Competitive Strategy for Woolworths Supermarkets: An Analysis of Proposed Acquisition of Renaissance Supa IGA St Kilda
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This report analyzes Woolworths Supermarkets' proposed acquisition of Renaissance Supa IGA St Kilda, with a focus on competitive strategy in the Australian supermarket industry. It includes a competition analysis, futuristic overview, and issues leading to concern.
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Running head: COMPETITIVE STRATEGY
Competitive Strategy
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Competitive Strategy
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1COMPETITIVE STRATEGY
Table of Contents
Introduction:...............................................................................................................................2
Background................................................................................................................................2
The Concerned Parties...............................................................................................................3
Acquirer: Woolworths Limited.............................................................................................3
Target: Renaissance Supa IGA St Kilda................................................................................3
Other Supermarkets:...............................................................................................................3
Transaction.................................................................................................................................4
Inquiries Undertaken..................................................................................................................4
Competition Analysis Based on Proposed Acquisition.............................................................5
Futuristic Overview of the Proposed Acquisition......................................................................5
Competitive dynamics of the Industry Where the Firms Compete............................................6
Retail Market..............................................................................................................................6
Market for Local Retail Supermarket.....................................................................................7
Market for State-wide Retail Supermarket.............................................................................8
Wholesale Procurement and Supply Markets.........................................................................8
Issues Leading to Concern.........................................................................................................8
Market Concentration.............................................................................................................8
Existing Competitive Behaviour of the Target Market..........................................................9
Barriers to Entry...................................................................................................................10
Conclusion............................................................................................................................10
References:...............................................................................................................................11
Table of Contents
Introduction:...............................................................................................................................2
Background................................................................................................................................2
The Concerned Parties...............................................................................................................3
Acquirer: Woolworths Limited.............................................................................................3
Target: Renaissance Supa IGA St Kilda................................................................................3
Other Supermarkets:...............................................................................................................3
Transaction.................................................................................................................................4
Inquiries Undertaken..................................................................................................................4
Competition Analysis Based on Proposed Acquisition.............................................................5
Futuristic Overview of the Proposed Acquisition......................................................................5
Competitive dynamics of the Industry Where the Firms Compete............................................6
Retail Market..............................................................................................................................6
Market for Local Retail Supermarket.....................................................................................7
Market for State-wide Retail Supermarket.............................................................................8
Wholesale Procurement and Supply Markets.........................................................................8
Issues Leading to Concern.........................................................................................................8
Market Concentration.............................................................................................................8
Existing Competitive Behaviour of the Target Market..........................................................9
Barriers to Entry...................................................................................................................10
Conclusion............................................................................................................................10
References:...............................................................................................................................11
2COMPETITIVE STRATEGY
Introduction:
The report gives an overview of competitive strategy in relation to the acquisition and
structure of Australian supermarkets. The supermarkets chosen here are Coles, Aldi and
Woolworths. Coles represents a supermarket chain of Australia with headquarters in
Melbourne and owned by the parent company Wesfarmers (coles.com.au 2018). George
Coles found the company in the year 1914 that presently operates close to 801 supermarkets
across Australia. The company boasts of close to 100,000 employees. Aldi represents a
German low cost brand that entered the Australian market and brought in challenges for
Coles and Woolworths with its low cost structure (aldi.com.au 2018). Woolworths on the
other hand represents compilation of divisions, brands and chain of Woolworths Group and is
the largest food retailers in Australia (woolworths.com.au 2018). The report however focuses
on the Woolworths Supermarkets that represents a grocery chain store owned by the
Woolworths Limited. The company together with its rival company Coles forms a duopoly
and captures close to 80 percent of the Australian market. The profit of Woolworth rose to
37.6 percent in the year 2017. The supermarket also holds a second position in the Australian
market in terms of the revenue. The report provides an insight into Woolworths proposed
acquisition of Renaissance Super ICA St Kilda analyzed by the Australian Competition and
Consumer Commission (ACCC) in presence of other competitors like Coles and Aldi.
