Five Forces Analysis Of Shoprite (Anthony):
Table 1.1: Porter's Five Forces Model
The first force, the bargaining power of customers is a moderate force acting on Shoprite. Even though shoppers don't have much haggling power, they are able to use the high number or rivals within the supermarket industry to their advantage.
The second force, the threat of substitution is a moderate force acting on Shoprite. Even though shoppers must purchase food, they can substitute Shoprites offering’s for those of a different grocery provider. For example, a shopper could substitute Shoprites apples for that of Whole Foods line of organic apples.
The third force, the bargaining power of suppliers is a relatively weak force acting on Shoprite. This is due to the large number of suppliers in the grocery industry and the supplier's reliance on Shoprite's continued business.
It is important to note that brand-name product suppliers do tend to have Moderate bargaining power. This is because these brand-name products tend to have high recognition among consumers. (e.g. Doritos, Oreos, etc.)
The fourth force, the threat of new entrants is a moderate force acting on Shoprite. This is a moderate force because of the possibility of new entrants. Although it is hard for small grocers to compete at the level of Shoprite, many large chains (specifically online) have been gaining market share over the past couple of years.
The fifth force of rivalry is a strong force acting on Shoprite as there are many grocery stores and produce options that customers can choose from (e.g.ACME, Wegmans, FreshDirect, etc.). Despite fierce competition, Shoprite has embraced a low-cost strategy in order to gain a competitive advantage.
Competitive Strategy (Anthony):
Shoprite follows a low-cost industry-wide strategy. Low-cost in the sense that they buy in bulk to keep the costs down. And industry-wide in the sense that they market to a large number of customers across all market segments. For example, let’s compare an identical offering of 6 oz. Driscoll raspberries from both Shoprite and ACME, a fierce competitor. Shoprite markets this offering at $4.49, while ACME markets this offering for $4.99. Although $0.50 may not seem like a lot of money, it surely adds up when you have to purchase multiple items, week after week.
Value Chain (Luis):
Model 1.1: Value Chain Description
Inbound Logistics: (receiving the products) Shoprite has over 20,000 suppliers from micro to national suppliers. Shoprite’s supply network offers customers a great variety of products. Examples include: Coca-Cola, Kellogg's, Nestle, Reynolds Consumer Products, Campbell Soup Company, Dole Holding Company LLC, etc.
One of Shoprite's inbound suppliers:
Operations/Manufacturing: (stocking products into their designated shelves, checking or scanning expiration dates on products, money and credit handling, premises maintenance, staff management (assigning tasks to different employees), shoplifting prevention (training staff members to watch for theft: security staff or employees checking receipts at the exit doors).
Outbound Logistics: customers walk into the store, buying the products, and ShopRite receives the money through self-checkouts or cashier registers, or customers can opt for delivery or pick up by placing an online order through shoprite.com.
Sales & Marketing: Shoprite uses different methods to advertise its products by using print ads, radio or TV commercials, billboard ads, as well as digital media such as social networks. Shoprite uses digital coupons as a marketing strategy to attract customers, and in most cases, they use a traditional advertising tool by mailing coupons to customers.
Image 1.1: A Shoprite Advertisement
Customer Service: Shoprite provides return and refund services, store assistance to find specific products or store segments, self-checkout assistance, and Shoprite Help Desk (To find information about the store or product availability).
How Shoprite Uses Information Systems (Haoyu):
ShopRite uses its application: the ShopRite app. Customers will log in to their own accounts and order from them in this application. The retailer will receive orders from intelligent devices and prepare what customers need. During this transition, data is the bridge between the computer side and the human side. People and their smart devices are actors in their purchasing behaviors. Also, the data customers insert will be transformed into the database. Meanwhile, ShopRite APP will recommend what users like by big data. It is a good way to lock customers by predicting their tastes.
Image 1.2: The Shoprite Mobile App
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