Reed Supermarkets: A New Wave of Competitors

Group - 2
DM23436 Sanjana Chatterjee
DM23143 Swagato Mukherjee
DM23323 Muthu Ezhilan P
DM23412 Ayush Khandelwal

Case Summary:

● Reed Supermarkets was founded in Michigan in 1939 and had grown to 25 stores in
Michigan and Illinois by 1960.
● By 2010, they had grown to 192 stores and 21000 employees across five Midwest
states.
● It was a high end supermarket store known for quality and organic products, with prices
18% higher than average supermarkets, with an estimated revenue of $660 million and a
market share of 14%.
● Standard groceries, baked goods, meats, seafood, paper goods, health and beauty
items were among the items available.
● The customer base was older, more affluent, had a smaller household size, and had a
median income that was 12% higher than the area's average household income. Pet
ownership was also found to be 20% higher in this supermarket than in the others.
● Added value through the rich customer experience

Strengths:
● Eye-catching stores, wide range of products.
● Elegant serving displays, outstanding customer service
● Low staffing levels result in shorter check-out times.
● Value-added services such as runners (shuttled bags to cars) at no extra cost

Issues:
● Stagnant Market share
● Erosion of loyal customers to lower priced competitors
● Bad Macroeconomics condition leading to stress in higher end markets

Number of Market Revenue Total Revenue Market

 stores Presence Per store Revenue Share Effectiveness

Reed 25 13.16% 26.4 660 14.00% 1.06

Delfina 18 9.47% 25.1 451.8 9.58% 1.01

Galaxy 21 11.05% 22.6 474.6 10.07% 0.91

TopVal 24 12.63% 20.1 482.4 10.23% 0.81

Other 32 16.84% 24.5 784 16.63% 0.99

Whole 3 1.58% 19.1 57.3 1.22% 0.77

WalMart 5 2.63% 42.5 212.5 4.51% 1.71

Target 4 2.11% 30.2 120.8 2.56% 1.22

Costco 3 1.58% 100.4 301.2 6.39% 4.05

Sam's 2 1.05% 66.1 132.2 2.80% 2.66

Dollar 18 9.47% 1.6 28.8 0.61% 0.06

Dollar 10 5.26% 1.9 19 0.40% 0.08

Family 22 11.58% 1.7 37.4 0.79% 0.07

Trader 3 1.58% 25.5 76.5 1.62% 1.03

876 18.58%

Total 190 407.7 4714.5

Possible Solutions:

● Improving operational efficiency by temporarily reducing range in slow moving sections

until the economy improves.
● Exhibit 6 calls for better coupons and promotions. Thus a comprehensive loyalty
program is needed to address this need.
● Reworking Dollar specials program to bring more products to midprice rather than
bringing all products to very low prices. This will help to improve average ticket size,
while improving footfalls.
● Work on adding private labels to improve gross margins.
● Experiment on certain non food items to improve revenues and market effectiveness as
result.