Strategic Analysis: The Future of the Australian Supermarket Industry

This report provides an analysis of the Australian supermarket industry, focusing on its future prospects and challenges. It begins with an overview of the industry's current state, highlighting its significant revenue and employment contributions to the Australian economy. The report employs a PESTEL analysis to examine the macro-environmental factors influencing the industry, including political, economic, social, technological, environmental, and legal aspects. It also discusses the industry's life cycle, competitive rivalry using Porter's Five Forces, and the impact of digitization and changing consumer behavior. The analysis identifies key competitors, such as Coles, Woolworths, and Aldi, and explores strategies for maintaining competitiveness and adapting to evolving market conditions. The report concludes by emphasizing the importance of customer relationship management, corporate sustainability, and strategic adaptation for the future success of the Australian supermarket industry. Desklib provides this and many other solved assignments for students.

Running Head: FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
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1FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
Executive Summary
The purpose of this report is to analyse different elements of incompetency in supermarket
industry of Australia. The industry is now facing with a series of threats which regarding the
macro environment or external factors in Australia. Hence, it is pragmatic to make an assessment
regarding this problem. Moreover, the report suggested implementing a digital marketing
strategy for the supermarket industry of Australia which will be beneficial for future expansion.

2FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Macro Environmental analysis....................................................................................................4
Political....................................................................................................................................4
Economic.................................................................................................................................4
Social.......................................................................................................................................5
Technological..........................................................................................................................5
Environmental..........................................................................................................................5
Legal........................................................................................................................................5
Life cycle strategy....................................................................................................................6
5 forces analysis.......................................................................................................................7
Company analysis........................................................................................................................8
Competitor analysis.....................................................................................................................9
Strategy analysis........................................................................................................................10
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

3FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
Introduction
The supermarket industry in Australia is one the most volatile sector in the country. High
competitiveness and the dynamic environment in maintaining business make it more unstable for
the companies to sustain. Besides this, immense pressure of the customers and their shifting
behaviour also pose a great threat for the retail supermarket industry of Australia (Knox 2015).
In this regards, it cannot be overestimated by stating that the supermarket industry is considered
to be one of the profitable sector for Australian finance. An annual revenue turnover at the rate of
$102bn and a bulk of people of more than 3 lakh are employed in the retail industry provides a
great deal of opportunity for the industry to get flourished further (state of the industry 2017).
Therefore, the purpose of this report is to analyze the future possibilities of the retail supermarket
industry in Australia. In course of the discussion, uses of marketing models like five forces
model, life cycle strategy further render a clear depiction of the condition of Australian
supermarket industry.
Discussion
The discussion regarding the future scope of retail and supermarket industry of Australia,
has been supported by the understanding of external or macro environment of the industry and
put emphasis on the marketing strategies that should be implemented in order to eradicate any
kind of constraints.

4FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
Macro Environmental analysis
The macro environmental analysis, also known as PESTEL analysis, is a mechanism with
a number of external variables like political, economic, social, technological, environmental and
legal factors.
Political
Obesity and other health related risk factors are increasing in a rapid pace in Australia
which can lead towards death and disability in Australia. In response to combat this threat the
Australian Federal Government was going to take necessary steps by introducing a National food
plan in 2009 (Baker et al. 2017). In fact, a national food policy program was initiated by the
public health sector which compelled the supermarkets to maintain quality of foods. Legislations
and regulations related to the quality of food are very strict in Australia that the supermarket
giants also have no power to influence the decision of the government. Besides this, safety in
workplace, prevention of exploitation and employee benefits is also come under the supervision
of the government (legislation.gov.au 2018).
Economic
The recent status of the Australian economy proves that it can be beneficial for the
supermarket industry in a long run. In fact, the industry is expected to expand 2.2% in 2017-18
(Crothers 2017). Moreover, the supermarket and grocery sector occupies the Australian economy
with 62% shares (Singh-Peterson 2015). It can also be argued that Australia has one of the
highest GDP in the world with an amount of US$ 1.3 trillion in 2016 (Lewis 2017). Therefore,
with an influx of economic stability it is possible for the supermarket industries to retain their
business in Australia.

