Reed Supermarket was fighting to keep market share in Columbus, Ohio with a growing number of competitors. Currently holding 14% market share in 2010, their focus was to grab 16% in 2011 without expanding into new locations. Reed had to assess which business model could gain two percent market share by 2011. Reed had three options: a) continue with the model they have and hope customer loyalty will give them share; b) continue with the model they have but make some changes; or c) move to an every day low price model.
Reed has attractive locations, long hours, exceptionally attentive customer service, and a quality image. These attributes were able to set Reed apart from the rest of the competitors, but in a key demographic where the annual household income was larger than the national average, the population growth was high than the national average, and the unemployment rate was under the nation average.
Reed’s largest weakness was the high prices and was cited by 55% of surveyed non-customers as the number one reason they did not shop there and 31% cited it as the second most important reason why they did not shop there. Three quarters of their current customers interviewed also stated better prices were the most important to them followed by better discounts and coupons. Aldi, a limited selection low cost store, was also looking to open as many as four locations to obtain more market share while Reed was not going to open any new stores.
Under Reed’s current model they are able to retain the loyal customers that they have and are able keep the quality image. Because such a large percentage of people state that the number one reason for not shopping at Reed’s is their prices, their current model would not bring them any extra market share. The current model at Reed supermarket needs to be changed. In fact, with three quarters of Reed’s current base also stating that price is the most important value, they stand to possibly loose share to limited selection...
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