Group member: abida hasan iffat sANAM TASNIA & jibran

History...... Established in 1939

Kalamazoo, Michigan, USA

192 retail stores

2 regional distribution centre

21000 employees

Features

Attractive store

High end product

Well known for maintaining high quality

Exceptionally attentive customer service

REEDs in Columbus .. Considered as market leader when it comes to product quality & customer service

High End grocery store

Sales of $660 million in 2010 (exhibit 1),Current market share 14% [2010]

Reeds average value per transaction was higher than national supermarket average

Customers: older,affluent,had a smaller household size than the typical consumer

Direct Competitors:

Galaxy TopValDelfina

Whole Foods

Market Dollars

Aldi

POSI

TIO

N

Problem…Lost market

share & Threat to

lose further

Objectives. . .

Focus to grab 16% in 2011 without expanding new location.

Understand customer feedack

Impact of Dollar special campaign

Prepare marketing strategy

Threat posed by Dollar stores & Aldi..... Small market share : Aldi (1.62%) & Dollar (1.80%) where as Reeds (14.00%)

Operating profit :Reed (2.1) and that of Aldi (1.5) while dollar store (3+) is 8.5

 different customer segment

Reeds quality index is very high compare to Aldi & Dollar Store

Strategies……Maintain current Brand position

serving high end customer with high quality product

customer service , long hours, clean store, convenient location

faster check out

Community service(philanthoropy)

Special bucket thanks

giving New product

testing

Homeless/jobless: x-mas bucket

seasonal gifts

Customer loyalty program weekly loyalty

member exclusive discount

bonus point at sign up

Earn point on purchase

appreciation sales

on line ordering benefit [ free delivery]

Strategies,,,Integreted market campaign

facebook especially offer chance to stay in the front of customers mind

youtube still attracts a younger

smartphone apps

Improve product mix

introduce more private label “healthy reed”

increase organic and prepared food

expand line of organic pet food

product specification

In store Reed Café{try it B4 buy it]

serve food that was prepared using items within the store

will feature a bar to capitalized on growth in alcohol purchases

Should collin continue the dollar special campaign??

Does’nt help to improve Reeds high

price perception

not consistent with brand equity and

loss on each discount item.

Net operating loss on each

discount item.

Decrease the net operating

profit.NO!

The financial impact

Thus, because the dollar specials campaign, is losing morning for Reed’s and isn’t driving sales of higher-margin items to compensate, it should be discontinued.

base price$2.70

margin 22.7%

COGS $2.09 selling items

at $1.50,

Reed’s is seeing a loss of $0.59 for each good sold and a gross margin of -39.3%.

With a total expense of 0.56, net profit for the discounted products are -1.15 and net profit margin is -76.7%.

Finacial impact of Dollars campaign

Goal of 16%

Reeds

• Sales $660 million 2010

• 5% decrease from 2005-2010

• gross margin 22.7%, net 2.1%

• Aldi 1.5%

Reeds

• current market share 14%

• total supermarket sales area $4.7

• increase sales $94.3 million= 2% market share

• $3.8 million per store

Reeds

• average revenue increase 1-2% year

• sales per store increase 5800 customers

• $71000 per store =25 store

• Net profit increase of $1.9 million

Action plan…• Discontinue dollar special campaign

•Increase sales target : it should set to 775 million for 2011

•Maintain current target segment

•Maintain cuurent location

•Maintain brand position

THANKS!Any questions?