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Social
The social atmosphere is highly dubious in Australia in terms of the relationship between
the customers and the supermarket industry. In response to that it can be argued that the
customers’ behaviour and preference determine the success of Australian retail sector. The
leading supermarket companies like Woolworths and Coles have a long time competition in
order to sell products at a cheap price. The reason behind such strategies is influenced by the
customers strongly (Cascio 2018).
Technological
Introducing the online facilities is one of the key marketing strategies for the leading
supermarket companies in Australian retail sector. Supplemented by the consumer behaviour the
introduction of online purchasing facilities can help the retail and grocery market of Australia to
make a better future (Muzellec, Ronteau and Lambkin 2015).
Environmental
Due to the change in climate in the Australian regions the government puts pressure on
the food supply chain industry to maintain the quality of foods. This is related to the food
insecurity which is resulted by the impact of climatic change all over the Australian region. In
response to this, giant supermarket companies in Australia such as Coles and Woolworths
publish non-regulatory certification on food suppliers in order to protect their brand image
(Richards and Devin 2016).
Legal
In this regards, a series of regulations and legal restrictions the food supply chain industry
of Australia has to follow. The Australian government imposes regulations on quality of

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production as well as on private business activities. Zero tolerance in exploitation and safety in
workplace are the focal point of the government. Besides this, acts like competition and
consumer regulation, 2015 is also played a pivotal role in business activity across Australia
(Price 2016).
Life cycle strategy
Life cycle is referred as a model which is being used in the business progress of a
company or of an industry. The cycle represents the inception of the industry and its journey to
the present day and also reflects the future of the industry.
The food supply chain industry has begun its journey with the foundation of Coles
supermarket in 1914. It can be argued that before the establishment of Coles the retailing
industry in Australia was existed but not in a booming nature. Subsequently, Woolworths opened
its first outlet in 1924 and thus the never ending competition between the two rival companies
has been started. Amidst of this, the entry of Aldi in 2001 posed a serious threat to the very
monopoly of Coles and Woolworths. However, in 2007 Coles was outnumbered by Woolworths.
In response to this, Metcash also started to expand their market capitalisation since 2011 (Tamm
2015).
In this regards, the external environment is very much facilitated the nature of the retail
industry in Australia. During the early phase of Coles the pressure of rivalry was not very much.
However, in course of time with the expansion in food supply chain market, a strong
competitiveness encircled the sector. In addition to this, the stakeholders in terms of government

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regulations and sustainability perturb the very nature of the supermarket industry in Australia
(Carey et al. 2016).
5 forces analysis
Competitive rivalry- The supermarket industry of Australia is full of competition and
dominance. It can be viewed that the major competition is circled between Coles and
Woolworths. In this context, both of these two rival companies are often change their business
strategies in order to maximize customers. Despite of their intense enmity in recent times
companies like Aldi comes into prominence where Woolworths faces severe challenge from the
Aldi which is going to take its position (Richards and Devin 2016).
Bargaining power of the suppliers- Suppliers are considered to be a major stake holders
for the Australian supermarket industry. The food supply chain retailers are mostly depending on
their suppliers. As a result of that, there is a possible trend of dominance among the suppliers.
However, in reality, supermarket giants like Coles and Woolworths are capitalised 70 to 80% of
the Australian market. Therefore, the power of the suppliers becomes futile in compare to the
monopoly of Australian retail giants (Klindzic, Knezevic and Maric 2016).
Bargaining power of the customers- In Australia, due to their dominance over the
market supermarket giants like Woolworths and Coles are supposed to take advantages over
customers. Instead of this, the buyers have enjoyed more power. The reason behind this
transformation of power is that the Australian government formulates a number of strict
regulations for the food supply chain industry so that they are unable to treat customers as
granted. For an instance, the Competition and Consumer Act, 2010 is entitled to monitor

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activities regarding the supermarkets and will take adequate steps if the code of conduct has been
violated (Corones 2015).
Threat of new entrants- It can be argued that the supermarket industry is pretty much
secured for the big companies. In the context of Coles and Woolworths, all the associated
companies are subordinated to them. In addition to this, Coles has a good relationship with
global retail giants such as ASDA. Therefore, by analysing the recent status of the company it
can undoubtedly be advocated that Coles is ruling the Australian supermarket industry and free
from any tough competition (Tamm et al. 2015).
Threat of substitute products- The supermarket chains are accompanied with a number
of products, so that it is nearly impossible to replace it. Nevertheless, with the advent of
digitization and the technological advancement can help to introduce an alternative way of
shopping. In other words, using software and applications most of the companies are now tried to
expand their customer base virtually (Tamm et al. 2015).
Therefore, it can be forecasted that there is a possible opportunity for the supermarket
industry in Australia to retain their business activity in the upcoming future. In fact, the customer
attractions play a pivotal role in this regards where the company can manipulate the customer
needs and expand its market capitalisation.
Company analysis
Customers are considered to be of the major stakeholders regarding the supermarket
industry of Australia. In response to that, the strategic planning of the supermarket organisations
has put focus on building a good customer relationship. In fact, the companies are tried to create
better communication with the customers. Indeed, the government interference and regulations

