Strategic Management Analysis of Coles Supermarket in the Retail Industry

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT

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Contents
Executive Summary.................................................................................................................2
Market Size and Trends..........................................................................................................2
Corporate and Financial Performance..................................................................................3
SWOT and competitive advantage.........................................................................................4
Strategic Options....................................................................................................................13
Strategic Recommendations..................................................................................................14
Conclusion...............................................................................................................................15
References...............................................................................................................................16

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Executive Summary
This research intends towards strategic analysis of Coles supermarket in the retail
industry emphasizing on major developments and variation in the retail sector, causes of
these significant changes, situations analysis, resource and capabilities, SWOT and
competitive advantage and the future face of the organisation. In Australia, the retail industry
nearly adds 4.5% to the GDP and last year the retail sales were also grown by 3.7%
(mordorintelligence.com, 2018). The retail market of Australia is dominated by various big
players such as Coles, Woolworths, Aldi, Costco and Walmart. However, for explicit
understanding, Coles supermarket is selected as the company in the retail sector.
Cole’s supermarket was incorporated in 1914 and currently the company is having its
operations in nearly 807 locations. In terms of human resource, around 115, 000 employees
are working in the organisation with achieving its strategic goal from a long period of time.
In the year 2018, the revenue of the company was around A$ 39 billion (wesfarmers.com.au,
2018). In Australia grocery sector, Coles stands out as second largest player with its various
strength and capabilities and its market strategy of offering fresh quality food at lowest
possible prices. In relation with company long term commitment, the company is seeking to
help Australia grow while working towards a sustainable feature and developing enduring
collaboration with farmers in Australia and therefore, supporting domestic employment in the
food sector. As per their annual report, Coles is working with over 5,000 suppliers with
offering customers quality products through nearly 2,500 retail outlets in the country.
Market Size and Trends
Coles undertakes its operations in oligopoly market structure as in the Australian
retail sector, Woolworths and Cole’s together rule over the majority of the market segments
(Davey & Richards, 2013). Similarly, there are some organisations that attain authority of
setting their price due to price differentiation when some superstores are focusing in other
goods for the community. Due to these two supermarkets tight position in the market, various
barriers have been formed marking their position. Considering key market trends, the future
of Australia retail industry rely on disruptive forces in relation with change in consumer

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preference as well as advancement of technology. The Australia retail industry also needs
multiplicity and agility of delivery platforms which can recognise non-responsive retailers.
As per the report of IBIS World, grocery and superstores sectors is one of the most
fiercely competitive Australian industry and there are massive changes in the industry when
looking last 5 years including rapid growth and development of Aldi and Costco causing both
i.e. Coles and Woolworths to reduce their profit margin (Sutton-Brady, Kamvounias &
Taylor, 2015).
In terms of competitors, Coles with 27.6% market share, targets Upper Middle and
working class population. On the other hand, Aldi Stores is having 11.4% market share and
targeting only households. The highest market share is of Woolworths with having 34% share
and therefore ahead of Coles, Aldi and IGA supermarkets (roymorgan.com, 2019). In next
forthcoming years, this competition is also expected to rise in relation with the number of
competitors that joints the hand together and the major tool of various players will be the
price element together with product selection and location of store.
Corporate and Financial Performance
Expected growth of 3.2% in Cole’s industry profits in the next upcoming years. Total
sales revenue of Coles was noted at $16.2 billion with 87.8% customer satisfaction ratio
(roymorgan.com, 2019). The Down Down advertising campaign of Coles is also noted as one
of the significant contributors to business growth. The company revenue growth is also
boosted with the company competitive strategy of cheap private label goods and opening of
new stores. Despite Aldi rapid growth in the Australian retail industry, Coles has still
managed to gain slightly in comparison of the last five years and in consideration with
demerger from Wesfarmers.
Attractiveness for Coles Supermarket
Considering some previous years, the Coles Superstore appeal in the sector has been
practically great as of the extremely high entry barriers and with supplier’s low bargaining
power. However, it may differ because of the changes that can occur in the future.The
attractiveness of Coles supermarket will ultimately reduce with rise in bargaining power of