Olivers Market

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 вЂ"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 resources, competencies, and competitive capabilities to enter into a new location

2. Based on your analysis of the competitive pressures, is the supermarket industry in the Sonoma County area (where Oliver’s is located) competitively attractive? Why or why not? Is there a potential for a company like Oliver’s Market to realize above-average profits and return on investment doing business in Sonoma County?

Yes, the Sonoma County area is attractive because the area is a growing population with at least 10,000 households making over $75,000 per year. The Novato location is good, because half the population would have to pass the location to get it its competitors. Oliver's Market can realize above average profits in Sonoma County because of their pricing strategy which has lower ever day prices and their promotion with weekly discount prices to senior citizens. Oliver Market also offers 10% price reduction weekly provided by the vendor which is passed on to the customer. Oliver's Market has a private label program that includes vitamins, spices and juices. The private-label was to provide value to their customers rather than build the Oliver's brand.

Oliver's Market prided itself on its customer service. They were willing to obtain any product a customer requested. A kiosk was in the store to take customer request for products. Oliver's Market would carry a least a case of the product on the shelf, and would keep it on the shelf until a competing item took it off the shelf.

3. What driving forces are operating in the supermarket industry in Sonoma County?

The nation’s retail grocery sector is undergoing a major transformation, led by supercenters вЂ"big-box retail stores with full-scale grocery service. These supercenters are the latest development in the nationwide restructuring of the retail grocery industry. Based on efficient distribution systems, low prices, and shoppers increasingly seeking value, supercenters are intensifying competition within the sector. Supercenters also have important local impacts. Their imminent appearance in Sonoma County raises a complex range of issues concerning their costs and benefits, fiscal implications for local governments, and land use policy. Transformations in the discount retail industry are rapidly altering the grocery business nationwide. The engine of this change is the retail format known as the supercenterвЂ"a big-box retail store that also contains the equivalent of a full-size grocery store, with total floor space often three to four times as large as that of a conventional supermarket. As recently as the mid-1990s, supercenters occupied niche markets and were confined largely to regional chains. In just a few short years, Wal-Mart, the dominant force in American discount merchandising, has used the new format to make itself the dominant national grocer as well. Wal-Mart is now the largest grocer by sales volume and the fifth largest by number of stores. Other discount chains that have experimented with the supercenter format include Kmart (the nation's 22nd largest grocer, ranked by sales) and Target (the 27th largest). Based on trends elsewhere, the region can expect substantial impacts of three kinds:

• Lower prices charged for grocery goods,

• Lower wages and benefits paid to grocery workers, and

• An array of local development issues, such as traffic and fiscal effects.

While some changes will be beneficial, others suggest local costs. Due to their magnitude, the distribution and timing of these benefits and costs raise significant issues. The other forces might be

• Consumer benefits

• Lower wages and their impact on the regional economy

• Local development and fiscal impacts

4. What does the strategic group map reveal about the positions of the major players in the Sonoma County retail food market? Is Oliver’s in a good position on the map? Why or why not? Who are Oliver’s closest and toughest competitors?

The major player in Sonoma County retailed food market commonly sell in different price/quality arranges, emphasize different distribution channels, incorporate product features that apple to different type of buyer, have different geographic coverage which reveals that they are trying to make stronger and more attractive market position than other retail food market. The strategy group mapping is the analytical tool for comparing others retail food market position and strategy group consist of those industries members