Background
The Australian Competition and Consumer Commission (ACCC) put forward
guidelines based on which market inquires undertaken for a proposed acquisition thereby
leading to the anticipation of the final decision (King 2013). Any proposed acquisition
undergoes scrutiny by the ACCC before implementation of the final decision. ACCC puts
forward a statement of the issues that put forwards an opportunity for all the interested parties
Introduction:
The report gives an overview of competitive strategy in relation to the acquisition and
structure of Australian supermarkets. The supermarkets chosen here are Coles, Aldi and
Woolworths. Coles represents a supermarket chain of Australia with headquarters in
Melbourne and owned by the parent company Wesfarmers (coles.com.au 2018). George
Coles found the company in the year 1914 that presently operates close to 801 supermarkets
across Australia. The company boasts of close to 100,000 employees. Aldi represents a
German low cost brand that entered the Australian market and brought in challenges for
Coles and Woolworths with its low cost structure (aldi.com.au 2018). Woolworths on the
other hand represents compilation of divisions, brands and chain of Woolworths Group and is
the largest food retailers in Australia (woolworths.com.au 2018). The report however focuses
on the Woolworths Supermarkets that represents a grocery chain store owned by the
Woolworths Limited. The company together with its rival company Coles forms a duopoly
and captures close to 80 percent of the Australian market. The profit of Woolworth rose to
37.6 percent in the year 2017. The supermarket also holds a second position in the Australian
market in terms of the revenue. The report provides an insight into Woolworths proposed
acquisition of Renaissance Super ICA St Kilda analyzed by the Australian Competition and
Consumer Commission (ACCC) in presence of other competitors like Coles and Aldi.
Background
The Australian Competition and Consumer Commission (ACCC) put forward
guidelines based on which market inquires undertaken for a proposed acquisition thereby
leading to the anticipation of the final decision (King 2013). Any proposed acquisition
undergoes scrutiny by the ACCC before implementation of the final decision. ACCC puts
forward a statement of the issues that put forwards an opportunity for all the interested parties
3COMPETITIVE STRATEGY
that includes the competitors, customers, stakeholders and shareholders for ascertaining and
considering the preliminary issues recognized by the commission. The commission also helps
to provide a platform for merger and other parties with provisions of the more submission if
considered necessary.
The Concerned Parties
Acquirer: Woolworths Limited
Woolworths represents the largest retailer of grocery in Australia. Its operation also
includes merchandize stores, supermarket, liquor, petrol, home improvement and hardware.
Target: Renaissance Supa IGA St Kilda
Renaissance Supa IGA St Kilda represents a supermarket that offers complete range
of the fresh produce and the groceries (iga.com.au 2018). The supermarket also has a huge
section for liquor that offers both non-chilled and chilled products. Renaissance Supa IGA is
located at 64 Fitzroy Street and spread over an approximate area of 1,259 square metres along
with facilities availability of sixty-three car parking spots. The supermarket also offers the
customers with free parking facility for one hour through a redemption scheme. However,
Nero Tadeo Nominees Pty Ltd owns the liquor licences of the company controlled by Mr
George Altman. He also holds the responsibility of running and owning two supermarkets
under the brand of Renaissance Supa IGA.
Other Supermarkets:
Coles:
Coles represent the leading liquor, food and convenience retailer owned by the
Wesfarmers Limited, a public listed company (coles.com.au 2018). Wesfarmers has varied
operations in insurance, chemicals, retail, energy, resources, industrial sectors and fertilizers.
that includes the competitors, customers, stakeholders and shareholders for ascertaining and
considering the preliminary issues recognized by the commission. The commission also helps
to provide a platform for merger and other parties with provisions of the more submission if
considered necessary.
The Concerned Parties
Acquirer: Woolworths Limited
Woolworths represents the largest retailer of grocery in Australia. Its operation also
includes merchandize stores, supermarket, liquor, petrol, home improvement and hardware.
Target: Renaissance Supa IGA St Kilda
Renaissance Supa IGA St Kilda represents a supermarket that offers complete range
of the fresh produce and the groceries (iga.com.au 2018). The supermarket also has a huge
section for liquor that offers both non-chilled and chilled products. Renaissance Supa IGA is
located at 64 Fitzroy Street and spread over an approximate area of 1,259 square metres along
with facilities availability of sixty-three car parking spots. The supermarket also offers the
customers with free parking facility for one hour through a redemption scheme. However,
Nero Tadeo Nominees Pty Ltd owns the liquor licences of the company controlled by Mr
George Altman. He also holds the responsibility of running and owning two supermarkets
under the brand of Renaissance Supa IGA.
