Is small the new big? Challenges in the retailing industry

Abstract

In the last decade the Industry of Grocery retail has seen its biggest changes since distribution became organized. From the empowerment of private label products and the introduction of sophisticated loyalty programs, retailers have been able to shape the market and the preferences of their consumers. But what happens when these preferences change due to factors that fall outside retailers capabilities? This study describes the changes in an industry that seemed to reach its maturity due to a change in consumer purchasing habits for smaller store formats. Players in the grocery retail industry in Portugal that have been focusing on Hyper and Super formats are facing new challenges. Consumers start to demonstrate preference for a commerce based on proximity at the same time as they are threaten by new entrants in smaller formats and cheaper business models. We focus on the example of Meu Super, the new proximity chain of small grocery stores launched by Sonae MC in order to respond to the introduction of Amanhecer, a similar concept created by its main competitor Grupo Jeronimo Martins and adaptation of already existing brands like Dia’s group Minipreço or Spar. The problem is that for a company that holds a heavy-weight brand in the grocery retail in Portugal like Sonae may be a bigger than expected challenge to penetrate in segment with many different features that the ones where Sonae is competing in. We present a Case Study based on Meu Super strategy by Sonae to point out the main challenges and threats of this strategy and promote the discussion of whether Sonae should leverage its already successful brand Continente in order to beneficiate from its synergies, or if the choice of creating a new separate brand was the right one, taking in consideration the company’s resources and limitations.

Date of Award	10 Jul 2013
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Rita Coelho do Vale (Supervisor) & Pedro Verga Matos (Co-Supervisor)