1. What competitive pressures must Oliver’s Market be prepared to deal with? What do we learn about the nature and strength of the competitive pressures Oliver’s faces from doing five-forces analysis of competition? Which of the five competitive forces is the strongest? The competitive pressures that Oliver’s Market must be prepared to deal with are the pressure associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry and the pressure associated with the threat of new entrants into the market. They must be prepared to face with the rival stores, Trader Joe’s, Costco, and Whole Foods who had recently entered in the sales territory with brand new stores and so far Wal-Mart and Target also had announced plans to develop regional supercenter, that is, large –format discount center into their territory. Oliver’s market competes with rivals by its pricing strategy. They set their everyday prices on traditional grocery items eight to ten percent below Safeway’s prices. They also price its natural foods just below Whole Foods. Beside that they use promotion and advertising as another weapon to compete in the market. They have a Direct to You program that offers a ten percent discount to seniors on Wednesdays before 4:00 p.m. They also have a staples program which compares prices to Safeway for everyday items. For Oliver’s Market among the five Competitive forces, pressures associated with the threat of new entrants into the market are the strongest one. Because Wal-Mart and Target had announced plans to develop regional supercenters in the Sonoma county region. They are strong candidates for entering the market, because they possess the res... ... middle of paper ... ...one, and does not want to work the 60- 80 hours a week. Steve does want to make Tom an owner. Fourth problem- Demographic data on the two stores, Cotati, and Santa Rosa are closely related. A decision needs to be made on which store to purchase, or to purchase both stores. Can Oliver Market make a profit with these stores is the question. Also Steve and Tom need to think about their competitor best and weak strategy and who are entering in the demographic markets as well as which rivals are strong candidates to expand their product offering and enter new product segments where they do not currently have a presence. The first priority is to decide which store to purchase and their lower priority whether to invest the two million up front to renovate the stores or to operate the store as is.
Increasing revenue is the main focus of business in a capitalistic venture. The most profitable items for AWG are their fresh produce line which carries an approximate 5% profit margin, but requires an inventory turn time of three days to guarantee freshness and overall customer satisfaction. The application of a SWOT analysis demonstrates that AWG’s attributes far outweigh its limitations. At the end of 2012, AWG amassed sales reaching approximately $8 Billion (AWG, 2014). Walmart leads the retail grocery market, but as AWG erodes that ranking it will emerge as a logistics leviathan in the future.
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
Due to the small size of their stores they are able to focus on customer interaction and making every customer feel welcome and valued. The next advantage is their control over inventory. Trader Joe’s carries approximately 4,000 SKU’s per location compared to big grocery stores who carry approximately 50,000 SKU’s per location. The smaller amount of inventory allows them to keep better records of inventory. Trader Joe’s is also able to eliminate products less often than big grocery stores who generally eradicate 10 to 15 products per week. The next competitive advantage that Trader Joe’s has is their private label. Approximately 80 percent of Trader Joe’s inventory is comprised of their private label. This is considered a competitive advantage because they are able to create a customer base who wants only Trader Joe’s private label products which cannot be found elsewhere. They are successful with the private label because they not only use healthier ingredients they try to identify products that their customers haven’t experienced before. This leads to the last competitive advantage, Trader Joe’s huge fan base. Trader Joe’s has extremely loyal customers; in fact, many of them have launched online efforts to persuade Trader Joe’s to open stores in their regions. Customers have not only created fan pages, but also cookbooks featuring meals prepared with Trader Joe’s private label products. Trader Joe’s customers are considered a competitive advantage because most people shop at big grocery stores because they have everything one could need for a meal. Whereas Trader Joe’s customers shop there because they love the store, allowing Trader Joe’s more freedom in product choice and inventory amount.
Present day Federated consists of both Bloomingdale’s and Macy’s stores and operates in 34 states as well as Guam and Puerto Rico. While Bloomingdale’s and Macy’s provide both private and national brands and are similar in merchandising categories (men’s, women’s and children’s apparel, home décor, shoes, beauty, and accessories), they differ greatly in culture. Bloomingdale’s, being more upscale, targets consumers that are more concerned with trend and quality than they are price. Macy’s targets the more value oriented consumer and represents a broader Federated clientele. Macy’s represents 423 of the 459 Federated locations while Bloomingdale’s represents only 36 locations. Because I can better relate to the value conscious consumer of the Macy’s division and because they represent such a large portion of Federated, I will further explore their current characteristics and behaviors that suggest that they possess qualities of both monopolistic competition and oligopolies.
Wal-Mart has had a significant economic impact on the US, as well as the economies of countries that have relations with the US. Wal-Mart is the world’s biggest company of any kind, with 80 percent of the households in America purchasing something from the superstore; it is the nation’s largest retailer. Wal-Mart’s continuing price reduction has given Americans the advantage of being able to afford 15 to 20 percent more than they previously could. (Hansen) In a world governed by globalization and greed, competition has become rigid; as a result firms like Wal-Mart have utilized advanced marketing strategies to insure that they are on the ‘neck’ of competition, and are the core deciders of the market. (Ortega) However, Wal-Mart made decisions that were of a disadvantage to aspects of the economy, including the depletion on a small scale of Small Town USA.