Other Supermarkets:
Coles:
Coles represent the leading liquor, food and convenience retailer owned by the
Wesfarmers Limited, a public listed company (coles.com.au 2018). Wesfarmers has varied
operations in insurance, chemicals, retail, energy, resources, industrial sectors and fertilizers.
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4COMPETITIVE STRATEGY
Aldi Australia:
Aldi represents privately owned supermarket operator that entered the Australian
market in the year 2001. The company has more than 300 stores spread across New South
Wales, Queensland and Victoria (aldi.com.au 2018). In the year 2013, the company further
allowed plans for the expansion of its operation in Western and Southern Australia. This
particular supermarket characterized as a discounter with limited assortment. These type of
discounters emphasizes primarily on the products with the private level and does not provide
a range as massive as the full line supermarket and have small stores. Aldi is the only
assorted discounter operating in Australia and having major interstate network.
Transaction
Woolworths puts forward propositions of acquiring not only the business but also the
business assets and the liquor licence of Renaissance Supa IGA St Kilda from the Nero
Tadeo and thereby convert the retail space into one of the branded supermarket of Woolworth
in addition to (Beer Wine and Spirits) BWS liquor outlet(Huby and Cameron 2013). The
Supermarket brand also went into commercial negotiations with its property owner for
owning the property.
Inquiries Undertaken
The ACCC undertook the market inquiries based on the proposed acquisition. The
ACCC also put forward provisions of submissions from other interested parties. The
commission also welcomes further information from the interested parties for providing
investigation assistance.
Aldi Australia:
Aldi represents privately owned supermarket operator that entered the Australian
market in the year 2001. The company has more than 300 stores spread across New South
Wales, Queensland and Victoria (aldi.com.au 2018). In the year 2013, the company further
allowed plans for the expansion of its operation in Western and Southern Australia. This
particular supermarket characterized as a discounter with limited assortment. These type of
discounters emphasizes primarily on the products with the private level and does not provide
a range as massive as the full line supermarket and have small stores. Aldi is the only
assorted discounter operating in Australia and having major interstate network.
Transaction
Woolworths puts forward propositions of acquiring not only the business but also the
business assets and the liquor licence of Renaissance Supa IGA St Kilda from the Nero
Tadeo and thereby convert the retail space into one of the branded supermarket of Woolworth
in addition to (Beer Wine and Spirits) BWS liquor outlet(Huby and Cameron 2013). The
Supermarket brand also went into commercial negotiations with its property owner for
owning the property.
Inquiries Undertaken
The ACCC undertook the market inquiries based on the proposed acquisition. The
ACCC also put forward provisions of submissions from other interested parties. The
commission also welcomes further information from the interested parties for providing
investigation assistance.
5COMPETITIVE STRATEGY
Competition Analysis Based on Proposed Acquisition
The preliminary view of ACCC in respect to the proposed acquisition might result in
the lessening of the competition in local retail market of the supermarkets adjacent to the
target. This includes the neighbouring suburbs of Windsor, Middle Park and St Kilda West in
addition to the suburbs surrounding St Kilda. The ACCC also expressed concern regarding
the fact that the proposed acquisition would also ensure in removing the full line independent
supermarket that represented closest competitor to the Woolworths and Coles in local market.
In addition, the Renaissance Supa IGA, not only had differentiated promotion, service
offering and product range that provided competitive response to rival chain of supermarkets
thereby bringing in an additional choice for the customers(Arup et al. 2017). The acquisition
would enable in replacing the differentiated offers put forward in comparison to the offers of
the Woolworths that already has a presence in local market.
Futuristic Overview of the Proposed Acquisition
While accessing the proposed acquisition, the ACCC takes into consideration the
impacts of the acquisition by undertaking a comparison of the future competitive
environment provided the acquisition proceeds to a situation when the acquisition do not
proceed that ensures determining whether the acquisition helps in substantially lessening the
competition in the relevant market. In this particular case, the target represents profitable
business and therefore in the absence of the acquisition continues to operate as independent
supermarket for next couple of years. The ACCC put forward a final assessment that ensured
the likelihood of Renaissance Supa IGA St Kilda to exit the market by the year 2017.
