Woolworths Market Analysis: Overview of Australia's Largest Retailer and Industry Insights

In this report we will discuss about woolworths market analysis and below are the summaries point:- This report analyzes the market of Woolworth Company in Australia, the largest retail firm in the country. It examines the retail industry in Australia, the market structure, demand and supply determinants, and demand elasticity for fruits. The report also looks into recent events affecting the industry, such as governmental involvement in the retail industry.

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WOOLWORTHS MARKET ANALYSIS
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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Overview of the Woolworth company......................................................................................3
3.0 An overview of the retail industry in Australia.........................................................................5
4.0 Market structure in the retail industry.......................................................................................6
5.0 Determinants of demand and supply within Woolworth Company..........................................8
5.1 Health related concerns within the country............................................................................8
5.2 Increasing level of education among the current population.................................................9
5.3 Climatic conditions................................................................................................................9
5.4 Price of fruits..........................................................................................................................9
6.0 Demand elasticity for fruits.....................................................................................................10
7.0 Recent events to affect the industry.........................................................................................11
7.1 Governmental Involvement into Retail Industry.................................................................11
7.2 Effects of the event..............................................................................................................11
8.0 References................................................................................................................................11
Executive summary

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This paper presents the market report of Woolworth Company in Australia and which is the
largest retail firm in the country. The paper starts by giving Woolworth’s overview of its
operations and the structure of the company before proceeding to widen the perspective of the
retail industry where this company operates. Thirdly, the paper scrutinizes the market structure
within which the company operates, the determinants of the demand and supply for one of its
main products: fruits, the demand elasticity for this product and then lastly, looks into some of
the current events which affect the industry.

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1.0 Introduction
Woolworths Limited is among the major companies in Australia which have extensive
retail interests not only within the country but also in the whole Asia-pacific region. In the food
retailing sector, Woolworth group limited is the largest in Australia, the largest retail firm both in
Australia and also in New Zealand and lastly, it’s the largest retailer of takeaway liquor, poker
machines, and hotel operations in Australia. The company has been ranked among the top
employers within the Pacific-Asia with approximately 200,000 employees working in its support
offices, distribution centers and stores across New Zealand and Australia (Parkinson, 2018,
p.203). The company has also kept its development phase by continually expanding across the
borders through buying and wholesaling offices in Asia and India. Through its limited policies,
education opportunities, recognition programs and initiatives of providing balanced and healthy
environments for its workers, it has encouraged the performance of its workers.
2.0 Overview of the Woolworth Company
Since its establishment in 1924, Woolworths has always given equal employment
opportunities when it comes to recruiting new employees, one of its diversity strategies which
have been certified and developed by its top management to treat all its employees with respect,
courtesy, and dignity as a way of encouraging a healthy working environment. In all its
operations, the company has always acknowledged the role of diversity to add significance and
molding diverse perspectives within the working environment and to reflect the people it serves.
Woolworths has also been on the front line in the campaigns on gender equality in the workplace
by dedicating a 55% share of the company workforce to the female gender which is mostly
overlooked in many institutions. This has been realized following the realization by the company

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top management that male and female offer distinct perspectives on business (Parkinson, 2018,
p.203).
The company has a firm dedication in building internal ability. It considers this approach
as the main driver of its capacity to perform, change and grow. The company has been retaining
more of its employees during the past few years and that has seen its turnover rates continue to
decrease within its main territories and states. For this company to retain its diverse employee
base, it has been offering financial as well as non-financial benefits to its employees who include
flexible work arrangements, paid maternity leaves, professional development opportunities and a
range wellness programs (Parkinson, 2018, p.203). The long term goal of this company is to be
recognized as a leader in the sustainable retailing sector and which has been realized by
integrating and incorporating sustainability and responsibility programs in its day to day business
activities.
The company has been supporting competition in the retail sector and which has helped
consumers to enjoy low prices for the goods supplied in this sector as well as forcing the retailers
to supply quality products and services (Parkinson, 2018, p.203). Through its support for a
competitive environment, food retail sector within the Pacific-Asia has become highly
competitive and with many retailers entering into the markets and growth being realized in many
independent and specialist retailers. Through such awareness, Woolworths limited has been able
to dominate the food retail business.
The continued growth and success of Woolworths limited have been highly attributed to
its concentration in building its in-house capacity. The company has been retaining its talented

