Supervalu Retail Chain of Stores Market Analysis

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Introduction

SuperValue retail chain of groceries has been in operation for 135 years offering a wide range of products that include grocery, Pharmacy and supply chain operations across the country. It operates approximately 2500 stores and about 2500 affiliated retail shops through the companys supply chain operations. Currently the chain stores are grappling with the effects of current recessions and inroads by discounters such as Wal-Mart, Target, Sams Club and newcomers such as Tesco, and Fresh and Easy Neighborhood markets among others in what has been viewed as their traditional turf.

Target Market

Competitor Analysis

Competition in the grocery industry is very fierce with each store trying any marketing gimmick available at their disposal to lure customers onto their shelves. Such an environment will call for very creative strategies in order for superValue to remain afloat. The battle for the control of the grocery industry is set to get stiffer with the entrant of Aldi, an international Discount grocer who are already warming up to pitch tent in an already highly competitive market. Company Sources indicate that Aldi offers prices as low as 50% lower than the prices at the existing super markets as reported by Fickenscher (2009). This move is expected to intensify price wars in the industry as other chains readjust themselves to retain their market share. Mui & Neil (2009) suggest that plunging commodities prices have forced grocers to continue adjusting their prices downwards. They add that the competition for customers will continue driving down grocery prices which is a significant departure from the market trends over the recent past. The renewed focus on price will further be accelerated by the global economic downturn. As one of their main rivals Target lowers its prices by 25%, Wal-Mart is set to heat up the rivalry with the opening of additional super centers carrying a full range of groceries in the region. As much as the price cuts lead to increased sales volumes due increase demand, it is also likely to depress revenue if not carefully approached. Consequently, Safe ways recorded a 6.5% slump in revenue compared with the previous year as a result.

Other competitors have even diversified their methods of sales promotions to include revolutionary delivery services to their customers. For instance, Wal-Mart has expanded its prescription mail-delivery initiative across America to provide customers with more affordable prescription medicines through a convenient, free mail delivery system as noted by Nolan (2009). Customer service has also been given considerable attention as a market gimmick to lure in customers. Some supermarket chains including Winn Dixie and SuperValue are training their meat cutters on how to cook the chops and fillets they create in order to pass the same to their customers, a move which is expected to improve customer service at the meat counters. Along the training kit are lessons on how to greet customers as Martin (2009) observes.

Market segmentation

Market segmentation is one of the best marketing strategies available to marketers today. Success in marketing is thus largely dependent on the success in which we are able to segment the market. This enables one to know whom to market a certain product to and the methods to be applied. Consumers grocery buying decisions are largely personal and are mainly influenced by among others family traditions, ones ethnicity, geographical location and brand loyalty. Theoretical approach, symbolism and market behavior suggests the manner in which consumers purchase grocery and what is manifested in who they are in their buying. It is with this in mind that SuperValue decided to put extra energy towards meeting customers needs by providing a variety of merchandise and service demanded by each unique market in which they operate.

Marketing Strategy

The bullish marketing environment should however not dampen hopes for SuperValue as it also presents an opportunity for the store to refocus its strategies to outshine its competitors by offering superior services and products. One of the options open to the store is to adopt cost cutting measures so as to reduce the cost of business operation. Deterring the use of personal checks by customers is one of the avenues in which they save significant money. The issue of bouncing checks and check clearance is an expensive affair to the stores that leads to loss of revenue. It has been seen in many chains to encourage bad checks and also fraud. It also comes with enormous cost in terms of labor, time and check clearance costs. Customers should be encouraged to continue using cash, debit cards and credit cards as they are commonly used by most of them. Whole foods and Fresh and Easy have already adopted this in their operations as reported by Hirsch (2009).

In the midst of economic recession and subsequent decreased consumer spending, the store could also lay particular emphasis on ready to eat meals and fresh and environmentally friendly products. These will resonate well with the many customers who are eager to save to the last cent and also go along the green concept (eco friendly) which is fast catching up with the public. To further strengthen their position in the market they can opt for possible merger with another retail store to ward off competition from retail giants such as Wal-Mart and Tesco that are quickly eating into their market share. Improving customer care will also translate into a higher customer retention rate. Sales men and other staff need to be trained on etiquette and also how to cross sell products when dealing with their customers.

Conclusion

As price wars intensify, competitive pricing and discounted pricing will endear the stores more to consumers. Cash strapped shoppers are increasingly seeking the best deals as Martin (2009) observes in the Wall street journal. Customers are shifting purchases to the lower priced stores, a move that cost SuperValue 30% of its customers in July. A sharp price decline in many food commodities, including milk and grains, as well as marked reductions in shipping expenses because of a drop in oil prices in 2008 should provide a reprieve during the price deduction to minimize losses in revenue as Hirsch (2009) remarks. Safe ways has gone a step further by sacrificing some profit to reduce prices particularly in key markets such as Washington. Their major price cuts included $3 declines in the price of large laundry detergent and a large can of Folgers coffee. The Stores are now showcasing the new prices with eye-catching yellow tags. This has resulted to a marked rise in the average number of items per transaction. Several stores are expected to follow suit to match the fierce ranging competition.

Reference

Fickenscher, Lisa (2009). International Discount Grocer to Open in NYC Web.

Hirsch, Jerry (2009). Stores giving check use the bounce; In a cost-cutting move, Whole Foods may emulate Fresh & Easy in accepting only cash and cards at checkout. Los Angeles Times. Los Angeles, Calif. B1. Available via ProQuest. Web.

Martin, Timothy W (2009), Price War Dividing Grocers into Winners, Losers , Web.

Mui Q. Ylan & Neil Irwin (2009), A Silver Lining in Grocery Aisles Web.

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