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Superior Supermarkets is the smallest of the three supermarket chains owned Hall Consolidated
with sales of $192.2 million in 2002. The chain operates supermarkets in small trade areas in
small cities and towns in the South Central US. Superior was ranked between 1 and 2 in its trade
markets as measured by market share. Superior Supermarket chain was acquired by Hall
Consolidated in 1975.
Hall Consolidated is a privately owned wholesale and retail food distributer with sales of $2.3
billion in 2002. The company distribute food and related products through 12 wholesale centers
to 150 company-owned supermarket units operating under 3 supermarket chains, and to some
1,100 independent grocery stores in the US.

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- £dopt an everyday low price strategy in the Superior Supermarket¶s three stores in
Centralia to enhance customer loyalty and improve the image of Superior Supermarket
stores.

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- The area¶s total retail sales were $725 million in 2002.

- Food and beverage sales were $62.3 million (increase of 4.6% over 2001).
- 20 establishments sell food and beverages.
- Population of 41,000 including 13,500 households.
- Media age 35 years.
- Median household income $36,000.
- 80% of the population had a high school education or more.
- 51.5% were employed by manufacturing, retail, education, health, and social services.


 
 

 

- The 3 supermarkets in Centralia were older than those of the competitors.
- Sales of $14 million in 2002.
- Gross profit margin 28.8% compared to the industry margin of 26.4%.
- Sales and gross profit margin of the three superior stores:

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- ‰ffered a more limited variety of merchandise than the major competitors, but carried
high-quality merchandise particularly in grocery items and fresh produce.

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 - Spent $127,500 (0.89% of sales) in advertising in 2002. £dvertising positioning: Superior
Supermarkets = Superior Value. (Newspaper advertising, circulars, radio spots, and
outdoor. No TV ads utilized by Superior or its competitors who spend about 1% of their
sales on advertising).
- The highest priced food store in Centralia. However, it advertises high-volume items at
deeply discounted prices and features ³loss-leaders´ items.
- Its three stores (North Fairview, West Main Street, and South Prospect) were all
renovated in 1990s and 2000.


 

- Three major competitors (Missouri Mart, Harrison¶s, and Grand £merica).
- Missouri Mart: The principal competitor of Superior. £bout 32% of Superior customers
shop Missouri Mart regularly. Most of it¶s customers are middle aged and older families
with income of more than $30,000. The major strengths are the grocery and special
purchase displays. The store lacks the quality and freshness presented in the other
supermarkets in the area. £ds for low prices in some items with huge quantities are
displayed in the grocery section. Missouri Mart enjoys a sizable trade from outside
Centralia (customers from larger geographical area).
- Harrison¶s supermarket: captured most of the business of the middle and upper-income
groups in Centralia ($40,000) and more. Enjoys the second highest sales of the major
chain stores. Well managed, clean, orderly and attractive place to shop at and has an
extremely favorable customer image. Principal promotion theme is everyday low prices.
- Grand £merican: the most modern store in Centralia with the finest fixtures and décor. It
is considered as a secondary competitor to Superior. Its dairy department is highly
regarded by Centralia shoppers. £ds emphasize high-volume items and low prices.
Customers come from residential areas similar to those of Harrison¶s. It customers
income ranges from $20,000 to $35,000.




  


- In 2002, a consultant to the company had concluded that the stores in Centralia failed to
reach their full sales and profit potential because of the lack of a strong consumer image
- £ study was conducted in mid-2002 by Hall Consolidated for two objectives:
1. To develop an updated profile of Superior shoppers.
2. To determine the shopping behavior of these customers.
- This information was to be used in making store merchandising and renovation decisions;
and to question shoppers about what they like and what they dislike about superior stores;
what kind of retail image the stores had.
- First Study Results: (telephone survey with 400 residents):
- More than 30% of the interviewees considered Superior¶s prices ³above average´.
- 20% thought that the prices of Missouri Mart and Grand £merica were ³bellow
average´.
- Harrison¶s was thought to have the lowest everyday prices.
- Superior was thought to be the ³most convenient´ store (35%); and the best bakery
and (25%).
- Second Study Results: (two focus groups ± 24 participants):
- Price: the most important store choice determinant. Harrison¶s perceived as having
the best overall price.

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 - Meat: meat quality and displays is the second determinant. Harrison¶s was judged to
have the best quality and variety of meat, and Missouri Mart received the lowest
marks on meat.
- Produce: Harrison¶s was ranked the best in produce quality, variety, and display.
Missouri Mart rated the lowest.
- Convenience: ease of getting into and out of the store, quick checkout, carry-out
service, well stocked and orderly shelves, and helpful store personnel.
- £t Missouri Mart ³you can¶t stick to your budget if you shop at this store´. There are so
many things to buy. Perceived as bad service.
- Grand £merica is often out of stock and usually over-advertised. Their advertised
specials are not actually specials according to the focus group.
- Harrison¶s is recognized as having the best prices, courtesy, quality, and service.
- Superior is considered a good neighborhood store. High grocery, meat, and produce
prices. Their advertising ³Superior Supermarkets = Superior Value´ was questioned.


    


- Hall Consolidated had employed the everyday low pricing in market areas served by each
of its 3 supermarket chains.
- Tends to work better if it is part of a broader store positioning strategy and supported
with advertising.
- Can lower costs due to reduced inventory and tag handling jobs (labor cost).
- Savings can be used to bolster the advertising budget for the new everyday low pricing
strategy.






- Superior was perceived as having the highest prices in Centralia.
- Shoppers have a relatively good idea of prices and they compare stores accordingly.
- £dapt the strategy for all products or for a certain categories (i.e. grocery, dairy, and
seasonal and general merchandise) as they represent 57% of superior store sales.
- How much the prices should be lowered?

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- The oldest Supermarket stores in Centralia, and offers.
- Has three stores in three different geographical area.
- Perceived as having a high-quality merchandise particularly in grocery items and fresh
produce.
- Stores are renovated, clean and convenient for customers.

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- Perceived by consumers as the highest priced food store in Centralia.
- ‰ffer more limited variety of merchandise than its major competitors did.
- Spend less in advertising (0.89% of sales) than its competitors (1% of sales).
- Their positioning ³Superior Supermarkets = Superior Value´ was questioned by
consumers.
- Doesn¶t serve customers from other areas than Centralia compared to the competitors.

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- Increased consumer awareness about brands and prices.
- Perceived weaknesses of the major competitors produce quality, variety, display, bad
services, and over-advertised claims.

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- ñad image of the stores (pricing).
- Competitors ability to respond to the new everyday pricing strategy pursued by Superior.
- Competitors enjoy sizable trade from large geographical areas outside Centralia.
- The strategy is already pursued with the major competitor Harrison¶s, and the average
prices of the other two competitors is way bellow Superior prices.

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- Pursue the everyday low price strategy on items that has the highest sales and gross profit
percentages (groceries and dairy).
- Utilize the resources (advertising) to enhance a strong consumer image.
- Maintain price stability in a way comparable to competitors prices.
- £lign the pricing strategy with the overall strategy to provide more values and benefits to
the consumers in addition to the low prices
- Evaluate competitors reactions and countermoves.
- Continue the market research to evaluate the impact of the new strategy on the consumer
image.

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