Ralphs's Supermarket Analysis

Ralph’s is a supermarket that is owned by Kroger’s. This company is facing strong competition from Fresh & Easy, which is run by Tesco. It is also fighting off Trader Joe’s. 

I don’t think Ralph’s will survive another five years. It does not have Trader Joe’s focus on private labels and turnover, and it does not have Fresh & Easy’s focus on goods that appeal to the customer and low employee cost. Plus, Ralph’s is stuck with union contracts while its competitors are nonunion. Ralph’s has gone through several bruising strikes that have cost it a lot of money. Ralph’s stores are also very large and probably have a lower sales and profit per square foot than their competitors.

So how can Ralph’s fix itself? I am having a hard time figuring this out. They can push their private label more, but that’s it. Their fish counter is small and not worth much. They are doing OK on the meat and on the produce, but not great. They can cut down on the number of SKU’s, but what would they do with the extra space? Maybe they can open up cafes and try to earn $4 per cup of coffee, but that is tough in this economy. Ralph’s stores are standalone, meaning they are not part of a mall, so they cannot sublease it to another tenant.

It is going to take some imagination to figure this one out.