Grocery and Supermarket Industry in Australia

This report discusses the Grocery and Supermarket Industry in Australia. It covers the major companies, history, domestic market, and external frameworks such as Porter's Five Forces. The report is useful for students studying marketing or business courses.

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In this report, the discussion is made on the topic industry with the motive to understand the
concept of business. In this report, Grocery and supermarket industry has been taken into
consideration to analyze the external factors and understand the concept of industry. The grocery
and supermarket sector is selected in the Australian market.
Industry Sector
Grocery and Supermarket industry is common in every nation as it is a major industry in terms of
the necessity for the consumers. The grocery sector is a retail market that primarily sells food.
The grocery stores always provide non-perishable foods that are packaged in boxes, bottles, and
cans. Mainly the supermarkets provide the products with a wide variety of products such as it
includes non-food products, household items, and clothing. Some of the supermarkets include
pharmacy, electronics, redemption, customer service, and others.
Domestic Market
The supermarket and grocery stores industry is a competitive industry of Australia as it
contributes a major part in the economy. It has been evaluated that the grocery industry earns
revenue of $103bn with the annual growth of 2.1%. The major company of the industry earns
65% of revenue in the current year due to which the industry grow in the Australia Market
(Ibisworld, 2018).

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(Source: Ibisworld, 2018)
Organizations
The major companies of Australia in the grocery and supermarket industry are Aldi,
Woolworths, and Coles Supermarket. The rapid growth of Aldi over the past five years has
highly contributed to the industry. These companies operate in the grocery and supermarket
industry. Aldi is the popular company in this industry just because if it’s rapid growth but as per
the competitor's report, Woolworths and Coles Supermarket are highly competitive in terms of
revenue (Woolworths group, 2018). In the year 2018, Woolworths earned 1724 in millions and
Coles Supermarket earned 1197 which is expected to increases due to which the industry grow in
the market that is why; these companies are considered as the main companies of the grocery
industry in Australia (Wesfarmers, 2018).
History of Industry
The Grocery and Supermarket stores in Australia are high determined. The growth of the
industry rises while Aldi expands the business in the market of Australia in the year 2001. The
company provides private label products with highly popular and spurring improvement in the
products (Aldi, 2019). The companies such as Costco and Aldi established the projects to affect
the shopping trends in the market of Australia. There are also another companies try to enter the

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market such as Germany-based Schwarz, Amazon’s grocery division, AmazonFresh, Lidl, and
Kaufland, and Group’s supermarket brands but those faces the challenges just because of high
competition in the market. After Aldi, the companies enter the market with the high brand image
that also highly contributes to the industry such as Woolworths, and Coles (Mudditt, 2018).
Rationale
As discussed above, it has been observed that the Grocery and Supermarket is the highly
competitive industry of Australia that is why; it is selected to get a higher level of knowledge
about this industry. As it is highly popular in Australia due to which Australia is selected as the
domestic market.
External frameworks
Porter’s five forces
Porter’s Five Forces Framework is a strategic tool which is used by the organization to evaluate
the industry. It helps to analyze the attractiveness of the industry in terms of profitability. It is
specially used for analyzing the competition of a business (Kabue, and Kilika, 2016). It contains
five frameworks that define the industry in different areas and these are discussed below:
The threat of new entrants
It has been found that the threat of new entrants is moderate just because of its low capital
requirement. It is observed that exiting companies have a high brand image in the market such as
Aldi, Woolworths, Cole’s supermarket and the others. The companies can face the challenges to
beat the existing companies as those have high market share in the market with the high
experience of the market.

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Bargaining Power of Buyers
It has been seen that the industry of grocery has the high bargaining power of buyers as the
consumers have many options to buy the products. Many companies provide similar services to
consumers due to which the companies provide low prices or different offers to attract the
customers towards their organization (NPR, 2017).
Bargaining Power of Suppliers
It has been evaluated that the negotiation power of suppliers is low as there is a huge number of
small and big companies who provides the raw material to companies to manufacture the
product. As there are many suppliers due to which the companies have to pay fewer fees to
switch with another company.
The threat of competitors
It has been seen that the threat of competitors is high in the industry as various companies
provide similar services to consumers and also provide the different offers so that the more or
more customers attracted towards the company. The main companies of the industry are Cole’s,
Aldi, and Woolworths, supermarket that compete with each other’s in terms of sales and revenue
(News, 2018).
The threat of substitute
It has been seen that the threat of substitute is low as the services provide by the grocery industry
is necessity of the people and due to which it is difficult for the public to replace these services
with another product that is why; the threat of substitute is high. However, the consumers can
buy with the product with the different companies in terms of competition.

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References
Aldi (2019) Aldi History. [online] Available From: https://corporate.aldi.us/en/aldi-history/
[Accessed 8/08/19].
Ibisworld. (2018) Supermarkets and Grocery Stores - Australia Market Research Report.
[online] Available From: https://www.ibisworld.com.au/industry-trends/market-research-
reports/retail-trade/food-retailing/supermarkets-grocery-stores.html [Accessed 8/08/19].
Kabue, L.W. and Kilika, J.M. (2016) Firm resources, core competencies and sustainable
competitive advantage: An integrative theoretical framework. Journal of management and
strategy, 7(1), pp.98-108.
Mudditt, J. (2018) Spotlight on Australia’s supermarkets and grocery industry. [online]
Available From: https://retailworldmagazine.com.au/spotlight-australias-supermarkets-grocery-
industry/ [Accessed 8/08/19].
News. (2018) Why Woolworths is beating Coles and Aldi in Australia’s ongoing supermarket
war. [online] Available From:https://www.woolworthsgroup.com.au/page/investors/our-
performance/reports/Reports [Accessed 8/08/19].
NPR. (2017) Discount Grocers Aldi And Lidl Give U.S. Stores A Run For Their Money. [online]
Available From: https://www.npr.org/sections/thesalt/2017/09/27/552384150/discount-grocers-
aldi-and-lidl-give-u-s-stores-a-run-for-their-money [Accessed 8/08/19].

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Wesfarmers. (2018) Wesfarmers Annual Report2018. [online] Available From:
https://www.wesfarmers.com.au/docs/default-source/reports/wes18-044-2018-annual-report.pdf?
sfvrsn=4 [Accessed 8/08/19].
Woolworths group. (2018) 2018Annual Report. [online] Available From:
https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf [Accessed
8/08/19].