Strategic Management Report: Coles' Strategies in Australian Retail

This report provides a comprehensive strategic management analysis of Coles, an Australian retail giant. It begins with an executive summary, followed by background information on Coles, its history, and its market position. The report then evaluates the suitability of Coles' current strategies, focusi...Read More

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student
Name of the University
Author Note

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1.Executive Summary
The report is built on the study of an Australian retail company named Coles. The
organization has been operating in the industry under Wesfarmers Ltd. till the year 2018. The
marketing strategies that have been implemented by the organization in retail industry and the
development of proper marketing mix by implementing the strategies is a major part of the
analysis. The report has been able to offer a detailed analysis that is based on proper
implementation of different strategies of Coles. Recommendations have been provided in the
report based on the ways by which the revenues of the organization can be increased in the
Australian retail industry. The different issues that have been faced by Coles in the retail
industry have been analysed in order to provide the effective recommendations in order to
improve its position as compared to its arch rival Woolworths. The recommendations are
mainly related to improvement of relationships with the suppliers and the employees who are
a part of the Australian retail organization. On the other hand, the development of new
products under its own brands is a major recommendation which has been offered to the
organization.

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Table of Contents
2. Background information of the chosen company......................................................3
3. Identification and evaluation the suitability of the current strategy of the company.3
4. Evaluation of the implementation of the strategy......................................................5
5. Identification of key issues and provide recommendations.......................................8
6. Conclusion................................................................................................................10
References....................................................................................................................11

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2. Background information of the chosen company
Coles Supermarkets Australia Pty. Ltd. trades as Coles in the retail supermarket based
chain of Australia. The headquarter of Coles is located in Melbourne and the organization is
an important part of Coles Group. The organization was established in the year 1914 and it
currently operates more than 800 stores all over the country. The employee base of the
organization is based on more than 100,000 members. The organization along with its rival
Woolworths is able to acquire greater than 80% of the entire Australian retail market
(Coles.com.au., 2019).
Coles had been operating as a brand of Coles Myer Limited between the years 1986 to
2006. The organization was further acquired by Wesfarmers in the year 2007. Coles had
thereby developed its position as a subsidiary of the Coles Group after the spin-off of the
business operations of Wesfarmers in the year 2018. Coles has developed its position in the
Australian retail industry in comparison to its major competitor named Woolworths
(Coles.com.au., 2019).
The report will be based on the analysis of the strategies that have been implemented
by Coles in order to operate profitably in the Australian retail industry. The issues that have
been faced by the organization based on proper implementation of different strategies will be
analysed in the report in detail. The report will provide a detailed analysis of the methods that
are used by Coles in order to implement different strategies in the operations.
Recommendations will also be provided to the organization based on proper implementation
of different strategies in various organizational processes.
3. Identification and evaluation the suitability of the current strategy of the company
Coles Supermarkets had been owned by Wesfarmers Ltd. up to the year 2018. The
objectives based on the operations of Coles Supermarkets was mainly related to the
satisfaction levels of the customers and plans that are related to the growth of the
organization as well. The corporate objectives that have been developed by the organization
and effective marketing strategies are a major part of the operations of Coles (Aaby, Slater &
Belonax, 2015). Coles has started its operations in the retail industry of Australia based on
the goal of giving the people of Australia a shop that they are able to trust and the levels of
values, services and quality that are provided to them (Coles.com.au., 2019). The following
corporate objectives have been set by the organization,

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 Aiming of providing fresh food with the help of a better network of stores to
consumers.
 Aiming to deliver the services and products that are of high quality and are
based on low prices as well.
 Aiming to drive the team in order to establish a culture that is based on the
adaptability of work environment and high levels of decisiveness.
 Aiming towards the proper expansion of the stores and the network with the
help of proper strategic partnership with suppliers and development of the
long term based relationships with the help of key suppliers (Coles.com.au.,
2019).
The major focus of more than 700 supermarkets that are a part of the network of
Coles Group is based on the ways by which fresh food based products can be offered to the
customers and proper enhancement of supply chain based systems. The management of Coles
also aims at enhancing the relationships with the key suppliers. The new channels that are
related to reach of the customers can be explored in an effective manner with the help of
mobile applications (Aghazadeh, 2015).
Marketing based concept of Coles
As discussed by Bharadwaj (2015), Coles mainly focusses on the ways by which fresh
food can be sold to the customers with the help of its efficient supply chain. The needs of
customers are analysed and understood and further great services are offered to the customers
as well. The supply chain of the company has been improved on a continuous basis and the
distribution based centre of Coles has been improved. The stores are designed for the purpose
of utilizing the space and enhancing levels of productivity.
The major investments that have been made by Coles are based on implementation of
technologies in different organizational processes. The ease related to shopping of the
organization is considered to be a major factor that has been able to increase the levels of
trust over organizational operations. Coles has provided click and collect based services in
order to develop the quality and enabling the customers in order to place the online orders in
an effective manner. The sales of Coles have been increased recently with the help of
customer base of the organization that has increased in the last few years (Camilleri, 2018).
Core marketing strategy implemented by Coles

