MGT604 Strategic Management: Strategic Analysis of Coles Retail

This report discusses the major strategic influences currently impacting Coles in the retail business, focusing on e-commerce, experiential shopping, and globalization. It identifies shortcomings in Coles' current strategies for addressing these trends, such as limited experiential offerings and slow online delivery. The report recommends growth strategies, including expanding into developing economies, implementing an Omni Channel distribution strategy, and personalizing customer service. It also suggests Coles offer a more holistic service experience, similar to IKEA, by incorporating restaurants and play areas into their stores to enhance customer engagement and increase sales. The report concludes that adopting these strategies will help Coles maintain long-term business viability and competitive advantage.

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Strategic management
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Executive summary
The aim of this report is to discussed about the major strategic influences in the current retail
business scenario to be faced by Coles. In doing so, the three major trends are identified, which
are emergence of the e-commerce practices, expectations of the experiential shopping and
globalization of the business. On the basis of these trends, it is also identified that the existing
practices of Coles are not effective enough in dealing with these trends. Thus, this report
discussed a few recommended strategies that will help Coles in gaining long term business
viability in their business operation.

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Table of Contents
Introduction......................................................................................................................................3
Identification of the strategic influences..........................................................................................3
Categorization of the identified influences......................................................................................4
Identifications of the strategic influences........................................................................................5
Recommended strategic goal of action............................................................................................6
Conclusion.......................................................................................................................................8
Recommendations............................................................................................................................8

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Introduction
The current retail scenario is much more challenging that it was a few decade ago. With
the changes and evolution of the retail industry, it is becoming more challenging for the retail
brands to cope up with these changes and fulfilling the expectations of the customers. In this
case, it is important for the retailers to identify the major trends in the retail industry and
designing their strategies accordingly, which will ensure the long term viability of the business
(Zakaria et al., 2014). In the Australian retail market, Coles is the market leader with having their
countrywide presence. However, they are facing the threat of intense competition in the market
and rapidly changing of the market trends and customer preference pattern. Thus, they should
have effective mechanism of determining the key trends in the retail market and getting their
strategies placed accordingly.
The aim of this report is to discuss about the key majors trends relevant in the retail
market that will have influence on the business operation of Coles. The three major influences
will be analyzed in this report. In addition, the categorization and implications of the identified
influences will also be discussed and based on these impacts; a few recommendations will be
discussed.
Identification of the strategic influences
 One of the major trends in the initiation of global business operations. Most of large retail
brands are entering in different foreign market operations to cater to larger target
segments and to fend off the competition threat in their home market (Low, 2019).
 Emergence of experiential retailing and personalized retail experiences. Customers in the
current time are not only expecting the exact products in the stores but all the holistic

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experience along with personalized fulfillment of their requirements (retaildive.com,
2019).
 Emergence of the e-commerce in the retail industry changed the existing offline based
retail practices. Customers are expecting more conveniences from their retail processes
with more value for money services from the retailers (Butler, 2019).
Categorization of the identified influences
It is identified that in terms of the major trends for them in the market, Coles have
categorized majority on the basis of the marketing factors. It is identified that Coles is currently
not having any foreign market operations apart from their business in Australia. This is in the
line of market penetration and product development strategic intent Coles by which they are
aiming in maintaining their market leadership status in the home country. In addition, another
trend of the emergence of experiential and personalization experiences is also categorized as the
marketing factor by Coles (Asdemir, Fernando & Tripathy, (2013). In terms of this trend, Coles
witnessed the evolution of the physical evidence of their stores with time. This includes
introduction of mobile apps, home delivery services and loyalty activities. All these practices are
helping Coles in engaging with the customers and offering the experiences just more than
shopping. Lastly, in dealing with the trends of growth of e-commerce, Coles have introduced
their own online shopping portals, which are enabling the customers in purchasing the products
available in the physical stores of Coles from their conveniences and getting it delivered at their
doorsteps.
Thus, it can be concluded that there are number of practices of strategy being initiated by
Coles in dealing with the major strategic influences in the market. However, the existing

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activities and strategies of Coles are not effective enough in meeting the emerging trends and
thus a few implications will be faced by them (Carrillo, Vakharia & Wang, 2014). The following
sections will discuss about the major implications that will be faced by Coles for the identified
strategic influences.
Identifications of the strategic influences
One of the major implications of the strategic influences will be reduction in the customer
satisfaction and retention for Coles. This is due to the reason that if the customers cannot be
provided with the experiences at par to the desired level, then it will create dissatisfaction among
them. As discussed in the earlier section, providence of the experiential shopping experiences by
Coles is limited to initiation of different activities such as mobile apps and loyalty activities.
However, the customers in the current time are expecting more than just added services. For
example, IKEA is having their own restaurants for their customers. Thus, the customers coming
for shopping at IKEA will also be able to have refreshment at the restaurants. This type of
holistic engagement and experience is expected by the customers (Tanenbaum et al., 2013).
Thus, the lack of these services will reduce the satisfaction level of the customers and this will
also affect the retention rate for Coles.
On the other hand, it should also be noted that Coles are not offering personalized
services as of now, which is expected by the customers. However, in this case, the business level
limitations are creating barriers for Coles in offering personalization services to the customers.
This is mainly due to the reason that Coles is reselling the manufactured items, which are having
fewer opportunities for personalization (Modrak, Marton & Bednar, 2015). On the other hand,
IKEA is known for personalized services to the customers due to the reason that they are

