sale Delfina & Whole Foods Market. Limited Selection stores. Costco, Walmart, Trader Joe etc. Delfina, Galaxy, Wholefood Market. TopVal, Delfina. Reed services are their assets In comparison to other competitors. Does it accomplish your Reed objectives to gain market share. No Yes Criteria 28/04/2019 MCG. Reed Super Market Business Case

Reed Super Market Business Case Appendix -1 Calculation of change 28/04/2019 MCG. Reed Super Market Business Case

Reed Super Market Business Case Appendix -2 Per unit calculation 28/04/2019 MCG. Reed Super Market Business Case