Who are the main customers? How is their purchase behavior?
Most customers are home buyers. They can shop groceries, dairy product, sanitary goods, personal care and so on. Parknshop offers one- stop shopping experience to cover daily household needs. Customers expect best- of- class service and top quality products. With the vision to become leading retail stores, this concept is implemented into every aspect of Parknshop strategic decisions like store location selection, store ambience, products and so on to meet changing needs of diverse customers. Let’s see purchase pattern of these target consumers.
As I mentioned above, people shop similar things in these stores. To some degree, they are standard and always charge the same price and not high. Low price products make customers less price sensitive. Buyers then face low switching cost, they may choose random one according to their mood or accessibility. In some occasion, sales promotion may change customer’s inclination, but it usually comes as short- term strategy. If they have extra time, they may shop certain things in a more specific kind of shop. In general, customers tend to switch freely among these mega players. Who is my key supplier?
Let’s take frozen food stuff as an example.
Supplier of this department is Tiger EYE Marketing Association Inc. Parknshop is a promising company, attractive to retail partner who want to tap into a diverse and ever- growing consumer base. While suppliers offer goods to guarantee Parknshop’s daily operation, suppliers can get rewarding pay back from Parknshop. It’s a win-win. So most of suppliers have developed a positive partnership with Parknshop. But there is certain degree of risk. Parknshop usually buy large volumes of goods, if suppliers cease the offer or under some unexpected situation, Parknshop will feel lost.
Who is my major competitor?
Direct competitor: Wellcome.
High level of rivalry often results in lower prices. Profits become hard to find. Existed retail market in Hong Kong is dominated by several tycoons like Parknshop, Wellcome, Jusco and so on. They set branches in every residence area to cover the daily consumption needs for routine household. The economy of scale is outstanding, any new entrants can’t surpass them because it requires large amount of investment and high customer loyalty. On the other hand, goods in these chain stores are much alike, differentiation within this industry is hard to achieve. But there is always some exception. Let’s take TASTE as an example. TASTE is a selected store of Parknshop group. So if a prospective store comes with a premium image, fine segmentation and strong back up, it may suffer less. But there is always little lucky ones.
So these barriers may keep new entrants off supermarket industry. Substitute also pose threat to supermarket. Substitues means product or service that can perform the same function as the industry’s offerings. So where else can we shop for daily household? Let’s take Kowloon City for example. It’s an old district of original Hong Kong. There are many corners stores, pharmacies and even a building for grocery shopping.
People can buy vegetables, hand soap, tissues and so on. Price is even cheaper with same quality and easier for pick up. There is no need to visit supermarket too often except people need to buy large volumes of things. Convenient store is another strong substitute. They are smaller in size so they prevail street corner and MTR station. People can grab light snacks and drinks. But the products are very limited in kind, it can’t satisfy too much needs. To cover certain need and large volume purchase, people always turn to supermarket.