Stores like Wal-Mart are famous for keeping their prices so low. This is one reason why they are able to maintain a grip on the consumers of an area. They accomplish this by keeping the cost to produce and transport the goods low. In January, a study by the Los Angeles County Economic Development Corp. found that, “an individual family could save $589 a year on groceries by shopping at a supercenter. Overall, shoppers could save $3.76 billion in merchandise nationwide.” (Blazier, A, 2004) A major reason they can keep prices lower than mom-and-pop run businesses is their ability to buy merchandise in bulk. Buying in bulk works the same way it does for a consumer. The more of a product that is purchased, the less the cost is per unit. Consumers see this every day when they go to stores like Sam’s Club or Costco. When they buy their merchandise in bulk, they are able to offer it to the consumer at a lower price. (Kale, 2011) This is what could eventually drive the mom-and-pop owned businesses out of the area, and draw a negative criticism from the public. The interesting thing about this criticism is that the public complains about Wal-Mart
When entering a grocery store, most people don’t take the time to stop and observe their surroundings, for their soul purpose at that instant is to purchase what very food they may need for that day or maybe even for that week. However, through all the haste of wanting to go in and out of grocery stores as fast as one can, most are unaware of the very culture that they too are now apart of, the interactions, both verbal and through people’s body language that they are experiencing, how people look and dress, even what is considered appropriate behavior although not specifically written down. Culture is all around us, and we all contribute to it, whether it is through our norms, values, symbols, or mental maps of reality (Guest 2014, 38-43). That is why through this assignment, I took the time to observe the culture experienced in the American grocery store Stater Brothers, the ethnical Filipino grocery store Seafood City, while also taking the time to reflect on my own personal views of what I thought was “normal” through my experience working in Northgate Gonzalez Market, a Mexican grocery store for three years.
Publix is not your quintessential grocery store, it is so much more. What is it about Publix that make it unique from all the other stores that sell groceries? What are its unique selling points that add extra value to a visit? Why are customers willing to pay more to shop there? To quote Publix President, Todd Jones, “We believe that there are three ways to differentiate: service, quality and price. You’ve got to be good at two and the best at one. We make service our number one, then quality and then price” (Jones, 2013).
In 2008, the economy suffered a recession that caused consumers to cut back on spending. According to Josh Parnell (2014), typically as consumers are considering cut backs, they are also considering how they should wisely spend their money whenever they have to. While Bob hoped that a struggling economy would persuade consumers to consider eating at home more than eating out to save money, Bob’s was not always the cheaper option (Parnell, 2014). In fact, because Bob’s was a local grocery store, they struggled to compete with prices against large chain stores. Also with an economic recession, employees are looking for ways to increase their wages. As minimum wage increased nationally and affected Bob’s and its competitors, because it is a smaller company, this impacted Bob’s on a larger scale(Parnell, 2014).
Changes in the economic environment caused changes in the social environment for consumers. Bob’s supermarket was hit especially hard by these changes “Some organizations in an industry are hit harder by economic forces than others,” (Parnell, 2014, p.63). The company tried to keep cost low with low wages, no advertising, and diy construction projects while offering differentiators like in store butchers and ready to eat combos. Bob’s Supermarket low cost differentiated strategic approach took a hit during times when consumers were looking to find deals. This caused problems for the company because they have already maxed out their potential to cut cost through efficiency, employee pay, and frugality. They were even getting charged more
It is easy to see how Bob’s Supermarket is stuck in the middle. The company is not the lowest price provider and it cannot be the lowest price provider. The company does not have the modern amenities of a larger grocery store and it cannot have all the amenities of a modern grocery store. Bob’s Supermarket is somewhere between a modern grocery store and a convenience store. Since its possibilities for being the best grocery store are limited the company should focus on being the best, convenience (plus) store in the area.
