The Supermarket Retail Industry into the Arabian Emirates - Case Study Example

EXECUTIVE SUMMARY In the UAE, the supermarket retail industry has turned highly competitive unlike in other parts of the world. Further, the industry still shows high potential for growth opportunities. However, it is worth to appreciate that such opportunities are only available for industry players who are ready to offer high value for customers at highly competitive prices Spinneys supermarkets aims at investing across borders, and thereby, challenging the greatest national players that also forms part of the global competition. As a result, it is critical to carry out a comprehensive strategic marketing plan analysis to determine the company’s worthwhile in both short and long-run. The hallmark of this report is giving a strategic market analysis of the retail chain, but it also provides the necessary information for business intelligence requirements. Spinneys supermarket will attain its set objectives through niche marketing and positioning for competitive advantage. The company shall divide its target market into domestic and global markets. Further, the domestic market shall be segmented into young and old individuals. Rival firms established in this report were local competitors as well as international from such regions as Europe and the US. TABLE OF CONTENTS EXECUTIVE SUMMARY 1 COMPANY OVERVIEW 4 Mandate 4 Corporate Mission 4 Corporate vision 4 Organizational core values 5 Stakeholders Analysis 5 COMPANY ANALYSIS 6 Macro Environment 6 Political and legal factors 6 Economic factors 6 Socio -demographic factors 6 Technological factors 6 Ecological and ethical factors 7 Micro-Environment 7 Style of management 7 Shared Values 7 Systems 7 Staff 8 Structure 8 CUSTOMER ANALYSIS 9 Target market analysis 9 Consumer Overview 9 MARKETING OBJECTIVES AND STRATEGIES 11 Optimization Plan 11 Positioning 11 Expansion 11 The 7p’s of the marketing mix 11 Product 12 Price 12 Promotion 12 Place 13 CONCLUSION 13 WORKS CITED 14 COMPANY OVERVIEW Spinneys Supermarket aims at becoming a re-known retail outlet in the UAE. The retail chain also aims at providing home & leisure items, beers, groceries, besides its wide variety of own brands. According to Thomas (155) the retail sector in general is a highly sensitive sector that was heavily affected during economic recessions. Contrary, the mega retail stores such as Spinneys Supermarket will not be susceptible to global crises as customers will continue to buy essential products maintaining the sales rate steady all the way through. Compared to other retail operators and furniture store. Thomas (155) viewed that retail store’s margins are smaller but guaranteed than that of other retailers. This is an appealing attribute for investors looking for investments not that can withstand economic recession (Thomas 155). Spinneys aim at engaging in the business of beverages and food retailing through supermarkets outlets. The company together with its subsidiaries, will offer a range of products including grocery, baking items, fish and meat, non-alcoholic and alcoholic beverages, dairy based products, pharmaceuticals, tools and recipes and garden furniture. Mandate Corporate Mission Spinneys mission statement is to provide all its customers with the very best value for money on their shopping. The retail chain aims to go national wide. Corporate vision Spinneys have a vision of becoming the “food specialist for everyone”. To achieve this vision, the retail chain plans to tap to everybody’s expertise across its business starting from factories to food counters. Organizational core values The main corporate value for Spinneys supermarket is to enhance value for its products and provision of high quality services and goods to its customers. Stakeholders Analysis Spinneys stakeholders will include suppliers, shareholders, employees, lenders, government and more importantly the customers who keep the business going. COMPANY ANALYSIS Macro Environment The macro environment forces can be divided into four categories; political and legal forces, economic forces, technological forces and social cultural forces (Faarup 89). Political and legal factors Spinneys face serious legal and local political implications such as working with administration agencies to offer employment opportunities, health and environmental standards and obtaining local council permit to open stores. The introduction of the number of working hours per week and minimum wage rate in UAE has an impact on Spinneys. Economic factors Local economic factors such as local economic development schemes and council rates affect the operations of super market chain. In addition, national factors such as economic recession, rate of inflation, GDP growth rate and level of employment will have an impact on Spinneys supermarket stores. Socio -demographic factors Aging population of the country has an impact on Spinneys. The aging population has an adverse implication on the availability of staff in the upcoming years. There will be fewer younger people for employment as the current employees start to retire. Technological factors In the recent past, e-commerce has become a main marketing and distribution medium. Fathima Group of Companies, a key competitor of Spinneys has embraced online marketing and distribution methods. This will compel Spinneys to invest heavily in technology in order to remain competitive in the industry. Ecological and ethical factors Of late, ethical issues and environmental concern have gained much prominence and are now critical areas for all businesses. However, organizations can either gain good or bad publicity on these matters as customers get more concerned with ethical buying. Micro-Environment In this front, a company is analyzed to identify the forces behind its competitive advantage which are attributed to the strengths emanating from its internal processes. Style of management Spinneys intend to have a result-oriented style management style that emphasizes on expansion, revenue growth and shareholder wealth maximization. This will lead to revenue growth and also an increase in dividends per share. Shared Values The company will adapt a culture of `customer first' policy within the whole of its operations, which emphasizes on the provision of superior pleasant shopping service for all of its clients. Systems The company will operate a sound integrated internal system, which incorporates production, marketing and logistics. In addition, New Product Development Systems and Marketing Information Systems will also be integrated. Staff