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According to Costoiu, Ioana, Semenescu and Marcu (2016), the marketing strategies
have been improved and reformed on a continuous basis by Coles for the purpose of
enhancing the experiences based on shopping that can be provided to the customers. The core
marketing based strategy is based on the stores, care, people, financial returns and products.
The relationship marketing strategy has been implemented by Coles in order to enhance the
customer experiences in the organization. This has played a key role in the ways by which the
organization is able to build a loyal base of customers. A six point based plan has been
developed by the organization in order to provide effective and quality services to customers.
 Delivering best quality experience to the customers.
 Providing better value.
 Offering stunning levels of quality and fresh food to consumers.
 Working in the smarter stores.
 Excellent levels of availability.
 Selling and further serving with the personality (Cross, Belich & Rudelius,
2015).
According to Husted, Allen and Kock (2015), customer experience is provided by
Coles by increasing the levels of on-shelf availability of different products and the
implementation of innovative methods for delighting customers. The marketing strategy that
is implemented by Coles is related to high levels of value offered to the consumers. Customer
value is increased by Coles with the help of ease of shopping of the consumers and the
delivery of services within the stipulated time.
Generic strategy applied by Coles
Coles has always aimed at implementing the cost leadership based strategy in order to
face the aggressive levels of competition that is provided by its arch rival Woolworths. The
trust in the market has been developed by Coles with the help of high quality services and
lower margins. The differentiated strategy that has been recently implemented by Coles can
increase the loyalty levels of customers in an effective manner (Kanten & Darma, 2017).
4. Evaluation of the implementation of the strategy
According to Killian and McManus (2015), the marketing strategy that has been
developed by Coles is implemented in an effective way with the proper development of a
marketing mix. The four Ps of the marketing mix of Coles is based on implementation of

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marketing strategies in different parts of the operations. The marketing mix of Coles can be
analysed in the following way,
Product – Coles has always aimed at offering fresh food, liquor, groceries,
general merchandise and the financial services as well. The most significant
segments of the business operations of Coles include, Coles online, Coles
supermarket, Coles Financial Services, Coles liquor. The organization is also
known in the market for its own brands that include, BonSucro sugar and
Graze Grass-Fed Beef. Coles Liquor also offers different liquor based brands
to the consumers in the retail market (Krush, Sohi & Saini, 2015). The
financial services are offered by Coles to greater than 1 million customers in
Australia. The fashionable and trendy apparel based products are offered by
Coles with the help of its Target Stores.
Price – Coles has developed its position as a cost based leader in the
Australian retail industry. The costs based on production and management of
supply chain are reduced by the organization in order to develop its position in
the industry based on low prices of the high quality products. The prices of
products of Coles have been lowered continuously over the last six years
(Lagat & Frankwick, 2017). Investments have also been made in the
development of proper store based network and an improved product range.
Coles express has introduced the concept of Every Day Value pricing in the
convenience stores. Different loyalty programmes, promotions and discounts
have been introduced and implemented by Coles in order to manage
aggressive levels of competition (Mathews, Bianchi, Perks, Healy &
Wickramasekera, 2016).
Place – Coles has developed more than 2300 outlets with the aim to reach out
to the millions of consumers. A network of stores that has been developed by
the organization is related to the objective related to the ways by which the net
space based growth of the supermarket can be increased. The open market
based style has been implemented by the organization in order to improve the
revenue levels of the company in Australian retail industry. The new Coles
express stores which were established are based on the improved range of the
convenience levels (McDONALD, 2016).

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Promotion – The marketing strategy of Coles and the advertising is mainly
related to the supermarket based offers and lower prices. The different taglines
that have been developed by Coles in the Australian retail industry include,
“Extra Value for You and Me”, “why pay more” and “Cheap Groceries”. The
taglines are a part of the promotional strategy of the organization based on
increasing the levels of loyalty of customers. Coles has been able to develop
different discount, promotion and loyalty schemes. The rewards and loyalty
based programs are helpful in increasing the number of consumers in the retail
industry (Moorman & Day, 2016).
Coles operates in the retail industry of Australia and is mainly known for the services
that are offered to the customers. The implementation three other Ps is important for the
experience that is offered to customers (Morgan, Feng & Whitler, 2018).
Physical evidence – The physical evidence has been developed by Coles with
the help of more than 2300 outlets. The management of the organization is
working towards the development of better and bigger services. The stores
have been refurbished in order to improve the experience of the customers.
Arrangement of products are also based on the efficiency and ease of
customers in order to select the desired products (Morgan, Whitler, Feng &
Chari, 2018).
People – Coles has been able to develop relationships with the employees and
suppliers in order to provide effective customer services. Freedom has been
provided by the company to the employees in order to increase the levels of
proactivity and value that is provided to the customers as well. Different
programmes are designed by Coles for the employees that include, The First
Steps Program and Retail Leaders Program (Nizam, Jaafar & Supaat, 2018).
Process – The processes that are a part of the supply chain of Coles are
improved in order to deliver higher levels of services to the customers. The
processes are streamlined in order to cut the costs that are based on services
offered to customers. The use of online platforms has been able to affect the
ways by which the organization is able to reach the customers faster (Saif,
2015).

