Smart Flanker Forum – Global Image Ranch Market Case

Indonesia Brand Forum 2013Jakarta Convention Center

May 20, 2013

Market Trend in Indonesian Supermarket Industry

• Shoppers are switching from conventional supermarkets to superstore

• Getting bigger or got beaten (merger & acquisition)

• Starting the price war

• Low groceries price points are subsidized by sales of good like electronics and apparel

New Trend of Customer Shopping BehaviorNew Trend of Customer Shopping Behavior• When Ms. Shanty wants fresh fish, meats, produce, imported and “hard to find” items, she drives to the nearest Specialty Store. When she needs products like paper towel, indomie, rinso, she shops at hypermarket, which has full grocery store.

• “Once you start eating quality foods, you can’t go back”, she said. Specialty Store may be more expensive, but it’s worth it “Anyway, I make up some of the differences at hypermarket”

• Ms. Shanty and growing number of shoppers like her are the supermarket’s industry’s worst nightmare. Faced with endless array of food shopping choices, consumers are increasingly shunning the neighborhood supermarket and going to hypermarket, or other discount store for rock-bottom prices, or to places like Ranch Market for specialized quality and service.

The new marketing strategy :

Marketing was not a battle in customers’ mind but the battle in customers’ heart

Alrise & Jack Trout

… Why do customers pay $3.50 for a latte? The short answer is that they think it’s worth it. But what are they

getting? Some of the finest coffee available commercially. Custom

preparation. (How many retailers could put up with “I’ll have a Grande low-fat-

triple-shot half-cafe white-chocolate mocha, extra hot, easy on the whipped cream, and I’m in a rush). Then there’s

the Starbucks ambiance. The music. The comfy velvety chairs. The smells. The

hissing system. “We aren’t in the coffee business serving people. We are in the

people business, serving coffee.” …

STARBUCKS

$4 billion in annual sales. It made $268 million in profits

in 2006

Coffee Beans (Raw Material)

Rp. 4.250/kg

Nescafe(Product)

Rp. 15.000/bottle

Nescafe sold atcoffee shop Hilton Hotel(Service)

Rp. 20.000/cup

STARBUCKSAmbience, Music, Smell, Lifestyle(Experience)

Rp. 30.000/cup

Ranch Market Mission

“Creating wonderful shopping experience through Quality Product, Extraordinary service

and Unique Atmosphere”

• Merchandising selection (carry products that customers simply can’t find anywhere else) :

The affluent do “necessity shopping” for the staples and “passion shopping”

for high-quality, hard to find items.

• Select the best quality available in the market : Customer don’t compare price but they compare value

Creating wonderful shopping experienceQuality Food

• Listen to Sam :

“ … avoid coming at us head-on and do your own thing better than we do ours.

It doesn’t make sense to try to under-price Wal-Mart on something like toothpaste.

Meet every one of the customers … appreciate them … that little personal touch …

Wal-Mart tries to duplicate it … we can’t really do it”

• Shift our strategy to managing customers instead of products, attracting and

retaining profitable customers. Survey said that top 20% to 30% of shoppers usually

generate 100% of total net profit. Why fight a mass-marketing competitor with open

price war when we can satisfy all shoppers we need with less cost and greater profit?

Creating wonderful shopping experienceExtraordinary Service

We create store environments that are inviting and fun,

and reflect the communities we serve.

We want our stores to become community

meeting places where our customers

meet their friends and make new ones

Creating wonderful shopping experience Unique Atmosphere

“ Stay hungry, Stay foolish” Steve

Jobs