However, the merger reviews put forward by the commission takes into consideration the
influence of the acquisition in near future. The Commission however considers that the
closing down of Renaissance Supa IGA St Kilda supermarket on a long term basis holds
Competition Analysis Based on Proposed Acquisition
The preliminary view of ACCC in respect to the proposed acquisition might result in
the lessening of the competition in local retail market of the supermarkets adjacent to the
target. This includes the neighbouring suburbs of Windsor, Middle Park and St Kilda West in
addition to the suburbs surrounding St Kilda. The ACCC also expressed concern regarding
the fact that the proposed acquisition would also ensure in removing the full line independent
supermarket that represented closest competitor to the Woolworths and Coles in local market.
In addition, the Renaissance Supa IGA, not only had differentiated promotion, service
offering and product range that provided competitive response to rival chain of supermarkets
thereby bringing in an additional choice for the customers(Arup et al. 2017). The acquisition
would enable in replacing the differentiated offers put forward in comparison to the offers of
the Woolworths that already has a presence in local market.
Futuristic Overview of the Proposed Acquisition
While accessing the proposed acquisition, the ACCC takes into consideration the
impacts of the acquisition by undertaking a comparison of the future competitive
environment provided the acquisition proceeds to a situation when the acquisition do not
proceed that ensures determining whether the acquisition helps in substantially lessening the
competition in the relevant market. In this particular case, the target represents profitable
business and therefore in the absence of the acquisition continues to operate as independent
supermarket for next couple of years. The ACCC put forward a final assessment that ensured
the likelihood of Renaissance Supa IGA St Kilda to exit the market by the year 2017.
However, the merger reviews put forward by the commission takes into consideration the
influence of the acquisition in near future. The Commission however considers that the
closing down of Renaissance Supa IGA St Kilda supermarket on a long term basis holds
6COMPETITIVE STRATEGY
relevance to the extent that it influences the incentive, strategic direction or the businesses
competitiveness in the future(Cartwright and Cooper 2014).
Competitive dynamics of the Industry Where the Firms Compete
According to the preliminary view put forward by the ACCC, the competitive impact
of proposed acquisition is accessed through markets mentioned below (Radice and Rafter
2014):
Market for local supermarket retail revolving the target that precisely includes
suburb of the St Kilda and the neighbouring suburbs of St Kilda
State wide market of the retail supermarket
State wide supply and wholesale procurement markets
The commission also took into consideration the acquisition based on retail liquor
market however; in the absence of the concern, such markets not considered any further. The
liquor outlets of the local markets where target operates also faces necessary competition
from the liquor sales of Woolworths, Coles and the other independent supermarkets and the
bottle shops. Thus, the influence of the proposed acquisition is not substantial.
Retail Market
According to the commission, in retail markets involving the buying groups or chains,
competition occurs not only at the state or the national level but also at the geographic level
(Bruwer et al. 2014). While all the retailers competes for attracting the customer from similar
retailers located in the same area. There is also competition amongst the large brands based
on the standardized retail offers across all the stores within the broader area.
relevance to the extent that it influences the incentive, strategic direction or the businesses
competitiveness in the future(Cartwright and Cooper 2014).
Competitive dynamics of the Industry Where the Firms Compete
According to the preliminary view put forward by the ACCC, the competitive impact
of proposed acquisition is accessed through markets mentioned below (Radice and Rafter
2014):
Market for local supermarket retail revolving the target that precisely includes
suburb of the St Kilda and the neighbouring suburbs of St Kilda
State wide market of the retail supermarket
State wide supply and wholesale procurement markets
The commission also took into consideration the acquisition based on retail liquor
market however; in the absence of the concern, such markets not considered any further. The
liquor outlets of the local markets where target operates also faces necessary competition
from the liquor sales of Woolworths, Coles and the other independent supermarkets and the
bottle shops. Thus, the influence of the proposed acquisition is not substantial.
Retail Market
According to the commission, in retail markets involving the buying groups or chains,
competition occurs not only at the state or the national level but also at the geographic level
(Bruwer et al. 2014). While all the retailers competes for attracting the customer from similar
retailers located in the same area. There is also competition amongst the large brands based
on the standardized retail offers across all the stores within the broader area.
