Competitive Strategy in Australian Supermarket

This study examines the competitive strategy in the Australian supermarket industry, focusing on the core strategic issues faced by Woolworths and Coles. It discusses the impact of lower prices, power of suppliers, and advancements in technology. The study also highlights strategic business models such as SCOR supply chain and Porter's five force model.

Competitive Strategy

EXECUTIVE SUMMARY
This study has examined that, Woolworths and Coles company tends to largely affect the
Australian supermarket. Competition between Woolsworth and Coles tend to remain constant
and is considered to be hostile in nature. This study has examined various core strategic issues
such as competitive strategy of competitors, lower price, power of suppliers, advancement of
high tech and digital technology, etc. are considered to be the major issue. Furthermore, this
study has also highlighted on strategic business models such as SCOR supply chain, Penetration
pricing strategy and Porter's five force model which in turn helps in resolving various strategic
issues.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
SUMMARY OF THE CASE...........................................................................................................4
IDENTIFICATION OF CORE STRATEGIC ISSUES..................................................................5
Theoretical concepts....................................................................................................................7
Application of strategy model.....................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Competitive strategy is referred to as long term plan which helps in gaining competitive
advantage over the competitors. It is very useful in creating a defensive position which helps in
generating higher superior return on investment. Competitive strategy is considered to be very
useful in attaining the long term goals and objectives of the research. This study will highlight on
the case Australian Supermarket: Who will and when. This study will identify strategic issues,
appropriate theoretical concepts and also application of the strategic model.
SUMMARY OF THE CASE
Woolworths and Coles company tends to influence Australian supermarket. They tend to
consist of around 80% of the total market share. Wools worth and Coles are considered to be
amongst the 20 biggest retailers in across the globe (Grimmer, 2018). They tend to have high
degree of dominance in the domestic market. Woolworths and Coles have been challenged by
the entry of low cost Germany brand i.e., Aldi. Coles is considered to be the part of the
Wesfarmers. Wesfarmers the Australian cooperative tend to become a very successful
conglomerate and it tends to own Bunnings, Coles, Officeworks and Kmart. There are also
several ranges of energy, chemicals, coal mining, fertiliser business and also safety product
business. Coles tend to operate over 750 full-time service supermarkets, Liquor land, BI-LO,
vintage cellars, 92 hotels and also around more than 600 fuels stations and other smaller
convenience stores.
In the year 2015, Wesfamers has employed across 205000 individuals and has generated
revenue of 62 billion Australian dollars (Azeem and et.al., 2019). It tends to cleverly allocate
several ranges of resources which in turn has been improved the overall business performance.
Over the years, Coles has outperformed by Woolworths. But this started to happen when Coles
was acquired by Wesfarmers. Wesfarmers on the other hand, had high degree of resources in the
retailing empire. In the year 2007, it has also recruited veterans of the supermarket chain i.e.,
Asda. The new group was led by Ian Mcleod which in turn has resulted in higher turnover of
Coles to 17 billion Australian dollars. The new team in turn has resulted in injection of high
degree of fund from the Wesfarmers. It has also resulted in rejuvenating the stores and resulted
in improved quality services. High degree of growth in the home improvement sector in turn
resulted in higher performance by Bunnings which in turn has helped in improving the financial
position of the company.

