SmartMart is a grocery store that has found its core differentiation in providing organic food to its customers. Due to changes in the market environment, SmartMart has had to rethink its strategies and has identified three scenarios. The first is the store size conundrum due to the recent arrival of low-cost competitors such as Big-Box Mart and new market entrants such as Community Supported Agriculture (CSA). The management has arrived at three strategies to address the problem, namely expand to Big-Box Mart scale, become a niche player or stick to the current store concept. The second scenario is tapping the biofuel opportunity for which three strategies have been identified, namely alliance, acquisition and organic growth. The third scenario is pursuing Organics 2.0 for which three strategies were identified, namely improving the supply chain to increase standards, to distribute high yield seeds to farmers and to work with government agencies and FDA to acquire a label for Organics 2.0.
Value created is a perceived addition of value by the stakeholder while value captured is the utilization of the created value in the value chain. Value, as understood, for SmartMart is multidimensional and it targets its people, the planet and profit. The decisions taken have been by keeping the company’s vision of providing healthy food while generating profit for its shareholders and in turn creating value for its stakeholders.
Change in Store Format
For this scenario, I would recommend SmartMart to move to be a niche player. This is because to expand to the scale of Big-Box Mart and to start competing on low prices SmartMart requires a lot of investment and this strategy has some serious potential consequences on the brand image. This is because if SmartMart is to scale to the level of Big-Box Mart, the brand would get diluted. Big-Box Mart is viewed as a store with poor customer service, low quality products and low price products. To compete against Big-Box Mart by keeping its brand image intact is perceived to be difficult. Moreover, if this expansion strategy fails, SmartMart could face serious financial losses.
If SmartMart adopts the second strategy and sticks to the current store concept, would result in the market capture by both the new entrants as well as by the low cost competitors. Though many are of the view that a change in the current market scenario is unnecessary as there is a growing demand for organic food, it is no secret that since the threat of new entrants is low, there is going to be significant number of new entrants in this field and this is going to squeeze the market share that SmartMart enjoys.
As per the move to become a niche player, SmartMart would customize its stores to local conditions capitalizing on its customer friendly approach. Though the ability to customize for a particular community is an existing concern, SmartMart’s sales tracking system is a boon. This tool monitors SmartMart customers’ buying...