...22 The future of online grocery in Europe The online-grocery market is poised for growth. But only early movers will win—and only if they are adept, disciplined, and agile. Nicolò Galante, Enrique García López, and Sarah Monroe Just because Europeans aren’t buying groceries online en masse doesn’t mean they don’t want to. In fact, many of them love the idea of saving time by not having to trek to a supermarket, push a shopping cart down aisle after aisle, then wait in the checkout line. The convenience of shopping for groceries online is alluring. But convenience isn’t everything. Consumers will shop for groceries online only if the offer is right: they’re not willing to sacrifice the price, quality, and range of products that they’ve grown accustomed to in the supermarket, and they won’t put up with inconvenient delivery or pickup arrangements. To date, few European retailers have given consumers a compelling reason to switch from the neighborhood grocer to the Web. That could soon change. Based on our latest research, we believe the advent of the “click and collect” model—which allows customers to place orders online and pick them up at a store or other designated location—could entice more retailers, as well as more consumers, to the online-grocery space. Nevertheless, getting into e-commerce isn’t a trivial matter for a grocery retailer. Will the payoff be worth the investment? Our research, which included a survey of more than 4,500 European 23 consumers...
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...and choose the products themselves, they must rely completely on FreshDirect to select the food for them. This notion has not appealed to some customers. Operating out of its production center in Long Island City, Queens, FreshDirect offers online grocery shopping and delivery service to more than 300 zip codes in Manhattan, Queens, Brooklyn, Nassau County, Riverdale, Westchester, select areas of Staten Island, New Jersey, and parts of Connecticut. FreshDirect also offers pickup service at its Long Island City facility, as well as corporate service to selected delivery zones in Manhattan and summer delivery service to the Hamptons on Long Island. When it was launched in July 2001 by Joseph Fedele and Jason Ackerman, FreshDirect pronounced to the New York area that it was “the new way to shop for food.” This was a bold statement given that the previous decade had witnessed the demise of numerous other online grocery ventures. However, the creators of FreshDirect were confident in the success of their business because their entire operation had been designed to deliver one simple promise to grocery shoppers: “higher quality at lower prices.” While this promise was an extremely common tagline used within and outside the grocery business, FreshDirect had integrated numerous components into its system to give real meaning to these words. Without a retail location, FreshDirect didn’t...
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...The Industry The grocery industry in the United States is currently an attractive industry (a.k.a. profitable). This attractiveness derives from the relative low threat of new entrants, low supplier and buyer powers, and low threat of substitutes. The main factors driving these results are the low concentration of suppliers and buyers, the significant barriers to entry due to high up-front investment costs (for infrastructure and distribution channels) and scale economies, low availability of substitutes, and the threat of retaliation from incumbents (by lowering price, for example). However, it is important to note that there is a heated rivalry among incumbents due to low seller concentration, high price sensitivity from consumers, dynamic price changes and strong exit barriers. Refer to Exhibit 1 for a detailed observation of the forces influencing the industry’s attractiveness. The industry offers opportunities and poses threats in several areas. In the economic environment, the rising oil prices increases costs in the supply chain and/or distribution channels. In contrast, the several free-trade agreements with different countries open the doors for a variety of products from abroad at potentially lower prices or higher quality. Also, the proliferation of high end and low end niches (in detriment of traditional supermarkets) is paving the way for small-footprint stores that cater to specific customers. Technology is playing a major role in the grocery industry with the...
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...I. Executive Summary This paper is about “The Wholesomeness of Whole Foods Market”. Whole Foods is the leading grocery store brand for natural and organic grown produce. They are constantly competing against non-organic grocery carriers such as Wal-Mart, Safeway, Kroger, Publix, Winn-Dixies and other local or domestic produce stores such as Jewel-Osco, Dominick’s, Pathmark, Shoprite, etc. Their marketing strategies are based on selecting the highest quality products from local producers/farmers and promoting its products both in store and on-line while providing a unique shopping experience for their consumers. They targets consumers who desire products which are organic and wholesome. They often target areas with students and middle or higher class income people. This paper shows what specific marketing trends of 2012 Whole Foods should focus on, such as Live a Little, Screened Interactions and The World has gone App crazy. Live a little is a marketing trend where consumers spend money rather than saving. Therefore, consumer will pay a higher price for healthy and flavorful products with no pesticides. Screened interactions is a marketing trend where Whole Foods should have touch screens with all their products information at the beginning of each isles involving which products are offered in this isle. Consumers can use these touch screens to either order or see what the products contain, such as amount of calories and nutrients. The world has gone app crazy trend...
