Strategic Planning for Australian Supermarket Industry

This assignment discusses the strategic planning for the Australian Supermarket Industry. It covers macro environmental factors, Porter’s five forces competitive factors, industry lifecycle model and influence of industry competitiveness. The industry is on the maturity stage with Woolworths and Coles as major players.

Strategic Planning
The Australian Supermarket Industry

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Contents
Introduction......................................................................................................................................3
Background of the case study..........................................................................................................3
Macro environmental factors...........................................................................................................3
Porter’s five forces competitive factors...........................................................................................5
Industry lifecycle model and influence of industry competitiveness..............................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
There are number of strategies developed within the business which are made on the certain
beliefs about the future. Future cannot be predicted by anyone and it demonstrates that the
company need to focus on various strategies to face potential challenges. Strategic planning
starts from the theory of planning and hence, it is important to get better knowledge about the
specific terms for planning which are featured for all kinds of plans (Bryson, 2018). There are a
plenty of management functions entailing the capability of an organization to look in the
potential in order to make ready oneself for an action helping the attainment of the aims set
forward is planning. The main purpose of this assignment is to highlight the strategic planning by
taking consideration of case study for which Australian Supermarket case study will be
considered. The macro environmental forces help company to take strategic actions for the
purpose of the development of the company. Competitive strategy will be considered under this
assignment by taking consideration of the Australian supermarket case study on which porter’s
five forces will be applied.
Background of the case study
The Australian supermarket industry can be considered as the business retailing groceries and
food lines, is categorized as a mature industry. There are number of organizations in this industry
that employ cost-reduction initiatives. There are major two names highlighted in the supermarket
industry that is Woolworths and Coles. It has been found from the case study that the Australian
supermarket industry attained average annual growth of 3.7% between 2007 and 2012. The
description has been given in this assignment by taking consideration of two well known
supermarkets i.e. Woolworths and Coles. There is a price war between them which become the

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loss leaders. Loss leaders are developed to amplify store foot traffic. Macro environmental
influences have been referred under the case study that depicts amendments in age and
population demographics affect not only fix decisions for the institution of new supermarkets,
but also influence the extend of products delivered between supermarkets. Moreover,
inhabitants’ growth will focus on constructions of new supermarkets so that the services of
groceries can be expanded in Australia (Gantt, Butler, Orr & Murray, 2014).
Macro environmental factors
Political
It has been found that the political conditions influence the supermarket industry in Australia and
also the performance of the organizations that deals under this industry. For instance, the
competition policy has been introduced by the Federal government in Australia which protects
major independent players like Woolworths and Coles in reducing the competition. The
developing market supremacy of these well known supermarkets has outcome into small retailers
rebellious to give their best to the industry.
Economical
The avoidance of the economic market condition of the Australia can be the major cause for the
supermarket to develop revenues. It has been found that there has been refuse in the activity of
the economic in the markets of Australia s well as New Zealand. Along with that there are
another factors that impact the performance of the supermarket industry that is fluctuations in the
current exchange rates which be the cause of weakening of Australia dollar that pit negative
effect on the operations of the supermarket industry (Wu, et. al., 2015).

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Social
The role of the social factor is also huge in affecting the supermarket industry in Australia in the
term that the company run their operations in order to attain the higher level of societal as well as
community improvement. It has been found from the case study that the societal values of people
of Australia are changing due to adaption of latest technology (Richards, Lawrence, Loong and
Burch, 2012). There are majority of people in Australia that go for organic food which increase
the competition for the supermarkets.
Technological
Technology is the factor that can impact over all process of any kind of industry as it helps
industry to grow in an efficient manner. It has been found that due to implication of the
technology, Woolworth is able to open its tore in different two places and handle them efficiently
from headquarter. Due to advanced technologies, Aldi as well as Coles supermarkets have
released Iphone applications through which customer can easily attract number if customers to
shop what they want without going anywhere (Maksimovic and Phillips, 2008).
Legal
The legal conditions is Australia is strict and the legal factor in the form of carbon tax as
executed across Australia has become the major reason that the affect the supermarket industry
and Woolworths in specific. The operations of the companies that work under this industry can
get influenced due to regulation by Australian Competition and Consumer Commission.
Moreover, the requirement to run the operation without biasness has also influenced the
performance of the supermarket industry that is why it is integral for the companies to focus on