Woolworths company tends to operate in the 873 stores, 527 liquor outlets and various
other 327 licensed outlets which mainly includes BWS and Dan Murphy's. It also operates 600
Caltex Woolsworth which s a co- branded petrol station and Big W stores (Haskins and et.al.,
2019). Woolworth has become successful after the establishement of the strategy “fresh food
people”. This strategy helps in dominating the market.
Competition between Woolsworth and Coles tend to remain constant and is also hostile
in nature. The supply chain of the Australian supermarket are well established. Woolsworth and
Coles tend to establish their business on the areas which tends to have large population. This in
turn results in higher sustainable growth and productivity of the business (Haskins and et.al.,
2019). Wesfarmers group performance states that the revenue of the group has increased from
0.2% from 2014 to 2015. Furthermore, the profit has also increased by 8.3% from 2014 to 2015.
Woolsworth and Coles tend to understand each other better which in turn eventually leads to
long term sustainable growth. They focus on expanding convenience style stores which h helps
customers in seeking convenient shopping style. Woolsworth and Coles tend to provide same
range of services in order to survive in the market.
IDENTIFICATION OF CORE STRATEGIC ISSUES
Woolworths has faced a major disaster when a 6 year venture dealing in home
improvement has led to shut down of the business. This has resulted in the projected losses of 1
billion Australian dollars and imposed risk on 7000 employees to lose their job. The main
reason of the occurrence of this issue is expansion of business too quickly (Pulker and et.al.,
2019). This has resulted in rise in the wage prices and also high degree of cost associated with
the development of the new store. One of the major issue faced is associated with, Woolworths
taking commanding lead over the Coles which in turn has resulted in battle in relation with the
Australian grocery sales. Woolworths in turn has taken a clear lead in expanding its market share
with its closest competitor Coles. Woolworths total market share has reached 34% in the year
2017, but the Coles maerket share has reached 27.6%.
One of the major issue faced by the Coles is to catch up to the prices of Woolworths.
Austrlains big two supermarkets i.e., Coles and Woolworths tends to take a trial on new
advanced technologies in order to combat issues associated with the safety and theft (Devin and
Richards, 2018).

Another major rage or issue going on between Coles and Woolworths is associated with
the decrease in the prices of the Coles which in turn resulted in lower generation of the revenue
when compared with that of Woolworths prices, market share and sales revenue (Coles catching
up to Woolies on price, 2017).
One of the critical issue related with the decrease in the prices of its competitors such as
Aldi will in turn result in higher competition in the Australian supermarket. This in turn
eventually leads to lower operational growth, performance, profitability and productivity for the
Coles.
Marketing and promotional power of the competitive companies like Metcash are in turn
considered to be one of the major issue which is mainly faced by the Coles and Woolworths.
Metcash tends to focus on marketing on its prices in order to stay in the market (Phillipov, 2016).
The company also tends to focus on effective advertising and marketing campaigns which in turn
leads to long term sustainable growth.
Coles and Woolworths were under stringent pressure who in turn were allegedly
exploited because of the labour supply chain. Company was not under the compliance of
corporate social responsibility. This in turn has resulted in major issue in carrying out the
business function with utmost accuracy (Merrett, 2019). Coles and Woolworths tends to boycott
labour supply chains because of the exploitation associated with the migrant workers. Coles has
represented that, the supplier chain must in turn undergo the risk assessment procedure. Control
of the suppliers over the market in turn is considered to be one of the major issue faced by the
Coles and Woolworths.
Another major issue faced by the Coles and Woolworths is to comply with the digital
reach in order to survive in the new era of the market. Competitors getting indulged in the
advanced digital technology has resulted in the lower market share, sales and profitability for the
company. Competitors getting indulged in digital promotional activities through social media
platforms and selling of goods and services through online website (Grimmer, 2019). This in turn
leads to higher sustainable growth and development of the business. This is considered to be one
of the major issue because of the high degree of cost associated with the business in order to
integrate advanced digital technology.

Higher coverage of the market share by Woolworths in turn is considered to be one of the
major issue faced by the Coles. Higher market share of the competitive companies in the market
has led to lower sales and profitability for the Coles when compared with Woolworths.
Aldi offering its goods and services at a very competitive price by cutting down its prices
in turn results in lower operational growth and productivity of the highly known companies such
as Coles and Woolworths. Aldi has also developed an integrated app which helps customers to
order goods from the app at a greater convenience (Devin and Richards, 2018). Aldi is giving a
major competitive challenges to its competitors like Coles and Woolworths. Aldi is highly
committed to comply with the environmental issues like reduction in the carbon footprint,
recycling and maximizing the efficiency of the energy. This in turn leads to higher operational
growth, performance and productivity. This in turn impose a major challenge on the Coles and
Woolworths in order to perform tasks with greater efficiency.
One of the key issue is that the preference of the customers is changing which in turn
largely influence the way business work. This is considered to be one of the major issue which in
turn largely affects the business operations.
Theoretical concepts.
Theoretical concept is a proposed a way of thinking about the potentially thinking about
the event. This is without falsifiable operational definition, conceptual definitions assume about
the knowledge and acceptances of theories which depends on the working environment. As per
the case of Australian supermarkets recently faces various issues within their business market. In
the case study mentions various super markets which are established within the Australia. Those
are faces ample number of issues like supply chain management, lower prices of products, entry
of new competitors through landscape and digital marketing power issues (Kshetri, 2018).
Supply chain is important part of company which deliver products and services at market places
by using different technologies. For that company can use SCOR model for managing supply
chain. With the help of this, management able to plan properly about their supply chain
management. This flows the goods and services, involves the movement and storage of raw
material, of work in process inventory and finished goods from the point of origin to point of
consumptions (Pettit, Croxton and Fiksel, 2019).
On the other side, Wool warths is face problem which is increases competition within the
market place. The competition rivalry between companies selling similar products and services

