Bob's Supermarket Social Challenges

Bob’s Supermarket faced a lot of economic challenges. One of those economic challenges was when the United States was hit with a recession. As a result, the recession left many businesses like Bob’s Supermarket with a decline in sales, because many consumers had started to retrench from spending. In fact, the tight economy left many consumers to look for cheaper options when it came to spending (Parnell, 2014). For instance, places like Wal-Mart and Aldi manage to profit from those consumers because of their low prices. The second challenge for Bob’s Supermarket was the mandated increases. The mandate increases in the minimum wage was a major cost component for Bob’s Supermarket. Therefore, it would have impacted the store because of its smaller size. The third challenge facing Bob’s Supermarket was their higher prices. According to
Parnell, “part of the reason for Bob’s generally higher prices was the higher cost structure to run a much smaller store than Wal-Mart or Kroger” (2014, pg. 402). For instance, Bob’s Supermarket bought most of their products from wholesalers who would often mark up the cost by 3 to 4 percent for most items, so that they could recover back the higher costs associated with shipping smaller quantities. Although, the Thompson brothers had the opportunity to lower their product costs with IGA, they chose not to because they couldn’t afford to pay the up-front fee, investment in signage, minimum order quantities, and the on-going fee as a percentage of sales (Parnell, 2014).
Bob’s Supermarket also faced social challenges as well.
One of those social challenges was the change in preference. The change in preference shows that “one-third of consumers had switch to buying their food and household essentials from discounters” (Parnell, 2014, pg. 404). The second social challenge was the change in demographics. According to Parnell, “Hanover is a mix of students, college related professional, and low to moderate income households” (Parnell, 2014, pg. 399). As a result, the demographic of consumers is more prone to shopping at discounters as oppose to the higher prices of Bob’s Supermarket. The third social challenge was advertising. Since, Bob and Sam did not know how to advertise they simply didn’t do it. As a result, this was probably one of the reasons why Bob’s Supermarket didn’t have lots of customers coming in and out of the store like Wal-Mart and Aldi. Their fourth social challenge relates to Bob’s Supermarket internal environment. Their internal environment suffered because both brothers were spectacle about incorporating any new ideas. As a result, it prevented Bob’s Supermarket from
progression.