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...For the exclusive use of O. Camacho, 2015. 9 -6 1 5 -0 1 3 REV: AUGUST 15, 2014 RORY MCDONALD CLAYTON CHRISTENSEN ROBIN YANG TY HOLLINGSWORTH AmazonFresh: Rekindling the Online Grocery Market We believe that a fundamental measure of our success will be the shareholder value we create over the long term. . . . We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case. — Jeff Bezos, 1997 Letter to Shareholders As Fishmonger Ryan Reese skillfully filleted a fresh rainbow trout at Seattle’s Pike Place Market one morning in late 2012, the usual mix of tourists and locals gathered to admire his prowess. The iconic downtown market’s appealing array of fresh and specialty foods drew daily crowds eager to admire its vendors' showmanship and buy their wares. But the trout wasn't for any of them. Ryan's customer was miles away on Mercer Island. Within hours AmazonFresh, the grocery subsidiary of Amazon.com, would deliver the fish, which she'd ordered online, right to her doorstep.1 AmazonFresh had spent five years testing and refining its business model since its launch in August 2007. The challenges were numerous; no other online grocer had yet succeeded on a national scale. Amazon typically allowed new businesses only a short time to achieve profitability before ...
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...United Kingdom’s largest retailer, Tesco PLC broke through in 1995 and has become not only the largest retailer in the UK, but also the world’s 4th largest retailer, trailing only Wal-Mart, Carrefour and Germany’s Metro AG. Originally, Tesco’s soul focus was the retail grocery market. As of February 2010, the grocery market continues to be Tesco’s largest source of revenue and it has accounted for more than 50% of Tesco’s £ 59.4 billion of sales. Further, Tesco does not limit its operation strictly to the United Kingdom. Currently, Tesco resides in 13 countries worldwide and operates 1,911 stores across Europe and Asia. The company has also expanded in the United States and has plans for an additional 320 stores in 2010 across the world. Australia’s economic and political stability and skilled labour force, provides a welcoming environment for foreign investors. With respect to the retail industry, consumer goods expenditure of 183 billion US $ in 2009 and an expected 212 billion US $ in 2010 presents significant opportunity to foreign retailers. However, risk exists as there is a limited presence of related and supporting industries for non-food products. As well, domestic rivalry remains strong in both grocery and non-food segments. The objective is to implement Tesco’s hypermarket store format in Australia while increasing the company’s global market share. Tesco’s main competitors include domestic retailers such as Woolworths and Wesfarmers Limited and as well, Costco from...
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...ANALYSIS AND CONCLUSION In an administrative disqualification hearing, the Office of Inspector General (OIG) bears the burden of proving by clear and convincing evidence that an intentional program violation has occurred. In this hearing, it is the position of OIG that the Individual used her EBT card for SNAP trafficking in an amount totaling $1,226.26 during October 1, 2013 through May 2, 2014, at Indiana Grocery. During the course of their investigation, the FNS completed a store survey at Indiana Grocery in comparison to other comparable grocery stores in the area. (Exhibit C-5) Based on this survey any transaction at or above $38.00 could be considered suspicious based on the inventory and size of the store. The store was approximately 600 square feet in size. The store had no shopping carts,...
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...In response to our conversation on January 19, I have prepared a strategic analysis to assess the current competitive position of Whole Foods Market in the retail grocery and organic food industries. As you are aware, the US food industry is intensely competitive with firms ranging from corner store shops up through national retail chains. In recent years, there has been an increased focus on healthy living as characterized by exercise, mental wellness, and eating healthy and organic food. In addition, concerns over food safety, particularly the use of pesticides and other chemicals, has gained media attention and caused some consumers to shift their purchase habits toward organic and natural products.1 If the government implements stricter food production policy, Whole Foods should expect an additional increase in sales. Lastly, a growing awareness of the food supply chain sustainability from the producer to the retail store has also attracted some customers to our stores. Whole Foods enjoys as loyal customer base because of our unique position as a national organic food retailer. We have seen an increase in middle aged and older customers shopping at our stores, in line with the aging US population. These customers tend to have higher discretionary spending and can afford to pay the premium price for organic groceries. On the other end of the age spectrum, we are starting to grow our base of twenty to thirty year old professionals who are conscious about eating healthy and responsibly...
