Harris Teeter Competition
Now Viewing Harris Teeter's competition in: Grocery Stores and Supermarkets (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
What are the demographics of the company's typical customer? - The typical grocery store customer is a female head of household, according to the Food Marketing Institute (FMI).
Who are the company's most valuable customers? - Households with children spend about 30 percent more than childless households.
What are the company's most effective marketing and promotional vehicles? - Marketing and promotional vehicles include newspaper, print, and TV advertising; direct mail; and in-store events. Free standing insert (FSI) coupons delivered via newspaper, retail price discounts, and end-aisle displays are common promotional tools.
How does the company support new product launches? - Sampling events help retailers promote new products.
What role does the Internet play in the company's marketing plan? - Most companies have Internet sites that communicate basic store operating information, such as hours of operation, location, and in-store events. Some websites post weekly promotions.
How effective is the Internet as a sales vehicle? - Internet sales are a tiny part of the grocery market. A few retailers have partnered with third-party websites to offer online sales.
What is the average purchase for the company's stores? - Consumers make about two trips to a grocery store and spend about $100 weekly. About half of a typical grocery purchase goes to perishables.
What is the company's philosophy on pricing? - Some companies use an everyday low pricing strategy (EDLP), while others set higher retail prices and use heavy discounts to drive sales volume.
How much does the company rely on weekly promotions to drive sales? - Retailers typically feature and discount different products weekly.
What resources has the company dedicated to category management? - Proper category management maximizes the use of valuable shelf space and helps minimize inventory shrink due to spoilage. Buyers and merchandising staff decide which items to stock, discontinue, or promote.
Competitive Landscape
Population growth and consumer tastes drive demand. Because margins are low, the profitability of individual companies depends on high volume sales and efficient operations. Large companies can offer a wide selection of products and have advantages in purchasing, distribution, marketing, and finance. Small companies can compete effectively by offering specialty products, serving a local market, or providing superior customer service.
Business Challenges
CRITICAL ISSUES
Competition from Alternative Retailers - As alternative retailers realized the traffic-driving power of food sales, the competitive set for grocery stores expanded and the battle over food dollars became more intense. By buying in enormous volume, mass merchandisers and warehouse clubs have become low price leaders: Wal-Mart is the largest food retailer in the US and holds an estimated 20 percent of the grocery market, according to Retail Forward. In addition, time-starved consumers are spending a greater percentage of food dollars away from home at restaurants. Take-out food has helped restaurants cut into grocery store's share of the food market.
Low Margins - Grocery stores operate with extremely low margins and depend on volume to generate profits. Gross margins are 25 percent of sales, lower than the 40 to 50 percent margin for most retailers. Profit margins can be razor-thin: in some cases, grocery stores net less than a penny per dollar of retail sales. Competition limits a company's ability to raise prices. On average, retail prices for food at home grow between just 2 and 3 percent annually.
Industries Where Harris Teeter Competes
- Retail
- Grocery Retail(primary)
- Drug Stores & Pharmacies
- Nonstore Retail
- Food
- Dairy Products