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manufacturing their own products based on the customer trend and preferences. Thus, the major
implication of the lack of experiential shopping in Coles will affect their existing customer base
along with the retention of them.
Another implication from the above identified trends for Coles will be the reduction of
the existing market share. This is due to the reason that with the emergence of the trend of
foreign market operations; more global brands will enter in the Australian retail industry and will
increase the competition for Coles. If though Coles is having market leadership as well as higher
level of market penetration in the Australian region but with the entry of new foreign players,
customers will have options to choose from. Hence, it will become difficult for Coles to maintain
their existing market share and customer base (Shulyn & Yazdanifard, 2015). The brand identity
of Coles will also get faded due to the increase in the number of competition in the market.
Emergence of the trends of e-commerce will also have implications for Coles in terms of the
customer targeting. As discussed in the above section, Coles is already having their online
marketplace. However, it should be noted that customers in the current time expects faster
delivery of the ordered products at their doorsteps. This expectation of the customers is getting
further amplified by the faster delivery services of the leading e-commerce players such as
guaranteed two days delivery of Amazon. In this case, lack of the adequate and effective online
services by Coles will cause dissatisfaction among the customers. If the customers can have
more efficient services with other retailers, then it is highly likely that they will switch from
Coles. Thus, it can be concluded that the identified strategic influences will majorly have adverse
implications for Coles in terms of their business operations.
Recommended strategic goal of action

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It is recommended that Coles should initiate growth strategies in extending their business
beyond the national boundary of Australia. Initiation of the growth strategy will help Coles in
increasing their presence in the foreign countries. The more will be the global presence of Coles
in different countries, the more will be their target customer bases and more potentiality of sales
volume and revenue (Altenburg et al., 2016). In this case, it is also recommended that Coles
should target the developing economies such as China, India and Brazil for their foreign business
operation. This is due to the reason that these countries are still having large untapped markets
and witnessing the highest economic growth in the recent time compared to the developed
economies. It is reported that e-commerce sales of the countries such as India, Saudi Arabia and
Indonesia will breach the US$ 3.5 trillion mark within the next few years. Thus, Coles is having
huge opportunities in entering in these countries. Initiation of the foreign market operation will
also ensure that Coles is gaining global brand identity and exposure.
It is also recommended that Omni Channel distribution strategy is important for Coles in
terms of their business viability. They have already having online as well as offline presence but
their online marketplace is not well penetrated in the market as their offline presence. Thus, it is
recommended that with the help of the Omni Channel distribution strategy, Coles will be able to
enhance the efficiency of their online distribution as well. This will ensure their effectiveness in
competing with the online retailers. In this case, the personalization strategy can also be initiated
due to the reason that offering the service approach according to the individual preferences of the
customers will enhance their satisfaction. For example, the customers should have the control
over the amount to order, types, variants and the types of packaging for their orders. As
discussed in the earlier section, Coles are not having the advantage of personalizing the products
and thus they should focus on their service approach in personalizing for the customers.

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Lastly, it is also recommended that Coles should focus on offering holistic service
experience to the customers like what IKEA is currently doing. For example, small restaurants
and play areas for the children in the stores will ensure better customer engagement for them.
This is due to the reason that presence of the play areas and restaurants will enable the customers
in spending quality time in the stores rather than just buying stuffs. The quality and leisurely
time they will spend in the stores, the more will be the chances for them to get exposed to
different product categories. Thus, the average buying trend of the customers will get increased
with this.
Conclusion
Thus, it can be concluded that Coles are having limitations in terms of their different
business activities. In this report, it is identified that they not fully capable in dealing with the
current major trends in the global retail business. There are number of adverse implications to be
faced by Coles due to the lack of proper management of the identified strategic influences. Based
on these limitations, the existing practices of Coles are discussed along with the gap areas. In
addition, different strategic practices are also discussed that will help Coles in gaining the long
term viability in their business. These recommended strategies include foreign market entry,
Omni Channel distribution strategy and offering experiential shopping approach to the
customers.
Recommendations
 Initiation of the market growth strategy will involve more investments for the business
and this Coles should have the access to financial resources for foreign business
development. In this case, it should be noted that Wesfarmers are the parent entity of

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Coles and it will be beneficial in accessing to the required fund for entering in the foreign
market.
 In terms of the entry strategy, it is recommended that Coles should follow joint venture
choice of entry mode. This is due to the reason that in different developing countries such
as India, foreign investments in the retail sector is restricted at 49 percent. Thus, Coles
should have local partners in entering in this sector. In addition, they will also gain the
local market insights with the help of the local partner and can offer the products
accordingly. The involved risks will also be low for them in regards to the investment in
the foreign countries.
 Increase in the premises area of their existing stores is also important for Coles for adding
more customer experience areas. For instance, they will require larger areas for adding
the restaurants and play areas. The existing stores of Coles should increase in terms of
areas for proper accommodation of all the facilities without making the customers having
clumsy experience.
 Lastly, the logistic infrastructure of Coles should be enhanced to have the maximum
efficiency in from their online business. Enhancement of the logistics will ensure that
Coles are delivering the products in minimal time along with the effective process of
reverse logistics.

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