Strategic alignment of IT resources – A case study in Grocery industry (Part 1)

Strategic Alignment of IT Resources

Grocery Industry

Kathleen Chan, Deepesh Joseph, Raymond Jones, Paul Walleck  

Introduction 

To investigate how and why grocery companies are aligning their information and communication resources (ICT?s)

(hardware, software, networks, databases, service offerings, processes, and portal layers) around a focal strategy.

 Grocery Industry Introduction

• NAICS 445110: Supermarkets and Other Grocery except Convenience Stores . This U.S. industry comprises of establishments generally known as supermarkets and grocery stores primarily engaged in retailing a general line of food, such as canned and frozen foods; fresh fruits and vegetables; and fresh and prepared meats, fish, and poultry.

• Previously , grocery stores dominated their regional markets, however today, they are evolving into the global market at increasing rate.

• The top 15 global supermarket companies account for more 30% of the world supermarket sales (72).

Sales in billions
Sales in billions

Global & Regional Players

Global & Regional Players
Global & Regional Players

Industry & Firm Characteristics

Japan

UK

Spain

US

Industry Size

$370 billion (29)

$185.6 billion (45)

$78 billion (57)

$820 billion (1)

General Competitive Landscape

No nation-wide supermarket chains. Increasing number of largest regional supermarkets compete directly with convenience stores and they are dwarfed by the likes of 7-Eleven (29).

Growing dominance of large grocery chains prompted

Office of Fair Trading to review competitive practices of largest retailers. Large chains exploits customer databases to provide customized coupons and discounts (46).

Fragmented & expensive logistics, and lack of centralized distribution. No strong competition from other imported products. Products not always priced competitively. Short shelf-live products can be problematic due to time & resources for new/unknown markets (57).

Since Wal-Mart has evolved to be the most competing player, their expansion led to close at least 2000 supermarkets. Most pressing issue for small and mid-sized grocers is to keep costs low in order to compete with hyper-marts, as new growth opportunities are few.

Improved Marketing Strategies 

Marketing to average Japanese firm is not a priority. To succeed in Japan, they concentrate on production quality and low prices (30).

Large chains provide customized coupons and discounts and websites offers online ordering and home delivery service.

Customers able to view many products online (46).

Largest grocery stores provides club card that gives discounts and loyalty to customers. Attract more customers by advertising via radio, local newspaper and national television (58).

Strategies focus on standardized promotions, personalized customer interactions and maximizing ROI (2, 3).

Improved Customer Experience by Usage of Research

and Technology

Use SMART systems to capture customers’ demands and improve inventory procedures (31).

Big Four make extensive use of online presence for e-mail marketing, recruiting, reward point checker, and surveys. Significant effort spent trying to increase online activity without hurting in-store sales. Growing recognition by retailers that web experience must be coordinated with traditional retail channels (47).

Mining consumer data to unearth new opportunities to provide better customer service (59).

Use specialized software, programs for store management and RFID technology.

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