Supermarkets Case

SOLUTIONS: Reed Supermarkets will continue the Dollar Specials Program. As a new market activity, Reed (known for premium prepared food) will offer premium catering services to companies and consumers. Besides a new source of revenue this activity can bring new customers into the store, which is one of the main goals. Furthermore, Reed will maintain its products natural, high quality, healthy and organic.

BRAND: Aldi, having 95% price competitive private brands in stock manages to generate 250% more sales per square foot than the average supermarket. However, by adopting private brands Reed will have lower profit margins. Hence, it should only adopt private labels in combination with repositioning and restructuring the brand, starting with a reduction in the operating expenses which are twice of those of Aldi (20.6% versus 9% of gross sales). Private brands should however make up a minority share of the total items in stock to preserve Reed’s premium brand image.

Moreover, as consumers may confuse Reed Supermarkets with the Dollar Stores due to the Dollar Specials name (Brad Johnson), a suggestion is to change the name of the deal to something less associative (Discount Deals for example).

INCENTIVES & INFORMATION: Based on consumer preference and estimated cost of print and digital advertising the forecasted advertising budget should be split into $7.37 million for printed and/or digital marketing including media, viral advertising, such as Social Networks, constant website updates; $1.9 million into emailed brochures and coupons. To make Dollar Specials as widely accessible as possible, each Dollar Specials will run for a whole week.

VALUE: Additionally to Dollar Specials, Reed will establish a new pricing strategy for discounts. With an average price of $2.7 and a discount of 26% ($4 for two products) will generate additional 1.8% in store traffic, which results in 0.38 million of additional transactions. This implementation