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pool of employees through its numerous professional and personal benefits on employees which
include flexible work arrangements and wellbeing programs. This has been the main strategy
used by the Woolworth’s human resource department to provide its staff with development and
progression opportunities within the organization (Parkinson, 2018, p.203). Cross-cultural
experiences are highly valued in all the organization operations which are upheld by giving the
organization workers a great concern whenever new opportunities arise, giving them access to
specialized skills and knowledge base.
3.0 An overview of the retail industry in Australia
Woolworth limited operates under the retail industry of Australia, which is among the
most developed markets in the country with approximately 150 thousand companies in total
operating in the same area. The industry, however, has only a few major players which control it
hence giving it a characteristic feature of an oligopoly market structure (Taylor, 2018, p.35).
Woolworth Company is among the few big players operating within this retail sector. Because of
its oligopolistic features, the larger players within the industry like the Woolworth and Coles
usually realize better returns when compared to the other smaller organizations.
Generally, Woolworth has a market share of 31% in the entire retail sector of Australia
and hence considered a top player in the industry. It is also among the major contributors to the
economic growth of Australia. This is in consideration to the fact that it contributes $53 billion
which is equivalent to 4.1% of the country’s GDP. Woolworth is the biggest retailer both in
Australia and in New Zealand and also has strong roots in the UK. In Australia, the company has
almost 900 supermarkets while in New Zealand has nearly 160 supermarkets (Taylor, 2018,
p.35).

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Since its establishment in 1924, Woolworth Company has highly invested in its growth
strategies as well as innovative programs in order to increase its market share within the industry.
For instance, Woolworth Company was the first company in the world to come up with the
technology of printing customer receipts through cash registers. Also, through its series of
acquisitions, it has managed to grow very fast and entered the foreign markets after conquering
the Australian one. Currently, the company has gotten a strong competitor called Coles Ltd but
because of the intensive competition, it has continued to be very hard and almost impossible for
new firms to enter the market (Taylor, 2018, p.35).
Coles Ltd has entered into stiff competition with Woolworth Company with serious
intentions to elevate its sales growth annually. With such a close competition, the industry has
been seriously impacted in regard to the ability of the smaller firms entering the market (Taylor,
2018, p.35). In addition, the oligopolistic nature of this market has created some serious barriers
for the veteran players to increase market shares. The two companies have an immense amount
of resources which enables them to acquire high-quality staff.
4.0 Market structure in the retail industry
From the above scrutiny, it’s beyond any reasonable doubt that the Australian retail
sector operates as an oligopoly market structure. This is in consideration of the fact that firms
like Woolworth and Coles have a market share of approximately 60%. According to the current
statistics, the industry has total revenue of more than $90 billion out of which the two giants in
the industry have the greatest share (Jie and Gengatharen, 2018, p.65). Woolworth’s alone
having a share of $51.9 billion while Coles having $30 billion. From an economic point of view,

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such a high-profit margin is associated with the dominance of firms in an industry. When the two
firms are considered together, they have a market share of 108% making the sector to look like a
pure duopoly. This extreme dominance in the sector has bestowed a certain degree of power to
Woolworth and which has made it rule over the Australian food market.
Following the rise of Cole’s to join Woolworth’s in the 1960s; entry into Australia’s food
retail industry has become very hard for small firms like Shoey’s. After their frequent trials to
compete with the two giants: Woolworth’s and Coles, they eventually shut down after some few
years of operation because they were unable to match with the scale and operations of the two
giants, ever since the industry has not registered any new entry into the market because the
barriers have continued to diversify (Jie and Gengatharen, 2018, p.65). This is despite the fact
that globalization has revolutionized most sectors within the country and opened them in the
global economy.
Food retail market sector in Australia has been highly profitable and has been
experiencing a steady growth rate over the past few years. The grocery sector, for instance, has
registered a growth rate of almost70% between 2012 and 2018; which has been mainly attributed
to the exemplary performance of both Woolworth and Cole. Woolworth revenue has undergone a
constant increase from $ 54,200 in 2011 up to $85,000 currently (Jie and Gengatharen, 2018,
p.65). This sharp increase in Woolworth revenues has been achieved through the adoption of
projects such as ‘Refresh Project’ and ‘Everyday Low prices’ which saw the company penetrate
the market with ease. In addition to the penetration aspect, these two projects have led to an
effective and efficient supply chain management. The massive restructuring of the company
operations has also promoted its performance over the last few years.

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The Australian retail sector is thus operating in an oligopoly market structure. It also has
some few features which make it fit under a duopoly market structure. This is especially in
consideration to the fact that the market is mainly represented by the two giants, Woolworth and
Cole and the price competition between the two giants in products like dairy and meat (Jie and
Gengatharen, 2018, p.65). Also, despite the marketability to generate high economic returns in
this sector under a short duration, it has proved to behave the same way even on a long term
basis. Profit generation capability of this market is also evident in the financial performance of
the firms.

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5.0 Determinants of demand and supply within Woolworth Company
There are several factors are in play in Australia that works together to determine the
demand and supply of Woolworth’s main product which is fruits. Some of those factors include
but not limited to population increase and diversity, education attainment level and better
knowledge of diet and the current health-related concerns which are mainly fueled by the
availability of information through social media. In addition, more consumers currently pay
attention to the origin of the food they consume as proved by the trend such as urban gardening
(Fairbrother et al, 2018, p.36). Expansion in consumer choice has also played a major role in
increasing the demand for fruits, including new fruits, specialty varieties, and greenhouse-grown
fruits. In regard to the supply of fruits within the Australian market, some of the factors which
have affected the supply include climate, the price of fruits, the price of inputs and other
technological factors like storage devices. Below are the two main determinants of demand for
fruits followed by those of supply for the same products.
5.1 Health-related concerns within the country
With the emergence of different diseases which have been closely linked with the
consumption of products of high chemical components, most of the consumers who used to take
manufactured products like soda and juice have shifted to natural fruits and juicy fruits. This is in
consideration to the fact that most manufactured products have high contents of chemicals for
preservation purposes as well as flavor (Valadkhani, Nguyen and Smyth, 2018, p.365). Due to
such concerns, Woolworth has registered an increased demand for its products which are mainly
fruits in addition to other cereals.

