Grocery Market Analysis: Customer, Competitor, and PESTEL Analysis

This report provides a comprehensive analysis of the Australian grocery market, focusing on customer analysis, competitor analysis, market analysis, and environmental factors. It examines the target customers, major competitors like Woolworths, and market trends. The report delves into the market size, growth potential, and the impact of environmental factors using Porter's Five Forces model. It also includes a PESTEL analysis, covering political, economic, social, technological, legal, and environmental factors affecting the sector. Additionally, it explores the cultural forces using Hofstede's framework and identifies the threats and opportunities within the grocery market, offering a complete overview of the industry's landscape and strategic considerations. The report concludes with references to support the analysis.

Running head: MARKETING AND STRATEGY
MARKETING AND STRATEGY
Name of the Student
Name of the University
Author Note

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CUSTOMER ANALYSIS
Customer analysis refers to the critical component of a business plan that attempts to
define the target market of a certain sector of the market. The grocery sector, in this case, caters
to all the population of the country. The problems that are created in the informative fields for
the consumers and the retailers depends on the nature of retailing of the grocery. The target
customers of the grocery market include citizens belonging to all the age groups. The various
sectors classified in the grocery sector majorly include food, liquor items. The grocery industry
in Australia has a wide range of buyers and sellers. The target consumers in the grocery market
of Australia include the total population of the country irrespective of their gender. The industry
may face a duopoly in the future due to the continued dominance of two of the major retail
chains that operate within the grocery market of Australia. The target customers of the retail
chain include those middle-income households that seek variety, convenience, services and
discounts (Roberts et al 2015).
COMPETITORS ANALYSIS
The Australian grocery sector is ruled by a number of companies that deal with packaged
groceries, fresh meat, vegetables and fruits, bakery products, dairy products, eggs and deli
products. The leading companies majorly fall under the category of the supermarkets and deals
with a variety of products other than the grocery items. Woolworths is a well-known store chain
that deals mainly in the grocery products (Woolworthsgroup.com.au, 2017). The company is also
known for its sales in the categories of home and lifestyle products. The company sells its
products over both the online stores as well as the stores of brick and mortar (Low 2016). The
retail magnet, Woolworths considers the households belonging to the upper middle class and the

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population of the country belonging to the working class to be their target customers. The
weaknesses of the grocery sector is that its competitors may encash is its relatively later entry in
the online retail market and the global presence of the company, which may be considered
negligible. The grocery sector has failed to sustain the competitive advantage it had over the
other sectors (Woolworthsgroup.com.au, 2017).
MARKET ANALYSIS
Market analysis refers to the qualitative and quantitative assessment of the concerned
market. Market analysis helps to look into the market size in terms of both value and volume.
According to reports, the grocery sector is considered to have a growth story that has been
growing stronger than the growth of the sector in the past (Mills 2013). There has been an
increase in the frequency of fresh supplies to the departmental grocery stores in order to increase
the existing customer base. The consumers of the sector are seen to be more interested in the
healthy food items such as the fresh vegetables, fruits and meat. The grocery sector functional in
Australia is undergoing a rapid growth. It is expected to grow at a rate of 35% per annum in the
next fiscal year (Swoboda, Elsner and Olejnik 2015).
ENVIRONMENTAL ANALYSIS
The Porter Five Forces model focusses on the ways how a company may build a
competitive advantage in the retailing industry of food and beverage that would be sustainable
(Röttcher 2013; Swoboda, Elsner and Olejnik 2015). The new entrants in the industry have a low
pricing strategy, reduction in the costs and by providing the customers with new value
propositions. The suppliers of the Food and Staples Industry use the negotiating powers to
extricate higher prices from the firms in the business (Sustainability.wesfarmers.com.au, 2017).