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7COMPETITIVE STRATEGY
Market for Local Retail Supermarket
While assessing the localized retail markets, the ACCC aims at identification of the
competitive constraints on the retail offers at the store level of target store and the stores
operated by acquiring firm. Market inquires have however has put forward that the shoppers
most likely makes a switch between target supermarket and the other supermarkets located in
suburb areas of Windsor, St Kilda West and Middle Park for similar shopping
experiences(Singh and Lawrence 2015). Thus, according to ACCC the acquisition in context
of local retail supermarket encompass the suburbs. The commission took into account the
dimensions of local market, distances between the supermarkets, drive and work time
analysis and the routes of the public transport. In addition, the commission also examined the
distribution of the catalogue areas of Renaissance Supa IGA St Kilda only to find that the
catalogues were distributed to the households that were only at a distance of 2 km from the
supermarket. Based on the considerations, the commission ended in a preliminary view that
the supermarkets located within suburbs of the St Kilda provided close substitutes.
Product Dimension of the Local Retail Supermarket:
1. Full line supermarkets such as the primary supermarket chain that retails range of
goods including fresh meat, bakery, packaged groceries, deli products, vegetables, fresh fruit
and the frozen items
2. Smaller but convenient supermarkets with limited product range and used mostly as
top up supermarket
3. Discounters with limited assortment like the Aldi
4. Special food retailers that includes the bakers, butchers and the green groceries
Market for Local Retail Supermarket
While assessing the localized retail markets, the ACCC aims at identification of the
competitive constraints on the retail offers at the store level of target store and the stores
operated by acquiring firm. Market inquires have however has put forward that the shoppers
most likely makes a switch between target supermarket and the other supermarkets located in
suburb areas of Windsor, St Kilda West and Middle Park for similar shopping
experiences(Singh and Lawrence 2015). Thus, according to ACCC the acquisition in context
of local retail supermarket encompass the suburbs. The commission took into account the
dimensions of local market, distances between the supermarkets, drive and work time
analysis and the routes of the public transport. In addition, the commission also examined the
distribution of the catalogue areas of Renaissance Supa IGA St Kilda only to find that the
catalogues were distributed to the households that were only at a distance of 2 km from the
supermarket. Based on the considerations, the commission ended in a preliminary view that
the supermarkets located within suburbs of the St Kilda provided close substitutes.
Product Dimension of the Local Retail Supermarket:
1. Full line supermarkets such as the primary supermarket chain that retails range of
goods including fresh meat, bakery, packaged groceries, deli products, vegetables, fresh fruit
and the frozen items
2. Smaller but convenient supermarkets with limited product range and used mostly as
top up supermarket
3. Discounters with limited assortment like the Aldi
4. Special food retailers that includes the bakers, butchers and the green groceries
8COMPETITIVE STRATEGY
5. Markets belonging to South Melbourne that puts together a collection of not only
food retailers but also the retailers of the other products
Market for State-wide Retail Supermarket
ACCC in addition to considering the local market also consider the competition on
broader retail market that puts forward a competitive constraint based on the retail offer by
Woolworth standardized across the various local markets. Woolworth presently standardizes
the element on the retail offer through pricing and state wide marketing campaigns across all
the stores (Corones 2015). The standardization can however undergo change in a response to
the competitive conditions.
Wholesale Procurement and Supply Markets
The ACCC considered proposed acquisition in context of the state wide market for
wholesale supply and the procurement of the product sold in the supermarkets(Khojasteh and
Jadid 2015). This is done consistently through the considerations of the past acquisitions of
the supermarket.
Issues Leading to Concern
These include:
Market Concentration
The local market mentioned above includes:
1. The target
2. Presence of one Woolworth supermarket at the precinct of St Kilda in the Acland
Street Shopping
5. Markets belonging to South Melbourne that puts together a collection of not only
food retailers but also the retailers of the other products
Market for State-wide Retail Supermarket
ACCC in addition to considering the local market also consider the competition on
broader retail market that puts forward a competitive constraint based on the retail offer by
Woolworth standardized across the various local markets. Woolworth presently standardizes
the element on the retail offer through pricing and state wide marketing campaigns across all
the stores (Corones 2015). The standardization can however undergo change in a response to
the competitive conditions.
Wholesale Procurement and Supply Markets
The ACCC considered proposed acquisition in context of the state wide market for
wholesale supply and the procurement of the product sold in the supermarkets(Khojasteh and
Jadid 2015). This is done consistently through the considerations of the past acquisitions of
the supermarket.
