The Challenges of Small Players in Australia's Retail Industry Dominated by Coles and Woolworths

INTRODUCTION
Retail industry in Australia is dominated by Coles and Woolworths. They have been
competed each other since decades ago and nowadays they are facing new challenges given
from new competitors, which are Metcash and Aldi. This domination makes the small player
hard to compete them. In general, retail industry in Australia is dominated by big players.
Suppliers are also monopolized by big players too. So that small players in the retail industry
will find it difficult to grow their business. It’s proven by the statement fromIBIS World
report 2018, another aspect that they have to take a look was the problem about alternative
market share, when there is a big supermarket it would be difficult for a small players to
operate theirs.
Woolworths acquired the macro organics business to answer this threat. Both Coles
and Woolworths strive to establish store in areas of population growth. All the risks had
been calculated including gives an account of how this can happen even in anti- big business
enclaves.Basically, with two giant players in the market, neither can afford to let other get
other a head. The supply chains for these supermarkets are very well establish, tight
contract are signed for food and vegetables. There are also tight times specific delivery
contracts for the trucking companies who deliver the goods. Moreover, they can obtain a
good supply by buying the readily available supply.
Merger or acquisitions is an alternative solution to compete the domination of the
big player in supermarket industry. Woolworths found great way to make it successful.
Mullumbimby on the NSW North Coast is a centre for small business ad had a large
alternative community which proposed a brand new bigger supermarket, but they had
difficulty to get the permission from the council, (Keating, 2015)l. At first they refused to sell
their business but at last it sold out to Woolworths. Woolworths overcame the problem
with the anti-big business community that coming after that case and win the case.
This report has purpose to show the problems, and the strategies to compete the
domination of big player in Australian supermarket industry. Merger, acquisitions, and
structure are one of the strategies that will be discussed in detail.

BONUS CONTENT
A decade ago Coles performance was left behind the Woolworths. However, since
Coles is owned by Wesfarmers, a successful cooperative which has strong fundamental
fund, this condition started to change. Wesfarmers hired a professional leader for the team
who came from the UK and gave the injections of fund to rejuvenate the stores and
improved the services. This innovation based on the ‘Tesco playbook’ (low prices, well-
stocked shelves, good staff, clean store, nice displays) and it started immediately. The same
level competitor of Coles is Woolworths. Woolworths is not just ordinary supermarket
chain, t has hundreds branches and run many other units of businesses also. In early 2016
was the worse time for Woolworths because the project that has been done in 6 years was
close down. The losses achieve $ 1 billion and 7000 jobs were put at risk. This failure was
because it had tried to expand too quickly, the wage rises and costs of the new store
development. Moreover, the store just left unoccupied.
Coles and Woolworths had a tight competition. They created strategies to win the
market in terms of moves and prices. When one of them had a successful move then the
other copied and improve, and soon. Basically, with two giant players in the market, neither
can afford to let other get other a head. The supply chains for these supermarkets are very
well establish, tight contract are signed for food and vegetables. There are also tight times
specific delivery contracts for the trucking companies who deliver the goods. Moreover,
they can obtain a good supply by buying the readily available supply.
Woolworths found great way to make it successful. Mullumbimby on the NSW
North Coast is a centre for small business ad had a large alternative community which
proposed a brand new bigger supermarket, but they had difficulty to get the permission
from the council. At first they refused to sell their business but at last it sold out to
Woolworths. Woolworths overcame the problem with the anti-big business community that
coming after that case and win the case. Metcash run in wholesale and distributor and a
marketing business. It supplies in 2400 stores n Australia including IGA stores. IGA Stores
stock similar lines to Coles and Woolworths and strive for similar prices. Metcash system is
struggling, it lost nearly a third of its market and 70 % of its value since 2007. It is because:
Aldi and its low price offerings, big supermarket are staying open late and killing the

traditional advantage of smaller player, the range in Coles and Woolworths and its
marketing budget are greater. The Metcash operation may shrink further if it cannot
develop answer to the problem it faces.
Aldi start in Australia in 2001 and develop rapidly by 2016 it has 350 stores with
another 120 planned. Aldi is come from German that has system of self service store and
has long since fine-turned low cost retailing. The mission of the company is giving the
opportunities to the buyers to buy the high quality products in lowest possible price. this
mission can be possible by tie the suppliers into firm contract and sell most product as home
brand. They also design the system of cutting all non-essential costs, good places on display
quickly and customer packing their own bag. It stocks a limited range of goods-quality
products, with limited choice. Aldi also had weekly special offer that heavily marketed
through catalogue and apps at that time. Aldi Also committed to reducing its carbon
footprint, maximizing its energy efficiently and recycling. This situation challenge
Woolworths which is behind Coles and challenged by Aldi is to focus in its food division.
Woolworths committed to provide convenience for superior freshness and a more
appealing range and a focus on innovation.
Woolworths also realize the costumers’ ability to buy everything effortlessly
through the technology, Consequently, Woolworths adding additional 58.000 work hours to
the system to get better services.
The Australian supermarket industry is a highly competitive and concentrated market that is
dominated by both Woolworths and Coles (Wesfarmers). In 2015, Woolworths had up to 933 stores
in operation and Coles were operating up to 762 stores. The two market leaders controlled up to
80% of the market and were perceived to possess a duopoly in the market (Hickey, 2015). The other
two major players include Metcash and Aldi, a growing presence in the industry. With the evolving
market landscape and increasing competition from new players such as amazon, these main players
need to ensure that they position themselves in a way to negate these new competitors and
maintain a competitive advantage in the market (Pash, 2017).
Both acquisitions and structure are imperative for these supermarket giants. They need to ensure
that they are structured in a way to effectively compete against their competitors. Woolworths and
Coles have diversified their retail coverage over the years as they seek to maximise profitability and
have entered markets such as petrol, liquor and pharmaceuticals (Round, 2006). Acquisitions would
be important for companies such as Woolworths as they strive to gain an advantage in multiple
market segments. However, a larger number of acquisitions does not always equate to greater