Management Strategy Supermarket Industry

Question: Discuss about theManagement Strategyfor Supermarket Industry. Answer: Ways of Making Money by Firms in the Supermarket Industry In the supermarket industry, firms operate by way of retail stores in different size and shapes that incorporates low profit margins. Supermarket industry provides easy access to the customers to meet their requirements as per the standard of living that helps in generating revenues. The firms involved in the supermarket industry operates to create value by following the current trends results in generating values, profitability and economies of scale. The procedure that the firms follow in the supermarket industry involves purchase of products in bulk quantity at lower rates and offers the products to customers at lower prices (Liao, Rice Lu, 2015). Further, supermarket industry associates with the updated style of marketing products and consumer services by using the technological advances. Such marketing and service system enables the firms to make money as well as increase turnover. Besides, in view of the grocery sales, supermarket industry experiences fall in revenue and there fore attempts to derive low profits. As a result, cost of firms increases including higher amount of tax and duties. Therefore, it can be said that the supermarket industry is not attractive for all sales sectors (Dawar Stornelli, 2013). Financial Ratio Analysis Reflecting Different Strategies and Competitiveness Whole foods Kroger Safeway Supervalu Gross margin ratio 35 79 73 78 Assets returns ratio 235 385 289 300 Return on assets 8 3 3 -9 Return on equity 11 15 14 -4 Considering the financial ratio of the firms, it can be said that the Whole foods firm pursued low cost strategy while other firms maintained higher costs as well as higher sales strategy in order to derive high profitability. Besides, return on assets reflects the strategy to maintain high value of resources to generate income by first three firms whereas Supervalu firm opted to use higher sales to earn profits. In view of the financial ratios of all the four firms, it has been identified that Supervalu has strong revenues and resources but due to high indirect expenses, the firm incurred net loss while other firms financial ratio reflected positive results. As the return on assets of Whole Foods reflected higher percentage hence, it has been highly competitive among four firms. Key Sources of Trader Joes Competitive Advantage Key sources of Joes competitive advantage incorporate target market at lower prices, so that maximum customers can be approached. Trader Joe considered the strategy of secrecy strategy to maintain the competitive advantage, increase product demand and to pursue market growth. It has been observed that Trader Joe applied the sources of low price strategy to maintain the economies of scale by trading lesser variety of products at large volume, which considers the bargaining power while negotiating with the suppliers (Cucchiella, DAdamo Gastaldi, 2015). In addition, less number of varieties in products has been applied to target the customers having fewer choices keeping the small size of stores. Considering the secrecy strategy, Trader Joe considered not to disclose the identity of the manufacturer of the products to increase its competitive advantage within the supermarket industry. Main Threats to Trader Joes Competitive Advantage and Analysis of Sustainability Major threats to Trader Joes competitive advantage involve market level of Neighborhood that might decline the firms brand value along with the market expansion as well as revelation of identity of suppliers. In addition, increase in the market section by Wal- Mart is a threat to Trader Joe since Wal- Mart has been a largest retailer in the world. On the contrary, expansion of market section in the neighboring areas provides threat in terms of product quality and presentability to the consumers as the products would reflect identical quality (Menkveld, 2013). Similarly, identification of suppliers is a threat in terms of damaging the customer relationship with the suppliers affecting the product availability. Modification of Trader Joes Strategy In view of the financial analysis of the related firm, it has been observed that Supervalu incurred negative returns and negative income. In addition, Trader Joes main threats includes expansion of neighbor market system and suppliers identification hence, it is recommended that Trader Joe should implement innovations in presentation of products. The strategy should incorporate modification in terms of increasing the variety of products so that more consumers get attracted and pursue such products. Trader Joe can also implement the modified strategy by approaching new suppliers so that the materials can be consumed at lower prices and consequently acquire large market level in supermarket industry. Reference List and Bibliography Brook, J. W., Pagnanelli, F. (2014). Integrating sustainability into innovation project portfolio managementA strategic perspective.Journal of Engineering and Technology Management,34, 46-62. Cucchiella, F., DAdamo, I., Gastaldi, M. (2015). Financial analysis for investment and policy decisions in the renewable energy sector.Clean Technologies and Environmental Policy,17(4), 887-904. Dawar, N., Stornelli, J. (2013). Rebuilding the relationship between manufacturers and retailers.MIT Sloan Management Review,54(2), 83. Liao, T. S., Rice, J., Lu, J. C. (2015). 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