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also put pressure on the companies to follow a good customer service facility. Besides, focusing
on the customer service management, it is also the role of the companies to keep the corporate
sustainability ratio high. Sustainability terms of providing healthy foods, preventing the growing
tendency of obesity among Australians by banning high fat and cholesterol ridden products as
well as take a matured step towards reshaping a better world can be highly beneficial marketing
strategy for the companies. Political stability and economic booming give the necessary support
for retaining the market orientation of Australian super market industry. Furthermore, the
keenness to preserve a good relationship with the customers is considered to be the core
competency of supermarket industry of Australia. In addition to this a more matured step
towards the environment will facilitate a better future for the industry.
Competitor analysis
A series of threats are posing threats to the steady development of the supermarket
industry of Australia. Firstly, the government interference in business activities affects the
business dynamic of the industry. It should not be practised in a regular basis; otherwise the
industry will not be able to grow up independently. Then the global economic crisis can added
up more problems regarding the market orientation of the Australian super market industry. In
addition to this, the high intensity of competitiveness makes the situation worse for food supply
chain industry across Australia. Besides this, there is always a rising bargaining power of the
customers which is seemed to be an obstacle for the developing supermarket industry. It is
always be good for a healthy business environment where the private companies and the
consumers share equal power to influence the industry. Therefore, it will be great for the
retailing industry in Australia to resolve these problems and make the nature of business
environment more beneficial for the associated companies.

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Strategy analysis
The business dynamic has been entered into the age of digitization. Digital mechanism is
now considered to be the most effective tool in relation to the strategic business orientation.
Therefore, it is imperative to step towards technology. In this context, creating a relationship
with technology is very simple and direct for the supermarket industry of Australia. The
supermarket giants should use digital marketing as an effective tool of customer maximization
(Tamm et al. 2015). In fact, it can be argued that utilizing digital apps and software can save
time for the customers as well. The consumers can choose their products in a matter of time by
sorting it out in phone. Hence, the significance of implementing digital mechanism in the course
of expanding the market capitalisation is seemed to be effective and rational for the supermarket
industry of Australia.
Conclusion
The report puts a great deal of emphasis on the macro environment of Australian
supermarket industry and at the same time analyses the role of competitiveness inside the sector.
In response to that the role of digitization can help to bring more relaxation in the work pressure
of the industry and make it more appreciable to the consumers. Therefore, it can be concluded
that despite having a number of threats the future of the supermarket industry is safe in Australia
and now it is going towards maximizing its market orientation.

11FUTURE OF THE AUSTRALIAN SUPER MARKET INDUSTRY
Reference
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content/uploads/AFGC-2017-State-of-the-Industry-Report.pdf [Accessed 21 Apr. 2018].
Baker, P., Gill, T., Friel, S., Carey, G. and Kay, A., 2017. Generating political priority for
regulatory interventions targeting obesity prevention: an Australian case study. Social Science &
Medicine, 177, pp.141-149.
Carey, R., Caraher, M., Lawrence, M. and Friel, S., 2016. Opportunities and challenges in
developing a whole-of-government national food and nutrition policy: lessons from Australia’s
National Food Plan. Public health nutrition, 19(1), pp.3-14.
Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
Corones, S., 2015. Regulating unilateral supermarket misconduct as customer/acquirer of goods
and services. Australian Business Law Review, 43(5), pp.400-419.
Crothers, L. 2017. Retail Food Sector Report 2017. Global Agricultural Information Network,
pp.1-22.
Klindzic, M., Knezevic, B. and Maric, I., 2016. Stakeholder analysis of social
supermarkets. Business Excellence, 10(1), p.151.
Knox, M., 2015. Supermarket monsters: The price of Coles and Woolworths' dominance (Vol.
6). Black Inc..
legislation.gov.au. 2018. Competition and Consumer (Industry Codes—Food and Grocery)
Regulation 2015. [online] Available at: