Food Lion Swot Analysis Marketing Writing Assignment (Essay Sample)

Food Lion Swot Analysis
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Introduction
Food Lion wants to be the overall low-cost leader in the supermarket industry while still producing quality products and great customer service. Food Lion’s strategy is maintaining its low-cost provider by following three pillars growth, efficiency, and sustainability. Food Lion wants to continue to grow by expanding in current markets as well as enter new markets to meet customers’ needs. The private label brand of Food Lion “My Essentials” continues to grow and offer everyday products at a lower price. Food Lion wants to be as efficient as possible to reduce wastes and costs. The way they overview how they order, ship, stock, and sell products will help eliminate costs down the value chain to make products efficiently and affordable. Lastly, food lion wanted sustainability they wanted to develop ways to work differently and see how good a supermarket can be. By offering private label products, they can increase revenues without compromising their strategy. Food Lion’s sustainability focused on rebuilding based off what customers said. Surveys and research were used to help collect data to reform this new strategy.
Food Lion wants to make sure they remain profitable by making sure they earn their highest potential while still maintaining the low price. Food Lion has implemented a new strategy not only being the low-cost provider but by also delivering great customer service. They do not want to compromise the price of products and want to make shopping enjoyable for customers. The company is built for the long run and has just remolded all their stores as well. They are interested in what customers seek is most important in grocery stores and what Food Lion can do to make their experience an enjoyable one. Food Lion has a great internal business process which makes it easy to process, pack, and distribute to their stores with efficiency. Products are rarely out of stock at warehouses because of the system Food Lion has in place to ensure that their shelves are full. They can send products to their other warehouses to ensure that all five warehouses have the appropriate products that they need for their stores.(Jobber,2001)
Strengths
Food Lion has implemented a new strategy that is taught to employees to help customers make shopping easy, fast, and affordable. A survey taken by supermarket consumers found that being able to find what they want, finding it fast, and purchasing it at a low price is what was important to customers. Food Lion has 1,300 stores in the South East and Mid Atlantic to make shopping convenient and affordable. Food Lion’s low-cost provider strategy helps bring customers in while the great customer service keeps them coming back.
Weaknesses
Food Lion has a bad reputation for having low end perishable. They have recently changed to prepackaged meat as well as buying local produce. Food Lion’s has a high worker turnover ratio and has added employee benefits to retain employees for longer. Having high ratio costs money to train and dress new employees.
Opportunities
Food Lion has a customer segmentation strategy that it implements in all of its stores. There are different departments so each one can focus on what is important and deliver what the customers need. Food Lion has remolded their stores to gain market share that they have lost from straying away from their overall lost cost provider. They have revamped their strategy to make sure they continue to be an overall low-cost provider. Offering their private brand increased sales and profitability as well as offering customers lower priced product from major brands
Threats
The continuing trend of labor unions could eventually hurt Food Lion. As of right now, they have a no union policy, but laws could prohibit companies from enforcing this. Wal-Mart’s opening of a chain grocery store could potentially threaten their current market share. The threat of new entrants for the supermarket industry is considered having an established company. The supermarket industry is also not very profitable and usually only make pennies for every product sold. The bargaining power of buyers is considered medium. Customers can shop at different supermarkets that can offer either the same or similar products that Food Lion has. Since Food Lion buys their products in bulk to lower costs and to offer customers the quality of products they want at a low price. Customers can switch to private brand labels, but for food lion, this would increase their sales for their private brand “My Essentials.” The threat of substitutes in the industry is medium. Depending on the economy customers may decide to grow their food.
The bargaining power of suppliers is low in this industry. Companies want their products on the shelf and for some of these products depend on supermarkets to make sales. Since Food Lion has many locations as well, they buy products in bulk giving suppliers a good amount of business. Rivalry among existing competitors for food lion is high. Wal-mart is opening a line of grocery stores to compete in the industry. Other retail companies such as Target and K-mart selling retail merchandise as well as groceries will attract customers who want to get all their shopping done in one place. This makes it more convenient for customers and can ‘reduce Food Lions profitability. As more companies decide to offer the same products as Food Lion rivalry continues to increase as Food Lion continues to improve ways to stay ahead of the competition and make them the low-cost leader.(Kotler, 2002)
SOURCE SIMILARITY AND MARKET COMMONALITY
High Market Commonality and High Resource Similarity
Harris Teeter and other supermarkets have the same resources and products. Both companies are high competitors and buy from the same suppliers and therefore have either the same or similar products on their shelves. The target markets are similar with a savings mentality for both grocery chains.
High Market Commonality and Low Resource Similarity
Wal-mart has similar resource similarity since it does offer some similar products of Food Lion. They have a high market commonality because they offer low priced products. It is important to keep an eye on Wal-Mart because in the future they could move from this area to a High Market and High Resource similarity with the launching of their new grocery stores.
Low Market Commonality and Low Resource Similarity
Food Lion and 7-11 have a low resource and low market commonality. They do not offer similar products and therefore do not have the same resources.
Low Market Commonality and High Resource Similarity
Family Dollar has a high resource similarity since they both offer many of the same products. The market commonality is low because Food Lion is supermarket while Family Dollar offers products that are cheaper and a more wide variety of products. Food Lion has products that are outside the country and has to monitor the taxes. If taxes rise, they can reduce their profits and can sometimes compromise their low-cost strategy. If products have restrictions or regulations such as cutting meat they have to follow procedures and rules which can cost time and money and reduce productivity and profits. If a global crisis consumers have less income to spend, and it changed buying habits. Ensuring the affordability of products is important as not to change the low-cost strategy. A high unemployment rate makes it difficult to hire quality associates that can deliver. Buying habits and gender influences the type of products that Food Lion offers. Since women usually do the grocery shopping offering a wider range of products that attract these customers will raise profits. Local communities play a role in Food Lion since they locate their stores usually in low income and low populated areas to attract their market. Technology grows fast a...