Case Overview and Key Issue
Grocery Checkout Inc. (GCO), an online grocery delivery service was founded in 2005 by Nathan Felder and his fellow teammates at the University of Western Ontario (Western) as part of their business project. Recently, investors of GCO have been pressuring Felder continually for faster growth, and he has a number of growth approaches under consideration. As the co-founder and chief executive officer (CEO), Felder wanted to reflect on which option would be the best fit for GCO and how it might affect his role in the company.
Company's Strategy
CGO originally focused on convenient service, as it was founded on the idea to serve students without transportations. Felder believed that the business should also
Based on the aforementioned factors, it is clear that the threat of substitutes is very high in the food retail industry.
" Degree of Rivalry: The level of rivalry is very high in food retail industry and this is caused by a number of reasons. First of all, there is already a very high industry concentration in the food retail market which results in a fierce competition among existing players. This intense competition is further worsen by the growing of industry which is approximately 3% per year based on the 2007 statistic. Second, due to the characteristics of foods, it's very hard for the food retail companies to come up with a proprietary product to differentiate itself from other competitors' offers and hence unable to develop a brand image which could develop customers' loyalty to their products. Also, since the primary purpose of any typical food is to satisfy people's hunger, it is the criteria used to determine if another food may be a qualified substitute. Based on the aforementioned criteria, any typical food may be reasonably expected to be substituted by any other type of food and therefore results in great verity of substitutes. Third, there are literally no switching costs between food or the food retailers. This is because the worst possible thing can happen to the buyer in the case of switching to a substitute is that they hated the food ever since. In the