Page 2: Key decisions
The continued survival of a company is not inevitable. What is clear is that for any company to survive it has to anticipate and adapt to changing circumstances. For a food retailing chain the following issues are critical:
- Retail positioning. This involves choosing the target market and differentiating the brand from the competition. The benefit of targeting is that it allows the retailer to focus the marketing mix (including product assortment, service levels, store location, prices and promotion) on the needs of the chosen segments. Differentiation provides the reason to shop at one store rather than another. Creating and keeping a competitive advantage requires innovation – a constant stream of new ideas for products and services aimed at the target customers.
- Store location. Store location is critical to consumers as it provides convenience, which is a powerful influence on the decision where to shop. Identifying suitable locations depends on factors such as the disposable income of the catchment area and the presence of other competitors as well as individual site conditions such as access to major trunk roads or motorways and space for parking.
- Product range and services. Supermarkets, if they are big enough, are likely to offer a wide range of non-food products, together with customer services such as coffee shops, as well as their normal range of fresh, chilled and frozen foods and packaged groceries. The choice is determined by the positioning strategy of the company as well as customer expectations. As price differentials have narrowed, especially on ranges of ‘essential’ or commodity goods in supermarkets, retailers have sought to differentiate themselves on customer service, not simply at the check-out but around the store itself. Customer research shows that many people regard supermarket shopping as a chore, so retailers are taking a range of initiatives to make the experience more attractive.
- Price. For some customers price is a key factor in choosing a store, particularly on basic commodity foods where the advantages of bulk buying come into play and are passed on to consumers in the form of lower prices. A small number of supermarket chains focus on offering a relatively narrow range of commodity food products at low prices. The big national chains, however, combine everyday low pricing on certain commodity products with frequent promotional activity on a range of other lines. Promotions are important because they encourage impulse-buying.
- Store atmosphere. Design, layout and in-store signage are carefully planned to meet customers’ needs. Colour, the width of the aisles and lighting are all important when providing an atmosphere conducive to comfortable and enjoyable shopping.