Superior Supermarket

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Superior SupermarketsBackground:

The Company: Superior Supermarkets

Superior Supermarkets is the smallest of the three supermarket chains owned Hall Consolidatedwith sales of $192.2 million in 2002. The chain operates supermarkets in small trade areas insmall cities and towns in the South Central US. Superior was ranked between 1 and 2 in its trademarkets as measured by market share. Superior Supermarket chain was acquired by HallConsolidated in 1975.Hall Consolidated is a privately owned wholesale and retail food distributer with sales of $2.3 billion in 2002. The company distribute food and related products through 12 wholesale centersto 150 company-owned supermarket units operating under 3 supermarket chains, and to some1,100 independent grocery stores in the US.

Decision Problem:-
 
Adopt an everyday low price strategy in the Superior Supermarket¶s three stores inCentralia to enhance customer loyalty and improve the image of Superior Supermarketstores.

Situation Analysis:

Competitive Environment (Centralia ± central Missouri):
 -The area¶s total retail sales were $725 million in 2002. -Food and beverage sales were $62.3 million (increase of 4.6% over 2001). -20 establishments sell food and beverages.
-Population of 41,000 including 13,500 households.
-Media age 35 years.
-Median household income $36,000.
-80% of the population had a high school education or more.
-51.5% were employed by manufacturing, retail, education, health, and social services.

Superior Supermarkets in Centralia:

-The 3 supermarkets in Centralia were older than those of the competitors. -Sales of $14 million in 2002.
-Gross profit margin 28.8% compared to the industry margin of 26.4%. -Sales and gross profit margin of the three superior stores:

Section Sales  GP Margin
 
Grocery 50%  30%
Meat and Poultry 20% 18%
Produce 18% 30%
General Merchandise 7%33%
Bakery $ Deli5% 50%

 
Offered a more limited variety of merchandise than the major competitors, but carried high-quality merchandise particularly in grocery items and fresh produce. Spent $127,500 (0.89% of sales) in advertising in 2002.Advertising positioning: Superior Supermarkets = Superior Value. (Newspaper advertising, circulars, radio spots, and out door. No TV ads utilized by Superior or its competitors who spend about 1% of their sales on advertising).-  

The highest priced food store in Centralia. However, it advertises high-volume items at deeply discounted prices and features ³loss-leaders´ items.-  
Its three stores (North Fairview, West Main Street, and South Prospect) were all renovated in 1990s and 2000.

Competitors:

-Three major competitors (Missouri Mart, Harrisons, and Grand America). -Missouri Mart: The principal competitor of Superior. About 32% of Superior customers shop Missouri Mart regularly. Most of it' customers are middle aged and older families with income of more than $30,000. The major strengths are the grocery and special purchase displays. The store lacks the quality and freshness presented in the other supermarkets in the area. Ads for low prices in some items with huge quantities aredisplayed in the grocery section. Missouri Mart enjoys a sizable trade from outsideCentralia (customers from larger geographical area).  

-Harrisons supermarket: captured most of the business of the middle and upper-incomegroups in Centralia ($40,000) and more. Enjoys the second highest sales of the major chain stores. Well managed, clean, orderly and attractive place to shop at and has anextremely favorable customer image. Principal promotion theme is everyday low prices.-  

Grand American: the most modern store in Centralia with the finest fixtures and décor. Itis considered as a secondary competitor to Superior. Its dairy department is highlyregarded by Centralia shoppers.Ads emphasize high-volume items and low prices.Customers come from residential areas similar to those of Harrison¶s....
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