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The grocery sector faces a pressure on its profitability due to the tendencies of the buyers to pay
possibly the minimum price and avail the best services offered by the company. The companies
operating within the sector faces a large threat from the possible substitute services or products,
which can be tackled by catering to the services more than just the products. The overall long-
term profitability of the concerns face threats due to the competitive nature of the existing rivalry
among the companies that operate within the grocery sector.
PESTEL ANALYSIS
Political factors – In case of the grocery market, the political factors include
 Restriction in the trading hours
 Leases regarding the zoning, planning and the retail tenancy
 Various other regulations imposed by the Australian government
Economic factors – The economic factors affecting grocery sector are
 The low rate of growth of the industry
 The higher costs of wage as compared to the global market
 The increment in the valuation of the New Zealand and the Australian Dollars.
Social factors – The factors affecting global market are
 The gradual increase in the average life expectancy of the residents
 The increment in the number of female employees

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 The increase in the average educational qualification of the population of the
country.
Technological factors – The technological factors affecting grocery sector are
 The increment in the tendencies of online shopping using various electronic
devices like mobiles
 The usage of technology in the reduction of the costs of the business and the
prediction of the preferences of the concerned consumers
 Technological enabling of the value added services
Legal factors –The following legal factors affect grocery sector
 The policies of taxation and recruitment along with the regulations for employee
management.
 The requirements of the food licenses and the quality of the food items that are
supplied to the stores.
Environmental factors – The environmental factors that affect Australian grocery sector
are
 The practices that reduce the harm that may be caused to the environment.
 The sourcing of the food items using approaches that are ethically sound.
 Reduction in the wastage of the natural resources (Woolworthsgroup.com.au,
2017).

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Impacts of the cultural forces (Hofstede’s framework)
Hofstede’s cultural value theory affirms that the beliefs and values of an individual have
a direct influence on the decisions and judgements of the person. This in turn affects the
behaviour of the institutions, groups and individuals residing in the social setup. Hofstede
identifies the following to be the values pertaining to the national culture
 Power Distance
 Individualism versus Collectivism
 Masculinity versus Femininity
 Uncertainty Avoidance
The local retailers in the Australian and New Zealand market are found to be dominating
the retail market. The culture being highly masculine and individualistic, the success rates of
direct advertisements seem to be better.
Threats and Opportunities
The opportunities that grocery sector include:
 The expansion of the online segment of the retail company.
 The chances of diversification into newer sections.
 The reduced energy consumptions in order to bring about a reduction in carbon
footprint and costs.
The weaknesses of the grocery sector of Australia can be listed as follows:

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 The substantial competition in the retail departments.
 The non-performers who are present in the diversified portfolio in the industry.

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References
Low, V.I., sector Food, G.I.C.S. and Retailing, S., 2016. Home away from home.
Mills, K., 2013. Above the retail gloom, property blooms. Property Australia, 27(9), p.16.
Roberts, K., Roberts, J.H., Danaher, P.J. and Raghavan, R., 2015. Practice Prize Paper—
Incorporating Emotions into Evaluation and Choice Models: Application to Kmart
Australia. Marketing Science, 34(6), pp.815-824.
Röttcher, A., 2013. A framework for the implementation of dynamic capabilities in successfully
diversified conglomerates..
Sustainability.wesfarmers.com.au (2017). [online] Available at:
https://sustainability.wesfarmers.com.au/media/2224/2017-wesfarmers-sustainability-full-
report.pdf [Accessed 28 Oct. 2017].
Swoboda, B., Elsner, S. and Olejnik, E., 2015. How do past mode choices influence subsequent
entry? A study on the boundary conditions of preferred entry modes of retail firms. International
Business Review, 24(3), pp.506-517.
Woolworthsgroup.com.au (2017). Woolworths Supermarkets - Woolworths Group. [online]
Woolworthsgroup.com.au. Available at:
https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/Woolworths
[Accessed 28 Oct. 2017].
Woolworthsgroup.com.au. (2017). Woolworths Group: Quality Brands and Trusted Retailing.
[online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 17 Nov. 2017].