Issues Leading to Concern
These include:
Market Concentration
The local market mentioned above includes:
1. The target
2. Presence of one Woolworth supermarket at the precinct of St Kilda in the Acland
Street Shopping
9COMPETITIVE STRATEGY
3. Presence of one Cole supermarket at the precinct of St Kilda in Acland Street
Shopping
4. Presence of one Aldi supermarket located at 135 Inkerman Street, St Kilda
5. Presence of two small format independent supermarkets within the nearby strips in
the locality
Coles and Woolworth is closest competitor of each other and market inquiries indicate
that targeted supermarket represents another full line supermarket operating in local market
(Parker, Cox and Thompson 2014) .This implies that Renaissance Supa IGA St Kilda remains
the only option for the shoppers of the local market for weekly shopping in addition to Coles
and Woolworth. Aldo might provide a price competition on being a discounter with limited
assortment. Aldi also does ensure the same depth as full line supermarket. The convenience-
oriented supermarkets in the surrounding areas of Renaissance Supa IGA St Kilda are smaller
and do not offer the complete product range as offered by the full line supermarkets.
Thus, no supermarkets produce closer substitutes. However, the closest constraint of
the supermarket at target site comes from other supermarket in the locality rather than the
convenience orientated and limited assortment supermarkets.
Existing Competitive Behaviour of the Target Market
Enquiries have indicated that Renaissance Supa IGA St Kilda gets into competition
with other local supermarkets through non-price and price offering unique to local market.
Instead of providing a match to the competitor, the target supermarket put forward a unique
and differentiated order (Williamson et al. 2013). Renaissance Supa IGA St Kilda represents
the only independent supermarket in local market. Being full line, the target market offers
wider product range including deli, fresh produce and the groceries. Thus as an independent
3. Presence of one Cole supermarket at the precinct of St Kilda in Acland Street
Shopping
4. Presence of one Aldi supermarket located at 135 Inkerman Street, St Kilda
5. Presence of two small format independent supermarkets within the nearby strips in
the locality
Coles and Woolworth is closest competitor of each other and market inquiries indicate
that targeted supermarket represents another full line supermarket operating in local market
(Parker, Cox and Thompson 2014) .This implies that Renaissance Supa IGA St Kilda remains
the only option for the shoppers of the local market for weekly shopping in addition to Coles
and Woolworth. Aldo might provide a price competition on being a discounter with limited
assortment. Aldi also does ensure the same depth as full line supermarket. The convenience-
oriented supermarkets in the surrounding areas of Renaissance Supa IGA St Kilda are smaller
and do not offer the complete product range as offered by the full line supermarkets.
Thus, no supermarkets produce closer substitutes. However, the closest constraint of
the supermarket at target site comes from other supermarket in the locality rather than the
convenience orientated and limited assortment supermarkets.
Existing Competitive Behaviour of the Target Market
Enquiries have indicated that Renaissance Supa IGA St Kilda gets into competition
with other local supermarkets through non-price and price offering unique to local market.
Instead of providing a match to the competitor, the target supermarket put forward a unique
and differentiated order (Williamson et al. 2013). Renaissance Supa IGA St Kilda represents
the only independent supermarket in local market. Being full line, the target market offers
wider product range including deli, fresh produce and the groceries. Thus as an independent
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10COMPETITIVE STRATEGY
supermarket Renaissance Supa IGA have varied offers in terms of the price, product range,
promotions and service. Therefore, this indicates that the closest competitors of Renaissance
Supa IGA are the Woolworths and the Coles supermarkets.
Barriers to Entry
As put forward in the previous reviews of ACCC, the barriers to the entry are higher in the
supermarket retailing (Nleya 2014). There involves a considerable sunk cost and lead times in
the establishment of a newer supermarket that can lead to the creation of a barrier already
when the market is served by multiple supermarkets especially if it includes scaled
incumbent. Since St Kilda represents a developed area, therefore it becomes difficult in
finding the appropriate sites for establishment of full time supermarket or space for expansion
of the existing small format supermarket to full scale. Therefore, the entry of independent full
line supermarkets for replacing the offering of Renaissance Supa IGA is not likely in near
future.