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the fair policy within the business to not be bias with anyone (Balland, De Vaan and Boschma,
2012).
Environmental
The environmental factor is vital for the business to analyze the condition of the company that
affect the performance of the Woolworths and Coles. An analyzed suggests that the companies
that operates under this industry and majorly Woolworths in specific influenced by the
environmental factors in the sense that the company is posing adverse threats on the presentation
of the conditions of the environment (Balland, De Vaan and Boschma, 2012).
Porter’s five forces competitive factors
The Porter five forces analytical tool helps in analyzing the existing situation of the whole
industry and techniques in which number of aspects influence the performance conditions. The
analysis of Supermarket Industry will be mentioning below with taking consideration of porter’s
five forces.
 Bargaining Power of Buyers:
The bargaining power of buyers is higher in the context of the supermarket industry of Australia
as there are wide ranges of supermarkets as well as retail stores available that are able to satisfy
the needs of the customer by providing good qualities to them (Johnston and Bate, 2013). The
customer gets an extent level of variety in foods by which they can select what they want at
affordable rates. The power of buyers can be fulfilled as either intrinsic power entertained by
supermarkets over suppliers.

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 Bargaining Power of Suppliers:
It has been found that the Australian supermarket industry refers that it is hugely focused and
there are number of big players that have attentive and focused on the majority of the market
share. This kind of tendency amplifies the bargaining power of suppliers to a convenience level
and as such, it can be considered that the bargaining power of suppliers is moderate. It has been
found that the supermarkets are major channel of distribution in the market. The issues of
supermarkets in Australia are “their dominance” which put adverse impact on the suppliers and
amplify unease regarding the dominance of supermarkets over international as well as local
suppliers (Muasa, 2014).
 Threats of new entrants:
The threat of new entrants in the context of the Australian super market is lower because it is not
possible for every small business to grow like Coles and Woolworths in the market of Australia.
They would require high investment and risk bear capability while investing in the market of
supermarket in Australia (Dwivedi, Merrilees, Miller and Herington, 2012). The involvement of
the new entrants in the existing market is hard which demonstrates the lower threat of new
entrants
 Rivalry among Existing Firms:
The threat of competition as assessed within the supermarket industry of the Australia that
indicates the significantly higher due to the fact that there are certain major competitors like
Woolworths, Wesfarmers, Coles Supermarket, Aldi etc that are having competition against each
other for huge market share. There is around more than 3500 competitors available in the

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supermarket industry in Australia with combined benefits of $3.3 billion on $83.7 billion
contract income in 2011–12 monetary years. The Australian supermarket industry has major
focused on Woolworth and Coles, the industry’s two overwhelming competitors, cumulative a
mutual 71% advertise share.
 Threat of Substitute:
The values of daily consumable products are important to fulfill the daily needs of people.
People are living for them and there is no alternative available which represents the lower level
for threat of substitutes (Werner, Rabinowitz, Klinger, Korczyn and Josman, 2009). Consumers
are bound to consume those products as they do not have another choice to switch. Comfort
stores, like 7-Eleven, are a substitute to general stores from a comfort viewpoint, but they
proceed to offer as it were a inhibited extend of supplied things compared to Woolworth’s, Coles
and Aldi general stores. From a competitive point of view, general stores endeavor to ‘grow a
bigger share of the comfort platform by presenting private names, introducing self-checkouts and
re situating conventional soothe store in order to more in-store places (Retail World, 2018).
Industry lifecycle model and influence of industry competitiveness
Lifecycle models are considered as not phenomenon of the life science. The experience of
industries is a same kind of cycle of life. Industry life cycle has 4 stages that are introduction,
growth, maturity and decline. In the stage of the introduction of the lifecycle, an industry is in its
infancy it can be possible that in the introduction stage the company can be all alone in the entire
industry. Tiny Entrepreneur Company or a proven company can be taken use of research and
development funds along with the expertise in order to improve something new (Burch, Dixon
and Lawrence, 2013). Introduction is the stage where the company wants to enter in the new

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market with new product or service for the purpose of a attracting a number of people towards
services are good quality products.
Growth is a second stage of the industry life cycle which requires a noteworthy amount of capital
(Jacquemin, Pontalier and Sablayrolles, 2012). The aim of the marketing strategy at this stage is
entirely different from the introduction aspect as there are various competitors that are ready to
compete in the market to attain the competitive advantages. Maturity is the stage of the industry
life cycle which can be known as the term of extension(Smith, 2013). In this stage the rate of the
product has slowed from the growth stage. In this stage the involvement of many competitors are
started to compete with existing competitors. Hence, they should remain focused and must stress
the unique features of the product of the organisation to constant offering the differentiate
products of the organisation from industry competitor. At last there is a stage of decline which
represents many adverse situations that can lead the company into negative term.
The stage of supermarket industry of Australia is on maturity stage because there are number of
competitors available in the market of Australia that are ready to enter in the existing market
(Jacquemin, Pontalier and Sablayrolles, 2012). They attract customers to provide number of
things at affordable prices which can be the reason of decline of other competitors. Amazon is
the current competitor of supermarkets as it entered in Australia which imposes threat of
Amazon Fresh making online sales amplifying major in the supermarket industry. It has been
anticipated that in next five years 12.4% will be increased in online grocery sales industry. To
remain in the competitive market, the efforts of Woolworths and Coles are continually getting
better their online sales channels by increasing their click-and-collect alternative and endowing
in consumer-data analytics. Along with that Coles has recently started a 12 month trial with

