Chun Yiu Chan
March 5th, 2012
Superior Supermarkets: Everyday Low Pricing
In April 2003, James Ellis, the president of superior supermarket was about to meet with the District Manager that manage the three supermarkets in Centralia Missouri. He mentions that the higher prices in Centralia and the growing price consciousness among the local shopper. They are currently facing the risk of losing market share from supermarkets in Centralia. Specifically, he was asked to implement Everyday Low Pricing for all product categories across-the-board or only on certain categories.
In Centralia Missouri, there are total population of 41,000 and about 13,500 households. The median age of population is 35 and their median income per household is $36,000. More than 80% of the population has high school education or more. Centralia recorded a total retail sales of $725 million and food and beverage retail store sales of 62.3 million in 2002.
There are four grocery chain stores which dominate the market of food sales in Centralia Missouri, Harrison’s, Grand American, Missouri Mart and Superior Supermarkets. Each supermarket serves a different role and has their own company image toward the shopper in Centralia. The superior supermarkets owned three locations in Centralia. The gross profit margin is 28.8% which is over average by 2.4%. Each location have a shopper center which consisting of a drugstore and two or three shop such as dry cleaner, shoe repair shop, barber shop or a florist. They carry high quality general merchandise and fresh product to attract customers. Superior supermarket also offer deeply discount prices in high volume items and features “Loss leaders” which is items sold to the customer at or near their cost to the seller. Around 20-23% of customers buying from two locations are out of Centralia. The STP Strategy for superior supermarkets targeted the age of 35-49 years old. Most of them shop two times a week in superior...