Competitive Strategy Australian Supermarket

Competitive
Strategy
Australian Supermarket

Introduction
• This presentation is being presented in order to
analyse the market condition and performance of
the Australian Supermarkets. The presentation
will be based on the case study of Australian
supermarket and on behalf of it the strategies of
the business, acquisition, and structure of the
Australian supermarket will be explained.

Australian
Supermarket Industry
• The industry of Australian Supermarket said to be as
businesses that are retailing food lines and groceries
is categorized as an established industry. Companies
that are competing in the established industries
involve violent cost-reduction creativities, with
competitive advantage developing from cost-based
in place of differentiation-based factors.

Market Analysis
PESTLE Analysis
• Political- The Australian Federal Government has
introduced a policy of competition which protects
key self-governing companies like Coles and
Woolworth’s in eradicating competition.
• Economic- A drop in the economic conditions of
the market in Australia has affected the
Supermarkets performance.
• Social- Organizations working in all over Australia
have to attain higher communal and public
development

Market Analysis
• Technology- The role played by the technological
factors influencing the Australian retail industry is
significant.
• Legal- The legal factor in the way of a carbon tax
as executed in Australia has affected the
supermarket industry.
• Environment- The environmental factor is
influencing the supermarket's performance in
Australia and the whole retail industry is getting
affected.

Business Strategy
• A business strategy means a set of actions to be
achieved to reach the desired ends. It can just be
defined as a long-term planning of the business.
Classically a strategy of business will take a time
period of around 3-5 years or sometimes it can be
longer (Business Matrix, 2018).

Cost Leadership
• A business might compete on the basis of price in
an attempt to enlarge its base of customer. To
become a cost leader, a company regulates its
procedure of manufacturing in order to attain
working competences.

Australian
Supermarket
• The Australian supermarket industry involves
various players such as Woolworth’s, ALDI, Coles,
etc. all of them want to become the leading brand
in the industry. However, in terms of cost
leadership, ALDI is the only supermarket who
provides products at the lowest cost by adopted a
different approach as compared to other
company due to cover a major part of the
industry.

Differentiation
• Businesses execute a differentiation strategy to
offer customer value by providing goods with
unique features (Stroh, 2014). A business can
differentiate its products from its competitors by
serving goods of excellent quality or with
progressive technical features.

Australian
Supermarket
• The key players such as Coles and Woolworth's
supermarkets offer a variety of products to its
customers by comprising private-label
merchandise (Financial Review, 2016). They have
adopted this strategy in order to attract more and
more customer and provide a solution for all the
needs under one roof.

Structures and
Acquisitions
• Structures
In 2010-2011 the Industry of Australian grocery was
at the value of $130.6 billion, involving for approx.
10% of the economy of Australia. The overall
industry involves two different channels of
distribution i.e. the vertically integrated chains and
independent chain. The industry of Australian
supermarket reflects that Woolworth’s and Coles
possess a business model that shows a vertically
integrated structure. This may result in an obstacle
for the new competitors arriving into the market of
Australian supermarket.

Structures and
Acquisition
• Acquisition
From 2005, Australian Competitions and Consumer
Council has studied 93 acquisitions of the
supermarket: from these 93 acquisitions 82 were
the offers or proposal from the Metcash (eventually
acquired 61 stores); 28 ere from Woolworths
(eventually acquired 27 stores); and 2 proposals
were from Coles (Australian National Retailers
Association, 2008).

Competition Analysis
• The industry of Australian supermarket is
extremely competitive. The market is welcoming
for the competition.
Porter Five Force Analysis
• Buyer’s Bargaining Power is high in the industry
• Supplier’s bargaining power is moderate
• Threat of New Entry is low
• Rivalry among existing companies is high
• Threat of Substitute is low

Recommendations
• Woolworth's and Coles should give their major
focus towards online shopping, and both of them
need to continue with the household brands or
home brands strategy as it results in larger
margins.
• ALDI supermarket should now focus on
differentiation of its offering so that it can
compete strongly with the strong players of the
market i.e. Woolworth's and Coles.

Conclusion
• In the conclusion, it can be said that Australian
supermarket industry is one of the money making
industry and is at the top position. The key
players of this market are Coles and Woolworth’s
who are giving strong competition to other small
retailers. From the analysis it can be said that
both the market are giving their best to become
the leader however, it they will focus on online
shopping one of them might can become the
leader and win the battle.

References
• Australian National Retailers Association (2008) Submission in response to the
Treasury Discussion Paper on Creeping Acquisitions [online]. Available from
http://archive.treasury.gov.au/documents/1422/PDF/ANRA.pdf [accessed 20
May 2018]
• Business Matrix (2018) Business Strategy, Model, Strategic Framework
[online]. Available from
https://www.business-case-analysis.com/business-strategy.html [accessed 20
May 2018]
• Financial Review (2016) Supermarkets look to online and store differentiation
as profit margins shrink [online]. Available from
http://www.afr.com/business/supermarkets-look-to-online-and-store-differentia
tion-as-profit-margins-shrink-20160826-gr24yk
[accessed 20 May 2018]
• Merrett, A., and Smith, R.L. (2018) The Australian Grocery Sector: structurally
irredeemable? [online]. Available from
https://law.unimelb.edu.au/__data/assets/pdf_file/0003/1682805/Session2-Mer
rettSmithpaper2.pdf
[accessed 20 May 2018]
• Stroh, P.J. (2014) Business Strategy: Plan, Execute, Win!. 3rd edn. U.S: John
Wiley & Sons.