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...are approximately 10% higher than Harrison (Hr) and about 7 percent higher than Grand American (GA) and Missouri Mart (MM). Subsequently, higher prices have become a competitive concern due to their declining market share in Centralia. The negative growth rate, based on 1995 to 2002 figures from Figure 2, is -0.53%. Product line: SS are supermarket stores. The stores’ products may be divided into 5 categories: 1) grocery (including diary); 2) fresh meat/poultry/seafood; 3) produce; 4) seasonal and general merchandise; and 5) bakery and deli. Promotion: The 2002 advertising budget was 0.89% of sales revenue, or $127,500. Competitors spent an estimated 1.0% of their sales revenue. If ELP is adopted, SS would increase the advertising budget (discussed later). Location: SS’s three locations (North Fairview, West Main and South Prospect) provide a competitive advantage. As cited by the VP of Operations: “we offer greater convenience of shopping with our three stores and that is worth something (implying higher prices)”. Further evidence is indicated in Exhibit 6 customer survey ranking “most convenient”: SS -35%, MM -25%, Hr -21%, and GA -18%. Goals & Objectives 1. Increase market share in Centralia. 2. Maintain contribution margin while offering an expanded selection of loss leaders. 3. Understand customer needs to improve consumer image of and experience with SS. 4. Develop an advertising campaign commensurate to objectives 1-3. Concerns & Constraints ...
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...McKinsey Problem Solving Test Practice Test © 2010 APTMetrics, Inc. Practice Test McKinsey Problem Solving Test – Practice Test Practice Test Overview and Instructions This practice test has been developed to provide a sample of the actual McKinsey Problem Solving Test used for selection purposes. This test assesses your ability to solve business problems using deductive, inductive, and quantitative reasoning. This practice test contains a total of 26 questions. The actual test contains 26 questions and you will be given 60 minutes to answer as many questions as possible. You will be presented with three scenarios based on actual McKinsey client cases. Information related to each scenario will be shown in text, tables, and exhibits. This information is presented in doublebordered areas and is distributed in sections throughout the scenario. The questions ask you to find the most appropriate answer to the problem as described using only the information presented. You should select one and only one answer to any question. While completing this practice test, do not use any electronic devices (e.g., calculator, computer) when performing calculations to answer the questions. Electronic devices will not be permitted to be used during the actual test administration. Also during the actual test administration, you may use all blank space in the test booklet as scratch paper to assist you in performing any calculations and recording any notes. No scratch paper will be allowed...
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...Exhibit 7: Analysis and Major Findings Analysis: This exhibit shows where a typical bottler in the US delivers its CSD products to retail outlets. This is based on year 2000 annual data. Graphically, this is shown in the following chart: The exhibit also shows the market share of the major players: Coca-Cola, Pepsi, and Other Brands (taken as one) on their product deliveries to retail outlets. It can be seen from Exhibit 7 that the two major players: Coca-Cola and Pepsi combined, dominate on all the retail outlets. This dominance is shown higher in the fountain and vending machine categories. The fountain sales is basically an advertising strategy for both companies that is called “paid sampling” (Yoppie, pp.5).They make sure that restaurants or fast food outlets retain most of the profit, which is to encourage the proliferation of more fountain outlets. For each outlet, the bottler’s cost per case (Yoppie, pp. 21) is also shown. It is lowest for the foodstores at $3.53 per case and highest for the bending machines at $8.48 per case. This is because the total cost per case consisting of delivery, advertising and marketing is lower for the foodstores because the products are delivered in bulk quantities and bottler’s also spend little in advertising in these outlets because it is a necessity for people to go to foodstores or groceries regularly for their basic needs. For each of the retail outlet categories, the profitability per case is $0.23 for the foodstores which...
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...LAURENTIAN BAKERIES The decision-maker must make a recommendation on a large expansion project. Discounted cash flow analysis is required. In addition to the assumptions and scenarios in the case, assume that, due to increased competition, the U.S grocery chain can only guarantee 33% of the increased sales unless they receive a $0.20 per pizza reduction in price. With this deduction, they will be able to guarantee 50% of the original increased sales. Should you reduce the price? Explain. In late May, 1995, Danielle Knowles, vice-president of operations for Laurentian Bakeries Inc., was preparing a capital expenditure proposal to expand the company’s frozen pizza plant in Winnipeg Manitoba. If the opportunity to expand into the U.S. frozen pizza market was taken, the company would need extra capacity. A detailed analysis, including a net present value calculation, was required by the company’s Capital Allocation Policy for all capital expenditures in order to ensure that projects were both profitable and consistent with corporate strategies. COMPANY BACKGROUHD Established in 1984, Laurentian Bakeries Inc. (Laurentian) manufactured a variety of frozen baked food products at plants in Winnipeg (pizzas), Toronto (cakes) and Montreal (pies). While each plant operated as a profit center, they shared a common sales force located at the company’ head office in Montreal. Although the Toronto plant was responsible for over 40% of corporate revenues in fiscal 1994, and the other...