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Airtasker in Sydney that permits customers to get they desire in the grocery products through the
Airtasker app.
Influence of Industry Competitiveness
In the context of Australian supermarket, it has been found that the supermarket and grocery
store of Australia is considered as the fiercely competitive. The instant growth of aldi has
surprised the industry, due to its private label products that has famous all over supermarkets of
Australia (Pash, 2018). By taking consideration of the industry life cycle, it has been found that
the Australian Supermarket is on the maturity stage because there are so many competitors
available that have the tendency to attain more competitive advantages in the competitive
market. The Australian supermarket and grocery stores have major player that are Woolworths,
Aldi, Metcash and Coles. According to the report of IBIS World’s Supermarket and Grocery
Stores industry, it has been analyzed that the expected growth rate of the industry is around 2.2%
in 2017-18, hugely because of the rising demand for high level of food products, like organic
fruit and vegetables. This kind of activity leads on from a 0.6 per cent decline in real terms in
2016-17(Retail World, 2018).
Figure: Market Share of different competitors
Source: (Retail World, 2018).

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It has been analyzed that the company of Woolworths has started to focus on the food division of
Australia; cutting rates to effective compete with Coles and ALDI, with declining of average
prices of Woolworth’s by 2.1% in 2016-17 (Retail World, 2018). Because of this trend the
company of Woolworths has started to invest in the customer services for the purpose of
upgrading the services so that the customer can get attention from the company. As an outcome
of the supermarket business of Woolworths, the company will attain the market share to remain
in the competitive market for the long period. In the context of Coles supermarket, it has been
found that the performance of this company is weakest in many years due to a core pressure from
the expansion of Woolworths and ALDI. This pressure of Coles Company has continued in the
year of 2017-18.
ALDI is another major competitor in supermarket industry as it entails new technology in its
system in order to upgrade the entire system in an efficient manner. The store of ALDI has now
more than 500 stores across Australia that be the major cause of competition among
supermarkets in Australia. It shows that the competitive environment has got influenced due to
involvement of many competitors in the supermarket industry in Australia (Kulmia, 2014). It has
apparent that the industry lifecycle stage has significant impact over the performance of the
companies and put impact over competition as well by which the companies get more aware and
started to do something new to remain in the competitive market.
Conclusion
In the Limelight of above discussion, it can be concluded that a role of a strategic planning is
required in the development of any kind of industry as it covers the proper planning about the
improvement of the products to get attention of the customers towards products and services.

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This assignment has been based on the Australian supermarket in which the competitive
Framework has been developed with taking consideration of porter's five forces. Macro
environmental forces have been considered under this assignment to get better understanding
about the external threats of Australia. At last the industry analysis has been done in which the
stage of the Australian Supermarket are discussed.

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References
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the industry life cycle: The case of the global video game industry, 1987–2007. Journal of
Economic Geography, 13(5), pp.741-765.
Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to
strengthening and sustaining organizational achievement. John Wiley & Sons.
Burch, D., Dixon, J. and Lawrence, G., 2013. Introduction to symposium on the changing role of
supermarkets in global supply chains: from seedling to supermarket: agri-food supply chains in
transition. Agriculture and Human Values, 30(2), pp.215-224.
Dwivedi, A., Merrilees, B., Miller, D. and Herington, C., 2012. Brand, value and relationship
equities and loyalty-intentions in the Australian supermarket industry. Journal of Retailing and
Consumer Services, 19(5), pp.526-536.
Gantt, R, Butler, B. Orr, S. and Murray, P. 2014. Contemprory Startegic management: An
Australian perspective, 2nd edn, John Wiley Australia Ltd, Milton.
Jacquemin, L., Pontalier, P.Y. and Sablayrolles, C., 2012. Life cycle assessment (LCA) applied
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Johnston, R.E. and Bate, J.D., 2013. The power of strategy innovation: a new way of linking
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Kulmia, A.M., 2014. A Study on Competitiveness in the Supermarket Industry in Kenya Using
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Muasa, S.M., 2014. Cost leadership strategy and sustainable competitive advantage of Naivas
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