Spinneys should give more emphasizes on recruitment, training and development, and operates appraisal programs in order to maintain a competent human resource workforce. Structure The retail chain will operate a complex structure due to its multifarious operations. Nonetheless, the company will have managers with varied responsibilities in order to manage different in house stores and brands and also those to man the head office where all the retail chain branches and subsidiaries are coordinated. CUSTOMER ANALYSIS Target market analysis The target market for Spinneys Supermarkets shall comprise of UAE and the global market. Spinneys Supermarkets shall target regional market blocks such as Africa, the United States and Europe in order to tap into the international market. Spinneys Supermarket will further segment the local market into youths and established couples. Young people play a crucial role enhancing market growth due to their spending nature. As a result, the company will aim at delighting them by delivering unique products. The company will also use social media in order to woo the young transitional individuals. The old have a more purchasing power, and thus, the company will aim at delivering value for money. The company will also segment its market based on demographic and buying power variables. Consumer Overview A study which was done by Hitt, Ireland and Hoskisson, (74) stated that the customers bargaining power in UAE remains significantly high. Although the customers do not directly influence the commodity prices due to availability of alternatives, they can alienate Spinneys without any prejudice or prior notice. Therefore, Spinneys will remain proactive when forecasting market trends and should always try to innovate ways through which it can maintain its customers. The threat of substitute products is considerably high as cost of switching products or suppliers is virtually not existent. Customers in the retail market get disillusioned very quickly and hardly follow a predictive trend (Hill and Jones 45). Spinney’s business strategy of “being the Food Specialist” and “Keeping things Simple” will attract customers to its megastores across the UAE. In addition, the company will also consider providing regular incentives such as “Special Offers”, “Eat Healthy” and “Discounts” in order to retain existing clients and attract new customers. MARKETING OBJECTIVES AND STRATEGIES These strategies will enable the business to remain sustainable in the long term that is, optimization plan, positioning and expansion (Schmidheiny and Lash 26-27). Optimization Plan This include freshening the retail stores with the initial phases covering improving and developing the Information Technology (IT) infrastructure. Positioning Spinneys will make significant progress in its strategy to position the retail business as the UAE’s ‘food specialist for everyone’. Also, staff will have access to the Spinneys Academy where they will be trained further in food-related skills. Expansion Spinneys aim at adding an additional 1m square feet of new promotion space to its park over the next three years. The retail chain also intends to target other potential markets such as Japan and China. The 7p’s of the marketing mix Product The Spinneys approach is simple that is ‘offering quality, and fresh foodstuff at lower prices continues to draw clients’. Spinneys will, therefore; make substantial advance in its strategy to be the ‘food specialist for everyone’ as it focus on the provenance, quality and freshness of food served by experts who know their trade. Price With regards to pricing strategy, Spinneys Supermarkets will consider setting prices that will maintain their old clients, ensure high margins while at the same time remaining competitive. Promotion A graphic designer will be engaged to develop a business logo, letterheads, and business cards to be used in promoting the business. A website will also be designed in order to enhance brand promotion. Also, the company will consider promoting its services in lifestyle magazines and local dailies, social media sites such as Facebook and Twitter; mediums that are mostly utilized by the established retail outlets. In its promotion strategies, the company will utilize advertisement, promotion, public relations and personal selling. A lot of direct marketing will be emphasized, and the company will carry out a survey via the newly established website. After collecting this information, the company will then make a decision on where best to place their adverts in the local dailies. The company will also consider generating a monthly newsletter that will be circulated to interested people as a reminder of their business. The management believes that a combination of excellent marketing strategies with a good network of contacts and acquired a reputation through the provision of quality and reliable services will facilitate the creation of their own clientele. Place Spinneys Supermarket will build a showroom for potential clients to visit. This will facilitate demonstration of the company’s products. Further, the company will also visit clients at their homes to establish their tastes and preferences. However, with regards to transportation, the company will ferry foodstuffs directly without engaging the services of a distributor. CONCLUSION Conclusively, Spinney’s business analysis presents a very healthy position. The analysis presents a very encouraging picture to both potential and existing shareholders. With regards to the macro business environment, Spinneys operates in a very coherent and cordial infrastructure that supports fair competition and growth that are vital to improve efficiency and effectiveness. Spinneys should remain to its customs and despite the appeals to expand in non-food products; it should continue to offers high quality fresh food to its clients while at the same time remaining resilient. WORKS CITED Faarup, Poul. The Marketing Framework: International marketing and sales. Massachusetts: Academica, 2010. Hill, Charles and Jones, Gareth. Strategic Management Theory: An Integrated Approach Strategic Management Series. Ed: 9. London: Cengage Learning. Hitt, Michael, Ireland, Duane and Hoskisson, Robert. Strategic Management: Competitiveness and Globalization: Cases. London: Cengage Learning, 2009. Schmidheiny, Stephan and Lash, Jonathan. The Business of Sustainable Forestry: Strategies For An Industry In Transition. Washington, D.C :Island Press, 1999. Thomas, Michael. Countdown: Responding to a Global Crisis. Kibworth: Troubador Publishing Ltd, 2010. Read More