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5.2 Increasing level of education among the current population
As more people continue to attain higher levels of education, knowledge on health
measures and body fitness have increasingly changed the lives of those people. For instance,
people are currently aware of the role of fruits in their bodies. This has seen most of the people
embrace balanced diet campaigns. Since fruits are among the major components of a balanced
diet, this has seen Woolworth Company realize an increased demand for its products and which
are mainly fruits (Valadkhani, Nguyen and Smyth, 2018, p.365).
In regard to the supply of fruits within the Australian market, some of the factors which
have affected the supply include: climate, the price of fruits, the price of inputs and other
technological factors like storage devices
5.3 Climatic conditions
Australia has been experiencing fluctuations in regard to its climatic conditions.
Obviously, fruits are crops which are highly sensitive to those climatic conditions when growing
and that makes most of the farmers realize low yields whenever the climatic changes have
negatively impacted the crops. Considering the fact that Woolworth directly gets its fruits from
the farmers, in such scenarios the company has been realizing reduced supply of these products
(Valadkhani, Nguyen and Smyth, 2018, p.365).

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5.4 Price of fruits
Prices of fruits keep on fluctuating within the market because of factors such as the
increased transport costs and the inputs. In scenarios where these factors tend to affect the
farmers in such a way that the profits are reduced, most of them tend to be reluctant in supplying
their products to different vendors with hoping that the prices may increase and get their normal
prices. In such times, Woolworth has been experiencing a shortage in supply of fruits from the
producers.
6.0 Demand elasticity for fruits
Fruits in the Australian market have elastic demand. This is in consideration of the fact
that they are not basic food but only considered when people are after achieving a balanced diet.
For that matter, when their price increases, people are less likely to buy them as they used to buy.
Instead, people tend to concentrate on buying the essential food items before they can consider
purchasing them (Valadkhani, Nguyen and Smyth, 2018, p.365).

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The main factor that affects the elasticity of demand for fruits is the nature of these two
commodities. This is in consideration of the fact that fruits are not essential food items in the
Australian market. For that matter, when their price increases, people definitely concentrate on
buying the essential food items before they can consider purchasing them. Postponement of the
consumption is another factor that has affected the elasticity of demand for fruits. This is in
consideration to the fact that demand for this commodity is not urgent and therefore its
consumption can be postponed when its prices hike
7.0 Recent events to affect the industry
7.1 Governmental Involvement into Retail Industry
The government of Australian has been influencing industries within the country through
the regulation of trading hours. Through its monitoring and regulating instruments which are
controlled by the Australian competition and consumer commission, the government has
embarked on maintaining a lawful and fair competition within the retail industry in order to
safeguard the rights of its consumers. it’s recent measures; it has introduced legislation within
the retail industry with an aim of reducing the barriers for entry for the newcomers in the
industry (Valadkhani, Nguyen and Smyth, 2018, p.365).
7.2 Effects of the event
Through this regulation and which was first implemented under the 2010 competition and
consumer act, the government has managed to improve the consumer laws and also established
favorable conditions for competition within the market. It has also improved the relationship
between suppliers, retailers and consumers within the retail industry through the elimination of

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unfair practices that existed before the amendment of the act. It is also through these regulations
that Woolworth was restricted from acquiring Kitney and White which could have converted the
industry into a monopoly market (Valadkhani, Nguyen and Smyth, 2018, p.365)
8.0 References
Jie, F. and Gengatharen, D., 2018. Australian food retail supply chain analysis. Business Process
Management Journal. Business Economics, 22, pp.65-75.
Fairbrother, P., Rafferty, M., Douglas, N. and Wang, L., 2018. Retiring Hurt? The Long-term
Costs of Structural Conflicts of Duty and Interest in the Superannuation Industry. country
Economics, 72, pp.36-37.
Parkinson, M.M., 2018. Case Study 4: Woolworths Group plc. In Corporate Governance in
Transition (pp. 203-221). Palgrave Macmillan, Cham.
Taylor, M., 2018. Wrestling with Giants-A Critical Account of Supermarket Power and
Competition Law in Australia and the United Kingdom. Market Economics, 42, pp.35.
Valadkhani, A., Nguyen, J. and Smyth, R., 2018. Consumer electricity and gas prices across
Australian capital cities: Structural breaks, effects of policy reforms and interstate
differences. Energy Economics, 47, pp.365-375.