Industry Analysis: Coles

This report provides an analysis of the supermarket retailing industry in Australia with special emphasis on Coles Group Limited. It covers market structure, segmentation, distribution channels, competitors, and trends for the total market. An internal analysis of Coles is also presented to identify its core competencies and competetive advantage.

Running head: INDUSTRY ANALYSIS: COLES
INDUSTRY ANALYSIS: COLES
Name of the student
Name of the university
Author Note

Table of Contents
Introduction.................................................................................................................................................2
Discussion....................................................................................................................................................2
Supermarket retailing in Australia: Overview..........................................................................................2
PEST Analysis of supermarket retailing industry in Australia...................................................................3
Market structure of the industry.............................................................................................................4
Market segmentation..............................................................................................................................5
Distribution channels...............................................................................................................................6
Competitors.............................................................................................................................................7
Market Trends of supermarket retail industry........................................................................................7
Coles............................................................................................................................................................7
Overview of the company.......................................................................................................................7
Coles: Core competencies.......................................................................................................................8
Recommendations for the future strategies...............................................................................................9
Conclusion.................................................................................................................................................10

Executive Summary
The respective paper is an analysis of supermarket retailing by giving special emphasis on Coles
Group Limited, Australia. The paper is a report which talks in details about the supermarket
industry with special emphasis to Coles, and the external factors affecting the industry
thereupon. The analysis in the report has covered market structure, segmentation, distribution
channels, competitors and trends for the total market, which means there would be a holistic
analysis of the respective market provided. An internal analysis of Coles, the issues the company
is facing and the recommendations is also provided at the end of the report.

Introduction
The respective paper is an analysis of supermarket retailing by giving special emphasis
on Coles Group Limited, Australia. The paper is a report which talks in details about the market
which I have chosen, which is supermarket retailing and the external factors affecting the
industry thereupon. The analysis in the report has covered market structure, segmentation,
distribution channels, competitors and trends for the total market, which means there would be a
holistic analysis of the respective market provided. Apart from that, an internal analysis of the
company Coles that I have chosen would also be presented in order to identify its core
capabilities and competencies and any competitive advantage they might be possessing. From
the respective analysis, the outcome would be that the key issues that the industry might be
facing would be provided along with the initial range of potential future strategies that the
company might take up in order to survive and thrive in the fierce competition of the global
business market. At the end of the report, there would be recommendations about how the
company might work in future with proper strategies and policies which it can undertake.
Discussion
Supermarket retailing in Australia: Overview
Supermarket and retail grocery store industry is a range of grocery and food products,
which includes vegetables and fruits, breads, canned food, frozen meat, cigarettes, dairy products
and other allied products for household or domiciliary purpose. The supermarket and grocery
stores industry in Australia has emerged as the most fiercely competitive industry in the country
in the recent times. In Australia, since the price- based competition has been diminishing as the

days are passing, there has been a great impact in the past two years. It has been found out that
over the past five year period and the first half, there has been a rapid expansion of ALDI has
significantly altered the operating landscape of the industry as it is popular for its low cost,
affordable, private label products that have underpinned a strong growth factor on the soil of
Australia. Australia proudly achieves revenue of almost $110bn from the retail supermarkets
industry with an annual growth that is estimated to be 1.5%. Certain basic additional factors that
accompany the supermarket retailing industry of Australia are that they have the ability to
control the stock in hand , produce attractive presentation of the products and also recruit the
most efficient and experienced employees to make their workforce strong
(Ibisworld.com.au.2019).
PEST Analysis of supermarket retailing industry in Australia
PEST analysis (which means Political, Economic, Social and Technological) of a particular
industry provides an outline of the macro environmental analysis of the respective industry. The
PEST analysis of supermarket retailing industry of Australia is provided hereafter.
1. Political: The political conditions of Australia, which includes different economic and
financial policies take by the Australian government in order to shape and reshape the
Australian economy, has a great impact on the retailing and supermarket business of the
country. For instance, recently the Australian government has produced a scheme of
competitive policy where the policy prevents the giants of retailing business, Coles and
Coles in eliminating competition which has resulted in small retailing businesses
struggling inhumanely to gain recognition in the business arena.
2. Economic: There has been a subsequent decline in the economy of Australia, though
often unnoticed, due to international and regional causes. It has affected the performance

