What competitive pressures must Oliver’s Market be prepared to deal with? What do we learn about the nature and strength of the competitive pressures Oliver’s faces from doing five-forces analysis of competition? Which of the five competitive forces is the strongest?
The competitive pressures that Oliver’s Market must be prepared to deal with are the pressure associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry and the pressure associated with the threat of new entrants into the market. They must be prepared to face with the rival stores, Trader Joe’s, Costco, and Whole Foods who had recently entered in the sales territory with brand new stores and so far Wal-Mart and Target also had announced plans to develop regional supercenter, that is, large –format discount center into their territory. Oliver’s market competes with rivals by its pricing strategy. They set their everyday prices on traditional grocery items eight to ten percent below Safeway’s prices. They also price its natural foods just below Whole Foods. Beside that they use promotion and advertising as another weapon to compete in the market. They have a Direct to You program that offers a ten percent discount to seniors on Wednesdays before 4:00 p.m. They also have a staples program which compares prices to Safeway for everyday items.
For Oliver’s Market among the five Competitive forces, pressures associated with the threat of new entrants into the market are the strongest one. Because Wal-Mart and Target had announced plans to develop regional supercenters in the Sonoma county region. They are strong candidates for entering the market, because they possess the resources, competencies, and competitive capabilities to enter into a new location
Based on your analysis of the competitive pressures, is the supermarket industry in the Sonoma County area (where Oliver’s is located) competitively attractive? Why or why not? Is there a potential for a company like Oliver’s Market to realize above-average profits and return on investment doing business in Sonoma County?
Yes, the Sonoma County area is attractive because the area is a growing population with at least 10,000 households making over $75,000 per year. The Novato location is good, because half the population would have to pass the location to get it its competitors. Oliver's Market can realize above average profits in Sonoma County because of their pricing strategy which has lower ever day prices and their promotion with weekly discount prices to senior citizens. Oliver Market also offers 10% price reduction weekly provided by the vendor which is passed on to the customer. Oliver's Market has a private label program that includes vitamins, spices and juices. The private-label was to provide value to their customers rather than build the Oliver's brand. Oliver's Market prided itself on its customer service. They were willing to obtain any product a customer requested. A kiosk was in the store to take customer request for products. Oliver's Market would carry a least a case of the product on the shelf, and would keep it on the shelf until a competing item took it off the shelf.
What driving forces are operating in the supermarket industry in Sonoma County?
The nation’s retail grocery sector is undergoing a major transformation, led by supercenters –big-box retail stores with full-scale grocery service. These supercenters are the latest development in the nationwide restructuring of the retail grocery industry. Based on efficient distribution systems, low prices, and shoppers increasingly seeking value, supercenters are intensifying competition within the sector. Supercenters also have important local impacts. Their imminent appearance in Sonoma County raises a complex range of issues concerning their costs and benefits, fiscal implications for local governments, and land use policy. Transformations in the discount...
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