The retail giant’s policies to offer lowest prices on the market is one that gives the company an upper hand since it can leverage on its massive economies of scale, but ultimately the low prices throw the local economy into turmoil. The many small businesses within the regions find it extremely difficult to compete with the low prices offered by the retail giant, Wal-Mart. According to Wolff-Mann (2016), the opening of Wal-Mart in North Carolina resulted in a 30% drop in the sales of a 44-year-old grocery store. Whenever the grocery store cut prices to retain its clients which were being lost to Wal-Mart, the giant retailer would always undercut or match the price. This unfair practice led to the close down of the store, while other businesses in the region succumbed to the stiff and unfair competition. Therefore, when Wal-Mart moves into a small town, things do not get better; the company introduces unsustainable economic models which makes thing worse within the
In general merchandise retailing, Wal-Mart’s primary competitors are Target and Kmart. Retail superstores such as Circuit City and Bed, Bath, and Beyond, also provide retail competition. A survey found that the majority of respondents favored Wal-Mart over stores like Target and Kmart. Respondents claimed Wal-Mart offered lower prices, better variety and selection, and good quality. The needs of consumers is an important economic feature in all competitive environments. What attributes (price, variety, quality, etc.) prompt buyers to choose one retailer over another is very important in the competitive landscape.
Trader Joe’s focuses on a lot of unknowing products in order to satisfied customers’ curiosity. Trader Joe’s also not selling same products, their products change all the time. They put 10 to 15 new products each time into the store which makes customer feel like playing a treasure finding game when they shopping in the store. In this way, customers are more willing to shopping at Trader Joe’s.
Since brands depend on delivering a uniform, consistent product, global brands has traditionally adopted a “one size fits all” strategy (Crothers). Wal-Mart continues to expand internationally because it relates to other U.S global brands such as McDonalds. “ McDonalds grounded on one simple idea: provide desirable food and drink at low cost.”(Crothers 130). Wal-Mart’s strategy was almost the same to begin with. What they have in common is convenience and low cost. Its fast and quick just like McDonalds’. Customers at Wal-Mart can buy anything at one place and one time. It’s a superstore and everything you need is there. Customers do not need to leave to go to another store, which is why Wal-Mart is so successful. Smaller retail companies get replaced because they don’t have a chance with competing with Wal-Mart. A Wal-Mart store opening can destroy almost three local jobs for every two they cre...
Challenges in Today's U.S. Supermarket Industry. 2014. Challenges in Today's U.S. Supermarket Industry. [ONLINE] Available at:http://msdn.microsoft.com/en-us/library/aa479076.aspx. [Accessed 31 March 2014].
This strategy understand that customers have specific needs and wants that must be meet. A major customer need is affordable products which is the first focus in Walmart’s operation’s strategy. First a company must meet order qualifiers for customers to want to buy from them, one major part of which is affordability. If a customer cannot afford something then the business will not be an order winner. The focus is on providing customers with their slogan of “everyday low prices”.
These five forces include: bargaining power of suppliers, bargaining power of consumers, competitive rivalry, threat of substitution, threat of new entry. The bargaining power of suppliers, threat of substitutes, and threat of new entries are low for AVON, while the bargaining power of consumers and competitive rivalry is high. The beauty industry is less impacted by a recession; Brazil being a prime example. Competition is competitive in all markets both domestic and foreign. AVON entered the Brazilian market before the competition, but is now battle grounds for entry between L’Oréal and Sephora. AVON is the number one company for direct selling method and marketing (AVON, 2016). Porter’s five forces are similar between domestic and foreign
The food and staples retailing is an increasingly competitive industry. The market giants (competitors) are Coles (owned by Wesfarmers) which has 741 stores across Australia and plans to add 70 m...
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.
Walmart needed high levels of growth to continue to survive and saturation of domestic market. Global retail expansion has attracted many large-sized companies with targets to increase business profits and market share. Global expansion not only attracts large organizations but also small to medium-sized companies, companies new to international expansion, as well as those who are already expanding in the international arena. However, there are also well-known retailers who failed in their expansion in certain global markets due to regulatory, legal and cultural challenges, competition, and attempting to change local shopping behavior. The lower pricing strategy was their basic strategy to expand Walmart’s philosophy, “Every Day Low Price” to all parts of the world. The only challenge was the distribution system; the company had given in to union demands from the state-run. Walmart was not influenced. The marketing strategies still involved huge discounts and great values on all of their products, similar to strategies in their home country: maintaining low prices every day, especially middle-class customers, yet maintaining profits. They also suggested