of the retail giants such as Coles significantly because of the gradual decline of the
prolific economic activities in the market of Australia. There has been fluctuations in
currency rates happening all over the country which has subsequently made the
Australian dollar docile and fragile in the regional as well as international markets which
has affected the international operations of companies such as Coles in a greater way.
3. Social: The Australian society and the people nowadays have developed a trend of
valuing the organizations that are highly socially motivated and socially responsible at
the same time. The Australian society has shown streaks of socialism in its attitude and
prefers the corporate organizations that are related to certain social initiatives thereupon.
Therefore, the retail giants of Australia, Coles and Woolworths, are suggested to work
harder on the Corporate Social Responsibility factors, make initiatives for communities
and societal development in order to make a mark on the minds of the functional as well
as prospective customers (Mialon et al. 2016).
4. Technological: As far as technological factors are considered, the supermarket retail
industries of Australia have subsequently exploited the technologies available in the
market in order to increase the efficiency of the supermarkets and its functions.
Technologies play an important role in determining the capabilities and competency of a
particular industry and the supermarket retail industries have subsequently shown
positive signs of harnessing technologies for the benefit of the organizations thereupon.
Market structure of the industry
The market structure of the supermarket retail industry of Australia is “Oligopoly”.
Oligopoly market structure is a kind of market structure which is characterized by few sellers
who might be selling homogenous or differentiated products where the few sellers dominate the

characteristics of the market and tend to have the control over the price of the product. Oligopoly
markets become difficult to penetrate as the trends set by the existing strong firms make it rigid
and inflexible.
Market segmentation
Segmentation
Demographic segmentation: The retail industry of Australia has emerged as one of the most
influential economy of the country. The Australian population prefers quality and convenience.
The people of Australia, especially the working population including the homemakers of
moderate to high income families often prefer to buy their groceries from reputed departmental
stores for its premium pricing abilities. Apart from that, the supermarket industry is also haunted
by the aged people as they feel comfortable to buy every grocery item at one destination due to
their restrictions in mobility. Women (working/ homemakers/ students) find shopping
therapeutic, so they prefer reputed departmental stores such as Coles and Coles (Richards et al.
2012).
Geographic segmentation: The supermarket industries are mainly placed in the cities and towns
of Australia. The population that lives in the cities and towns are highly cosmopolitan and
advanced. They have special interests in visiting the advanced and developed departmental stores
that provide dime- a- dozen grocery products that are typically consumed by the population that
resides in the cities rather than the rural population of Australia. The cities of Australia are well
connected; therefore, the population of the cities and towns are almost regular in the
departmental stores such as Coles and Coles ( Richards et al. 2012).

Psychographic segmentation: The people of Australia, especially the working population
including the homemakers of moderate to high income families often prefer to buy their
groceries from reputed departmental stores for its premium pricing abilities. Apart from that, the
supermarket industry is also haunted by the aged people as they feel comfortable to buy every
grocery item at one destination due to their restrictions in mobility. Women (working/
homemakers/ students) find shopping therapeutic, so they prefer reputed departmental stores
such as Coles and Coles. The children too prefer visiting the supermarkets as they have a
plethora of delicious food options that intrigue the tender and experimental minds of the younger
ones due to which they often insist their parents to take them to the supermarkets (Wu et al.
2015).
Distribution channels
The distribution channels of the food and other grocery products of Australia are mainly
the foodservice distributors. The foodservice distributors are the distribution channels which are
famous in Australia. Foodservice distributors are companies that provide food and non food
products in the places such as restaurants, supermarkets and cafeterias. It sometimes acts as a
mediator between the food producer and the food shops or distributors. The other distribution
channels which the supermarket industry of Australia avails are the direct channels, wholesale
channels and agent channels. The direct channels are often defined as the channels by which
producers directly sell the products to the customers. For example, in the section of cereals in the
supermarket, the cereals are directly bought by the companies from the farmers. The wholesale
channel on the other hand is described as the process by which goods are purchased and stored in
storerooms by the agents who further sell the food to the supermarkets. Such distribution
channels are common in Australian supermarkets. Lastly, the agent channels form as

