Business Research Project: Aldi, Coles, Woolworths Comparison

This business research report investigates the competitive landscape of the Australian supermarket industry, focusing on Aldi, Coles, and Woolworths. The research begins by outlining the market shares of each supermarket chain, highlighting Woolworths' dominance and Aldi's growing presence. The report then explores the factors influencing customer preferences, such as price, product range, and perceived quality. It examines the impact of Aldi's low-price strategy on its competitors and discusses the advantages and disadvantages of each supermarket chain based on existing research. The study aims to identify which aspects of Aldi, Coles, and Woolworths create the most value for shoppers, ultimately determining their supermarket preferences. The report also includes the research question that guides the study.

Running head: BUSINESS RESEARCH
Business Research on 'Aldi vs Coles vs Woolworths: which is better for customers?'
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1BUSINESS RESEARCH
Research problem
The Australian supermarket and grocery industry is dominated by 3 companies, Coles,
Woolworths and Aldi (Roy Morgan 2019). Woolworths Supermarkets chain is owned by the
Woolworths Group, established in 1924. It sells all types of consumer goods and fresh groceries
through more than 1000 stores across the country. Coles is the biggest rival of Woolworths,
established in 1914 and operates through more than 800 stores all over the country under the
Coles Group. Aldi, the German supermarket and grocery store chain is a comparatively new
player in the Australian market, established in 2001. Within this short span of time, Aldi has
been successful in capturing the 3rd position in the supermarkets and grocery industry of
Australia with more than 500 stores across Australia. The growing popularity of Aldi has been a
concern for the other two players and thus, this research proposal aims to make an exploratory
study to find out which of these 3 supermarkets is better for the customers.
As per the market research report by Roy Morgan, Woolworths Group has captured the
largest market share with 34% in 2018, which is an increase from 32.6% in 2017. Coles Group
holds the second position with 27.6% in 2018, which is a 1.6% fall from 29.2% in 2017. Aldi
holds a very less market share but still is in the 3rd position with 11.4% in 2018, which is a 0.5%
increase from 10.9% in 2017 (Roy Morgan 2019). Thus, from this report it is found that
Woolworths has been successful in gaining the preference from the customers especially in the
fresh food category, that is, fresh meat, deli, bread and fruit and vegetables, which helped it to
get the top position in the market.
Lane (2019) highlighted that low price of Aldi is one of the major reasons for its
popularity, which is putting its competitors under pressure. Providing quality products at a lower

2BUSINESS RESEARCH
price is the USP for Aldi and this strategy is forcing other competitors to drop their prices also,
which is good news for the shoppers.
On the other hand, Trevena et al. (2014) highlighted that although Aldi offers lower
price, the products are found to be not as fresh as supplied by its competitors. Studies have
shown that the processed products of Aldi from private brands contain high amount of
preservatives which is not good for health and tagged as the least healthy products.
Osegowitsch and McCabe (2018) pointed out that Aldi will not be able to displace the
market giants, Woolworths and Coles, in the long term due to its dependency on very limited
range of preselected products, mostly from private brands. While a Coles or Woolworths outlet
contains 20000 – 30000 store keeping units, an Aldi outlet has only 1500 units, which is however
advantageous for Aldi, but is not attractive for many customers, as it is not one stop shopping.
Hence, they prefer to shop from Coles or Woolworths.
It has also been found that Aldi has a very high proportion of, almost 50% of the shelf,
discretionary food items which are not an essential part of an individual’s diet and hence wastes
useful store spaces. However, in a competitive market, Aldi’s lower price strategy has been quite
successful, although in respect of nutritional value and wide product range, the other two
companies are preferred by the shoppers.
Research question
1) What are the aspects of Coles, Woolworths and Aldi that create more value for the
shoppers and thus help them create a preference for the supermarkets?

3BUSINESS RESEARCH
References
Lane, I., 2019. Supermarket shoppers love Aldi’s low prices, and that’s a big worry for Coles
and Woolworths. [online] The New Daily. Available at:
https://thenewdaily.com.au/money/consumer/2019/08/08/aldi-coles-woolworths-competition/
[Accessed 11 Aug. 2019].
Osegowitsch, T. and McCabe, A., 2018. Aldi supermarket strategy is unlikely to challenge
Woolworths and Coles. [online] ABC News. Available at: https://www.abc.net.au/news/2018-
08-02/aldi-supermarket-coles-woolworths/10065018 [Accessed 11 Aug. 2019].
Roy Morgan, 2019. Woolworths and Aldi grow grocery market share in 2018. [online] Roy
Morgan. Available at: http://www.roymorgan.com/findings/7936-australian-grocery-market-
december-2018-201904050426 [Accessed 11 Aug. 2019].
Trevena, H., Dunford, E., Neal, B. and Webster, J., 2014. The Australian Food and Health
Dialogue–the implications of the sodium recommendation for pasta sauces. Public health
nutrition, 17(7), pp.1647-1653.