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...Superior Supermarkets (SS) is a division of Hall Consolidated, a privately owned wholesale and retail food distributor. Hall distributes food and related products to some 150 company-owned supermarket units and about 1,100 independent grocery stores in the U.S. through 12 wholesale distribution centers. Superior is the smallest of the three supermarket chains owned by Hall, with sales of $192.2 million in 2002. Sales of three Centralia stores were $14,326,700 in 2002. Randall Johnson, the District Manager for the Centralia stores, has recommended that they implement everyday low pricing (ELP) since Superior’s prices are higher than the competition at a time of growing price consciousness, and that the price differential could cause them to lose market share. Problem Statement Superior Supermarkets (SS) must decide whether o not to pursue an everyday low pricing (ELP) strategy at its three Centralia MO locations. Analysis Three viable alternatives have been found. Alternative #1 is to do nothing. Do not adopt ELP and keep the current promotional budget. If market share continues to decline, at the growth rate of -0.53% or greater, this alternative would be deemed unsuccessful. Conversely, if market share remains stagnant or improves, this strategy would prove to be prudent. Alternative #2 is to implement a ‘limited ELP’ model. By marginally increasing the amount of loss leaders, the model could attract price-conscious customers at the margin. Under this model, the advertising...
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...Optical Distortion, Inc. (ODI) is the world’s first company to introduce contact lenses for chickens. These lenses offer farmers a unique cost saving opportunity and are more humane and efficient than the current de-beaking method. ODI, with help from New World Plastics has developed this commercially viable technology to reduce cannibalism by inducing astigmatism. With a patent holding off competition for at least three years, ODI needs to decide how to price contact lenses to ensure high adoption and profitability which will fuel ODI’s ability to circumvent competition through further investment in R&D – a key requirement to be able to establish themselves as a multiproduct, multimarket company which can provide effective service anywhere in the country. ODI should initially target Large Farms with 100,000+ birds with this product at a price of $0.16/pair because this contact lens technology yields the following superior results versus current debeaking method: greater reduction in cannibalism by 4.5%, zero chicken traumas, no risk versus medium risk with de-beaking, and a reduction in feed costs. There are several segments within the poultry industry – Small, Medium, and Large farms characterized by 10,000 or less birds, 10,000-50,000 birds, and 50,000+ birds, respectively. Based on the case data, the US Poultry industry is consolidating at a rapid rate. For instance, in 1964, 1.2M farms represented 38.3% of the entire chicken industry and managed 343M birds. Five years...
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...decide whether to pursue an everyday low pricing (EDLP) strategy at its three Centralia MO locations. After much analysis, I believe that my recommendation would be for Superior stores (Hi-Value) to most definitely adopt this new method. First let’s look into some details about Hi-Value, and their competition: Product: The stores’ products are divided into 5 categories: 1) grocery (including diary); 2) fresh meat/poultry/seafood; 3) produce; 4) seasonal and general merchandise; and 5) bakery and deli. Price: more of a high-end branding strategy. Hi-Value everyday (non-promotional) prices are 10% higher than Harrison and 7 percent higher than Grand American and Missouri Mart. Higher prices have become a competitive concern due to their declining market share in Centralia. The negative growth rate, based on 1998 to 2005 figures from Figure 2, is -0.53%. Place: Three locations (North Fairview, West Main and South Prospect) give a competitive advantage. The VP of Operations even said “we offer greater convenience of shopping with our three stores and that is worth something (implying higher prices)”. Exhibit 6 shows that Hi-Value is ranked “most convenient” by 35%, Promotion: The 2005 advertising budget was 0.89% of sales revenue, or $127,500. Competitors spent an 1% of their sales revenue. If EDLP is adopted, Hi-Value should increase the advertising budget. One of Hi-Values important goals that they wish to get, which we learned through this care is to increase market share...
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