In the case regarding Bob’s Supermarket, several economic and social environment challenges were observed. First, the opening of Wal-Mart Supercenters in 1995 created major competition for Bob’s Supermarket. Immediate impact was felt in dropped sales and store closing. The Hope, Indiana store was force to close when Wal-Mart opened a Supercenter in Columbus, Indiana. The store layout of Bob’s Supermarket was customer unfriendly. Some store had old ice machines located in the front and outdated fixtures located inside the store. In addition, Bob’s Supermarket made the decision to not sale alcoholic beverages.
Analysts who study specialty grocer TRADER JOE'S attribute the company's financial success to the canny use of private labels, direct deals with producers and very compact stores (Speizer, 2004). Trader Joe’s is known for their critical standards of hiring their employees. Trader Joe’s customer service holds some superiority over other small grocery stores as they focus on that one important standard of their
Also, this increased competition among grocers resulted in some going out of business resulting in loss of sales for those vendors. Also, these large grocery chains demands exceeded the ability for small food companies to provide products in such large volume. This forced these small businesses to focus more on smaller markets and also to identify niches in the market that could be exploited. Small restaurants and food chains now became major purchasers of these products. Also, the frequency of the average American eating out increased further adding to the attractiveness of vendor sales to restaurateurs. Also, certain businesses expanded to meet these large demand markets in the grocery and restaurant market. These state of the art production facilities threatened smaller companies without a competitive product or established market. All of these changes resulted in certain drivers coming to the forefront. The first would be the need to reduce volatility. Competitors in the market would need to select markets wisely to reduce the risk of not being competitive or the uncertainty of the marketability of their product. They also would need to increase their ability to diversify into different products. Large food companies may monopolize a certain product making it necessary for other companies to become creative in developing other products or marketing strategies. On the plus side, the ability of a company
The financial crisis that caused the recession caused consumers to buckle down on their spending habits. The three stages that was heavily influenced from the recession were consumer pre purchase issues, purchase issues and post purchase issues. The mind of the consumer took a different approach in how they spent their money. Many looked for bargains and the best buys on food and product consumption. Brand names were not as important to the consumer as much as surviving the crisis.Consumers that found that purchasing the same product at a lower price still met the basic need of survival (Mckenzie & Schardrodsky, 2011).
Customers in the community were “low to moderate income” level, who are hit the hardest, and tend to look to get the most out of the money they have (Parnell, 2014). Therefore, because of the recession the consumers looked to travel another 10 miles to Wal-Mart to save money overall. A recession can have a long-term effect on an industry. Another challenge that was a result of economic environments is the challenge of maintaining low/competitive prices on foods. With the changes on minimum wage and recession, it would cause Bob’s to increase the price of their goods. The vendors and suppliers also feel the effects of the economic impacts and tend to downstream them to the ones who purchase the goods. The recession and economic impact from vendors would make Bob’s take a trying to cut cost by also looking at inventory, causing them to minimize their
Economics play a key role in the success of low-end retailers. They performed well following the 2007-08 financial crisis, as more Americans were forced into purchasing lower cost items. The crisis resulted in the worst economic collapse since the Great Depression, as 8.8 million US jobs and more than $19 trillion in household wealth were destroyed.
Grocery shopping has become more diversified than ever before. Whole Foods Market and Trader Joe’s have become household names in the consumer arena. Markets such as Roots, and Common Market are also in the game even though they operate on a smaller scale. Despite comparable size in terms of locations, each store’s growth has operated using a very different model.
Bob’s is a hometown grocery store based in Hanover, Indiana. Currently, the store is owned and operated by two brothers who have limited managerial, operational, retail, or grocery experience, if any. What was their strategy? How did their strategy assist them in achieving a competitive advantage?
Globalization in today’s companies are facing greater challenge to increase product variety, shortening product life cycle, and increasing profits with the use of resources. In this day and time, it’s the beliefs and theories within the business world that need to play catch up with some of the many great grocery retailer operations and how they react in their role within the world today. (Lau, 2012) (Pfouts, 1978)Traditionally, the economists and financiers behind these huge retailers have argued that the company is in the business to make money no matter how they do it, and lots of it. That intrusive image has been forced into the goals and outlooks of so many business people, creating the actions of most corporations to focus solely on