Overwaitea has a strong customer loyalty program

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Unformatted text preview: on facilities are linked electronically. The company considers customers as “our” customers and advertises extensively appealing to the western Canadian sense of family. Overwaitea has a strong customer loyalty program using a “Save-On-More Card.” 12 n KPMG/University of Illinois Business Measurement Case Development and Research Program July 1999o The company is unionized and suffered similar strikes and consequent loss of market share as Safeway in 1996 and 1997. 7. The Great Atlantic and Pacific Company of Canada Ltd. (A&P Canada) A&P, a U.S.-owned company, operates exclusively in the Ontario market, where it has a 15 percent market share (down from 20 percent in 1990). Initially, A&P’s strategy was to service the suburbs and other secondary markets but when the company acquired Dominion stores and Ontario’s Miracle Food Mart, it began to compete openly against all Ontario chains. The recession of the early ’90s, the entry of warehouse clubs, and the steady renaissance of Loblaw, has affected A&P’s sales growth. A&P lost market share following a 14 week labor dispute in 1994. A&P has streamlined its banners. “Dominion” and “Dominion Plus” are retained in major urban areas with competitive pricing and wide selection, and “A&P” stores have a similar focus in the rural areas. “Super Fresh” is a warehouse/supermarket format with lower wages and part-time employees. “D-Save-a-Centre” is a more limited selection format of the Dominion stores. “Basics” is another limited selection discount format. As of this writing, the superstore concept has not been used. The company is close to reaching its target of 25 percent of sales from private labels. A competitive strength is the expertise in information technology obtained from the U.S. parent. The company was an early adopter of category management, POS, couponing, and targeted mailings. A&P holds the Ontario grocery store rights to Canada’s most popular frequent shopper program, Airmiles™. 13 n KPMG/University of Illinois Business Measurement Case Development and Research Program July 1999o Changing Industry Competitive pressures in the grocery industry are likely to increase. Several new competitors, including Wal-Mart, have or may enter the market. New methods of delivery—especially the Internet—are challenging traditional store-based approaches. Customers are becoming increasingly demanding in their preferences, and there is the rising likelihood of an escalating price war in Ontario. New Competitors Loblaw faces competition not only from traditional grocery chains but also from less traditional outlets. The Canadian Grocer (Jan-Feb 1998) estimated that drugstores have 3 percent and warehouse clubs have 7.5 percent of the grocery sales market. Specialty stores (bake shops, meat shops, health food stores) and department stores have approximately 8 percent of the market. The 81.4 percent market share held by traditional grocery and supermarket outlets in 1997 is s...
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