intermediaries between the producers and the sellers in supply and distribution of the products
and goods (Cui and Mallucci 2016).
Competitors
The competitors who have emerged as the leaders in the arena of supermarket retail
industry are Coles, Woolworths, Metcash and Aldi.
Market Trends of supermarket retail industry
Supermarket industry of Australia is considered to be fiercely competitive and highly
concentrated according to the market reports of the industry. The discount operators playing in
the market, such as ALDI and Costco have been responsible to continue to influence the
shopping trends of the Australian population. It has been noticed that the large foreign
companies, such as the grocery departments of Amazon has also started establishing themselves
and setting new trends in the industry apart from the other companies existing, such as Coles and
Woolworths.
Coles
Overview of the company
Coles supermarkets is an established Australian supermarket or grocery store that has its
headquarters in Perth, Australia. The company was founded in the year 1924 and along with
Coles, Coles has emerged as one of the largest supermarket retail chains of Australia
contributing a handsome amount in the GDP (Gross Domestic Product) of Australia. Coles
specializes in the sales of goods such as fruits and vegetables, meat, canned food, seafood and
packaged food. However, Coles have also made new provisions of nutritious yet delicious food
for the children as well (Colescareers.com.au.2019)

Coles: Core competencies
With the usage of Core Competency Model developed by Hamel and Prahlad, the
strategic management and competitive advantage of the company Coles can be determined. The
core competency approach of Hamlet and Prahalad has four componenents, namely, resources,
capabilities, competitive advantage and strategies (Yang 2015).
Resources: the resources of Coles are both tangible as well as intangible. The most important
tangible resource is its human resources. The other resources are the revenue which the company
acquires. Technology is another resource of Coles (Colesgroup.com.au.2019).
Capabilities: Efficient customer experience and satisfaction procedures, delivering the customers
fresh products, providing special organic products for the population, attractive store designs of
the departmental stores, competitive pricing policy are some of the greatest capabilities of Coles
(Woolworths.com.au.2019).

Competitive advantage: The competitive advantage brought to Coles is mainly brought down by
the brand name of the company and the pricing policies, apart from the other factors such as
marketing and financial success that adds to the positive points of the company.
Strategies: The strategies of Coles are multifaceted yet aligned with the greater and the lesser
objectives of the company as well. The strategies of Coles included deeper long-term
relationships with the suppliers, provide an outstanding shopping experience for the customers
and having compassionate team members in the workplace (Colescareers.com.au.2019).
Key issues faced by the Industry and the company:
1. Less and weak communication with the target audiences which has resulted in a less
volume growth
2. Lack of proper and popular online shopping portals in most of the companies which are
into grocery industry of Australia.
3. There are physical limitations that the local sources often face due to geographical
division, composition and behavioral pattern of population.
Recommendations for the future strategies
1. The companies that are present in the grocery or supermarket retail industry of Australia,
with a special reference to Coles, are recommended to utilize the innovation adoption
model in which the companies might as well try to increase its opportunities in the
market as well as among the population of the country. The companies can spend a
relatively large amount of their revenue in the promotional expenses of their products so
that they are able to reach the optimum targeted customers (both functional and
prospective) (Wisdom et al. 2014).

2. The companies in the supermarket retail industry, especially Coles, are recommended to
reshape and restructure the model of information processing within their organizations to
motivate consumers that would enable them to buy the goods and commodities in more
volume (Young & Ghoshal, 2016). Guerilla marketing might be utilized as an innovative
marketing tool in order to encourage the consumers buy in bulk. Digital marketing
techniques might also be utilized by the companies and with the innovative ideas of
hashtag and digital strategies, the companies might as well win the hearts of the
consumers (Chaffey & Ellis-Chadwick, 2019).
Conclusion
The respective paper concludes to be an analysis of supermarket retailing by giving
special emphasis on Coles Group Limited, Australia. The paper is a report which talks in details
about the market which I have chosen, which is supermarket retailing and the external factors
affecting the industry thereupon. The analysis in the report has covered market structure,
segmentation, distribution channels, competitors and trends for the total market, which means
there would be a holistic analysis of the respective market provided. Apart from that, an internal
analysis of the company Coles that I have chosen has also been presented in order to identify its
core capabilities and competencies and any competitive advantage they might be possessing.

References
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Colesgroup.com.au.2019. Available at: https://www.colesgroup.com.au/about-us/?page=about-us
Cui, T. H., and Mallucci, P. (2016). Fairness ideals in distribution channels. Journal of
Marketing Research, 53(6), 969-987.
Ibisworld.com.au.2019. Available at: https://www.ibisworld.com.au/industry-trends/market-
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available information reveals the diverse and extensive corporate political activity of the
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Yang, C.C., 2015. The integrated model of core competence and core capability. Total Quality
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