Giant Eagle's Grocery Retail Strategy: Overview and Challenges
Explore Giant Eagle's supermarket chain strategy, challenges, and alternatives in the competitive grocery retail market. Learn about their Project 20/20 initiative and hybrid model approach to stay relevant in the industry.
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http://moneysavingmom.com/store_deals/wp-content/uploads/2010/03/gianteaglelogo.jpghttp://moneysavingmom.com/store_deals/wp-content/uploads/2010/03/gianteaglelogo.jpg Giant Eagle s Recommended Strategy to Win Jessica Hollern (jjh65@pitt.edu) Justin Petrulak (jep103@pitt.edu)
Where do you grocery shop? Are you loyal? What influences your decision? http://postgradproblems.com/wp-content/uploads/2013/07/f75c633ded16c94d44c98d00509dd375.jpg http://blogs-images.forbes.com/glennllopis/files/2011/09/TraderJoes440.jpg http://d1n0t8embjb5t8.cloudfront.net/wp/wp-content/uploads/2012/09/Costco.jpg http://www.theartofdoingstuff.com/wp-content/uploads/2013/05/amazon-logo.jpeg http://www.clevelandleader.com/files/gianteagle.jpg http://seedebtrun.com/wp-content/uploads/2012/02/aldi_store1.jpg http://potomaclocal.com/wp-content/uploads/2012/01/011212-Bottom-Dollar.jpg
http://moneysavingmom.com/store_deals/wp-content/uploads/2010/03/gianteaglelogo.jpghttp://moneysavingmom.com/store_deals/wp-content/uploads/2010/03/gianteaglelogo.jpg Overview Giant Eagle: Supermarket chain with over 175 company-owned and 55 franchised stores in PA, OH, WV, and MD Ranked #21 of the Top North American Food Retailers with annual sales of $10 billion1 For long has had highest share of any supermarket chain in Pittsburgh area Challenge: Extremely competitive market where traditional grocers are being pushed out by value grocers (Walmart, Aldi, Bottom Dollar) and premium/specialty grocers (Whole Foods, Trader Joes) Shrinking margins, less loyal consumer base, technology rapidly increasing Current problem Giant Eagle is facing and working on through their Project 20/20 initiative to determine their strategy and goals for the coming years 1 According to Supermarket News, 2012
Alternative #1: Keep Hybrid Model Giant Eagle s core format, dominant in terms of the number of stores Advantages: Very flexible format, appealing to a large customer base & not as specific to low-end or high-end shoppers, more recession proof as it caters to various levels of consumers, wide range of product offerings, fuel perks offered to consumers to drive loyalty Disadvantages: Tradtional grocers are being squeezed by the growing value and premium grocers which this hybrid model struggles to compete with, lack of clear & defined strategy; rather it serves as a catch all type market http://www.clevelandleader.com/files/gianteagle.jpg http://www.ilovetogossip.com/wp-content/uploads/2012/03/sa_00_m3c_sm_fuelperks.jpg
Alternative #2: Convert to Market District Format Currently only 7 Market Districts, developed to appeal to food enthusiasts, feature wide array of freshly prepared foods, specialty items, and services (nutritionist, make up artist, cooking classes, etc.) Advantages: High financial success and profitability, extremely loyal consumer base, creates a true shopping experience, limited competition in the Pittsburgh area and markets in which Giant Eagle competes, attractive promotions and fuel perks Disadvantages: Higher prices though warranted by premium and specialty products, the overall experience, and ambiance don t cater to value-shopping consumers, higher operating costs, could struggle in tough economy times as consumer disposable income declines http://rustwire.com/wp-content/uploads/2012/01/market-district.jpg
Alternative #3: Convert to Good Cents Format Previously named Valu King, low-cost supermarket concept to compete with Aldi, Bottom Dollar, and Walmart Advantages: Offers low prices and helps consumers save through a sluggish economy and rising food & commodity costs, respectable fresh produce, low costs to operate Disadvantages: Highly competitive market where sales are shared across many grocers, households not loyal they will shop wherever has the best price, less differentiation potential, profitability margins very low http://simplyfrugalliving.com/wp-content/uploads/2012/11/GoodCentsimage.jpg?bfc050
BOCR Model Assumptions and data gathered through our professional experience being involved with Giant Eagle, other competing retailers, and one of the largest food manufacturers in addition to other accredited sources1 1 Sources include Supermarket News, Progressive Grocer
Strategic Criteria Ratings Pairwise Comparisons
Benefits Weight: 0.324 Economic Social Convert to Market District (0.447), Keep Hybrid Model (0.293), and Convert to Good Cents (0.258)
Opportunities Weight: 0.298 Economic Social Convert to Market District (0.453), Convert to Good Cents (0.321), and Keep Hybrid Model (0.224)
Costs Weight: 0.221 Economic Social Keep Hybrid Model (0.427), Convert to Market District (0.366), and Convert to Good Cents (0.205)
Risks Weight: 0.158 Economic Social Convert to Good Cents (0.472), Keep Hybrid Model (0.310), and Convert to Market District (0.217)
Sensitivity Opportunities Benefits Converting to Market District at all priority levels is the best option.
Sensitivity Risks Costs With Costs as the independent variable, Good Cents is the best alternative. Only when the priority is low (below 0.33) will Market District have an advantage over Good Cents. With Risks as the independent variable, Market District is the best alternative.
Compatability Compatability Index for 3 Alternatives = 1.00000016101498
Final Results Ratings 0.500 0.400 0.300 0.200 0.100 - Hybrid Market District Good Cents Benefits Opportunities Costs Risks Convert to Market District Format given the financial success, limited competitive threats, household loyalty, strong brand image, and the ability to drive a competitive advantage for Giant Eagle.
Questions? http://d4493f2df0d1b95cfc62-773cd17a86049dd672fafb96394debed.r5.cf2.rackcdn.com/2012/284/231/giant-eagle_original.jpg