with the goals of achieving revenue, profits and market share growth. The market competition
motivate companies to increase their sales volume by utilizing the four components of marketing
mix 4 p's of marketing. This carries with marketing concept within the market place. To
analysing the competition within the market, management use porter five force analysis
(Kienzler and Kowalkowski, 2017). The main concept of this model is to analysis competition
within the market place by using bar ginning power of supplier and customers, threat of
substitute products and entry of new companies. The pricing is another issue for supermarkets
which are faces by them at competitive market era. The main concept of low price is a
microeconomic principle which is uses the concepts of supply and demand to determine the
appropriate prices points for a good or services. For that management can use penetrations
strategy. This determining prices is one of the core principle which is underlying economic
theory for working abilities. Reduction in prices of product is help to increase sales of product
and increase attraction of customers towards company in effective and valuable manner. It is also
using customer focus on group to identify customers focus and preferences and inn turns of
work.
Digital marketing power is another issues faces company which is not good and effective
for companies to maintain their sales. Most of the customers are not able to uses digital
technology for purchasing products and services of company in effective and valuable manner.
The concept of digital marketing is a tool of products and services promotion of brand which is
using all forms of digital advertising to reach out the customer by targeting segments in effective
and valuable.
Application of strategy model.
The application of supply chain theory in super markets to manage their supply chain in
effective manner. With the help of this model, management is able to maintain freshness of food
till the delivery of product to customers. The application of SCOR models for taking strategic
decision for supply chain management. Plan: The application of this strategy model is includes proper planning of market by
balancing resources. Source: sources of infrastructure and material acquisitions for managing inventory,
supplier network and supplier performance (Kireyev, Kumar and Ofek, 2017).

 Make: here is Super market make to order, to stock and includes production activities for
analysing time taking with supply chain management.
 Deliver: warehousing, order management and transportations. With the help of this
customers are get products on time in effective manner.
On the other side, application of pricing penetrations strategy is where price of product
is initially set low to rapid reach a wide function of the market and initiate word of mouth. This
strategy works on the new brand because of the lower price. This creates more effectiveness for
business to manage effective prices. In this management set lower prices of product in starting
and increase this as per requirement.
For analysing competition, porter five force is the best strategic model which is help to
an analysing whole market by knowing bargaining power of customers and other elements. Bargaining power of customer: customer bargaining power is lower threat which is not
affect to companies because of quality of products. Bargaining power of supplier is also lower because there are having various suppliers. In
that company can easily select any other. Threat of new entrances is hire which are come with other country in Australia. Through
this management knows about new comers within market (Patrutiu-Baltes, 2016). Threat of substitute product management knows about product which is higher within
the market because there are various products which are similar as per within the market.
 Competitive rivalry is help to analysis competitive of company at market place which is
like ASDA company.
CONCLUSION
From the study of the above report it is concluded that in the highly competitive world it
is very important for the companies to adapt to different types of competitive strategy to sustain
the competition. The present case was also based on Wool worths which used different types of
competitive strategies for being in the competition and maintain profitability. In the case study
the company was facing different types of issues which decreased the competitiveness of the
company like supply chain, digitalization, pricing issues, increase in competition and may others.
Further the report discussed the different strategies and models which can be used by the
company in managing those issues. These were like using the penetration pricing for meeting the
price issue, for managing the issues of supply chain SCOR model was applied and the fresh food

was supplied to consumers. In case of digitalization issue the company is trying to educate the
consumers in using the mobile application and to order the goods with them.

REFERENCES
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Online
Coles catching up to Woolies on price. 2017. [Online]. Available
through:<https://insideretail.com.au/news/coles-catching-up-to-woolies-on-price-201710>