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Coles Supermarkets has been able to implement the marketing based strategies in an
effective way in order to increase the levels of profitability and revenues that are gained in
the industry. The cost leadership based strategy has been implemented by Coles in order to
address the aggressive levels of competition in the Australian retail industry. The
organization has always aimed at developing the products in such a manner that can help in
facing the competition that is offered by its arch rival Woolworths (Sanaei & Sobhani, 2018).
SAF strategy model
Cost leadership strategy Relationship marketing
strategy
Suitability Yes Yes
Acceptability Yes Yes
Feasibility Yes Yes
5. Identification of key issues and provide recommendations
Coles has faced major issues based on the lack of profitability and revenues in the
year 2018 and had fallen far behind its major competitor Woolworths in the Australian retail
industry. The key performance based metrics of the organization that have been depicted in
the last few months is based on the survey of the suppliers. The survey that has been made
based on more than 40 FMCG based suppliers have showed that the major concerns are based
on performance levels of the organization in the industry. This is a major issue that has been
faced based on Processes which have been implemented by Coles in the retail industry (West,
Ford & Ibrahim, 2015).
Different categories that were a part of the surveys made by the organization are
based on culture of the company, store based culture and the position which has been
developed. The scores received by Coles were quite low as compared to that of Woolworths
in different categories. The performance of supermarket based division Coles was not quite
effective like that of Woolworths. The relationship that has been formed by Coles with the
suppliers have become quite weak in the last few years. The implementation of People based

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strategies have been affected in a negative manner by lack of proper relationships of the
management of Coles with the suppliers (Fan, Lau & Zhao, 2015).
The different surveys have been able to state that Coles requires a shift of strategy in
order to maintain the revenue levels that are gained in the Australian retail industry. The
Investment Bank UBS has started the profit related forecasts for the organization for the years
2018 and 2019. The survey that has been made based on more than 40 suppliers have
depicted that the performance levels of Coles have started deteriorating since the year 2009.
The feedbacks that have been provided by the suppliers have a major impact on the ways by
which the strategies of Coles have been implemented in different organizational processes
(Järvinen & Karjaluoto, 2015).
The morale of staff and their calibre have been found to be quite low as compared to
the operations of the organization earlier. The company has started becoming over dependent
on the price related promotions in order to increase the levels of revenues that are gained in
the highly competitive industry. The strategy of Coles has started becoming high reactionary
in nature and this has led to the lack of proper revenues of the company (Insideretail.com.au.,
2019). The lack of proper management of People has been an issue that is faced by Coles in
Australia.
Coles has started facing major challenges that are based on the ways by which data
analytics and digital strategies can be implemented by the organizations. The proper
implementation of digital analytics is considered to be an important factor that has a major
impact on the levels of satisfaction of the customers in Australian retail based industry
(Sanaei & Sobhani, 2018). The implementation of digital analytics is considered to be a
major lack of process development by Coles.
Recommendations based on facing the issues
Coles needs to be provided with effective recommendations that can help the
organization to improve the profitability levels and the relationships that have been developed
with the suppliers as well. The recommendations provided to Coles are as follows,
Implementation of training programs for the employees in order to improve
their morale and levels of commitment towards the company.
Coles can improve the relationship that has been developed with the suppliers
by developing the supply chain based activities. The management needs to

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increase the levels of interaction with the suppliers so that they are able to
understand their demands and needs.
The implementation of proper digital analytics is considered to be another step
that can be taken by Coles in order to analyse the customers and their needs in
a detailed manner.
The lack of sales in department based stores of Coles can be improved by
diversifying the portfolio of products that are offered under the own brands of
the company. The own brands will play a major part in the methods by which
the organization is able to develop a major differentiation in the Australian
retail industry.
The services that are offered by Coles in the different stores that are located all
over Australia need to be improved in order to increase the levels of
differentiation of the company.
6. Conclusion
The report can be settled by stating that Coles needs to shift the strategies in order to
increase the levels of revenues and profitability in the industry. The retail industry of
Australia is highly competitive in nature and development of new strategies are important for
maintaining the levels of profitability that have been gained by the organization. The increase
of product portfolio is considered to be a major factor that can affect the customer base and
revenue levels of the organization. The organization has been recommended to increase the
products that are offered under their own brands which is helpful in developing a
differentiation in the retail industry. The marketing strategies and marketing mix that have
been developed and implemented by the organization have helped the organization to face the
aggressive levels of competition that are faced in the industry. However, implementation of
changes in the strategy can play a major role in the ways by which Coles can maintain the
profitability levels.

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