Competitive Strategy for Woolworths Supermarkets: An Analysis of Proposed Acquisition of Renaissance Supa IGA St Kilda

Running head: COMPETITIVE STRATEGY
Competitive Strategy
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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

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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

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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.