Conclusion
Thus, to conclude one can say that based on the preliminary view of ACCC that the
acquisition put forward by Woolworths would help in replacing differentiated offer of target
supermarket through Woolworth has standardized offers that already form a part of the local
market. However, in the absence of proposed acquisition it is likely that the present
Renaissance Supa IGA in St Kilda will continue as an independent supermarket for a
considerable number of years. In addition, the entry of independent fully operated
supermarket or the expansion carried by the existing independently operated structures for
replacing the offers of target supermarket seems a bit impossible. Further, market inquiries
also indicates a general perception related to the higher quality and the personal service
supermarket Renaissance Supa IGA have varied offers in terms of the price, product range,
promotions and service. Therefore, this indicates that the closest competitors of Renaissance
Supa IGA are the Woolworths and the Coles supermarkets.
Barriers to Entry
As put forward in the previous reviews of ACCC, the barriers to the entry are higher in the
supermarket retailing (Nleya 2014). There involves a considerable sunk cost and lead times in
the establishment of a newer supermarket that can lead to the creation of a barrier already
when the market is served by multiple supermarkets especially if it includes scaled
incumbent. Since St Kilda represents a developed area, therefore it becomes difficult in
finding the appropriate sites for establishment of full time supermarket or space for expansion
of the existing small format supermarket to full scale. Therefore, the entry of independent full
line supermarkets for replacing the offering of Renaissance Supa IGA is not likely in near
future.
Conclusion
Thus, to conclude one can say that based on the preliminary view of ACCC that the
acquisition put forward by Woolworths would help in replacing differentiated offer of target
supermarket through Woolworth has standardized offers that already form a part of the local
market. However, in the absence of proposed acquisition it is likely that the present
Renaissance Supa IGA in St Kilda will continue as an independent supermarket for a
considerable number of years. In addition, the entry of independent fully operated
supermarket or the expansion carried by the existing independently operated structures for
replacing the offers of target supermarket seems a bit impossible. Further, market inquiries
also indicates a general perception related to the higher quality and the personal service
11COMPETITIVE STRATEGY
provided by target supermarket which is not only valued by the shoppers for the distinct
features compared to the standardized offerings of the major chains of supermarket.
provided by target supermarket which is not only valued by the shoppers for the distinct
features compared to the standardized offerings of the major chains of supermarket.
12COMPETITIVE STRATEGY
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aldi.com.au 2018. [online] Available at: https://www.aldi.com.au/ [Accessed 21 May 2018].
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13COMPETITIVE STRATEGY
Nleya, L.,2014. Reading between the aisles: The bigger picture on leases in grocery
retail. CCRED Quarterly Competition Review
Parker, R., Cox, S. and Thompson, P., 2014. How technological change affects power
relations in global markets: remote developers in the console and mobile games
industry. Environment and planning A, 46(1), pp.168-185.
Radice, N. and Rafter, K., 2014. Proposed amendments to the Corporations Act: The end of
the 100-member rule?. Governance Directions, 66(11), p.700.
Singh-Peterson, L. and Lawrence, G., 2015. Insights into community vulnerability and
resilience following natural disasters: perspectives with food retailers in Northern NSW,
Australia. Local Environment, 20(7), pp.782-795.
Williamson, P.J., Ramamurti, R., Fleury, A. and Fleury, M.T.L. eds., 2013. The competitive
advantage of emerging market multinationals. Cambridge University Press.
woolworths.com.au 2018. [online] Available at: https:// www. woolworths.com.au/[Accessed
21 May 2018]
Nleya, L.,2014. Reading between the aisles: The bigger picture on leases in grocery
retail. CCRED Quarterly Competition Review
Parker, R., Cox, S. and Thompson, P., 2014. How technological change affects power
relations in global markets: remote developers in the console and mobile games
industry. Environment and planning A, 46(1), pp.168-185.
Radice, N. and Rafter, K., 2014. Proposed amendments to the Corporations Act: The end of
the 100-member rule?. Governance Directions, 66(11), p.700.
Singh-Peterson, L. and Lawrence, G., 2015. Insights into community vulnerability and
resilience following natural disasters: perspectives with food retailers in Northern NSW,
Australia. Local Environment, 20(7), pp.782-795.
Williamson, P.J., Ramamurti, R., Fleury, A. and Fleury, M.T.L. eds., 2013. The competitive
advantage of emerging market multinationals. Cambridge University Press.
woolworths.com.au 2018. [online] Available at: https:// www. woolworths.com.au/[Accessed
21 May 2018]
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