Identifying Challenges Faced by Woolworths and Business Impact

This case study examines the challenges faced by Woolworths and their subsequent impact on the business. It begins with background information on Woolworths, established in 1879, noting its decline in 1969 due to strategic failures against competitors. The study aims to identify the reasons for Woolworths' market failure, using research questions focused on these challenges. Objectives include identifying retail sector trends, analyzing the external environment via PESTLE and Porter’s Five Forces models, conducting primary data collection through surveys, and providing recommendations. The literature review covers retail industry trends such as online sales, technology adoption, same-day delivery, social media marketing, personalized experiences, and influencer marketing. PESTLE analysis highlights political, economic, social, technological, legal, and environmental factors affecting Woolworths. Porter’s Five Forces assesses the threat of new entrants and substitutes, bargaining power of customers and suppliers, and competitive rivalry. A SWOT analysis identifies Woolworths' strengths, weaknesses, opportunities, and threats. Recommendations are provided based on the analysis of both primary and secondary data.

TO IDENTIFY THE CHALLENGES FACED BY
WOOLWORTHS AND ITS IMPACT ON THEIR BUSINESS
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Contents
BACKGROUND INFORMATION................................................................................................3
REASON FOR CHOOSING THE TITLE......................................................................................3
RESEARCH QUESTIONS.............................................................................................................3
RESEARCH AIM AND OBJECTIVES.........................................................................................3
LITERATURE REVIEW................................................................................................................4
Trends in retail industry...............................................................................................................4
Pestle and Porter’s five forces model..........................................................................................5
SWOT Analysis...........................................................................................................................8
Primary data collection................................................................................................................8
Recommendations......................................................................................................................12
REFERENCE................................................................................................................................13
APPENDIX....................................................................................................................................14
Questionnaire.............................................................................................................................14
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BACKGROUND INFORMATION
Woolworths is a chosen organisation within this research. It is a chain of supermarket and
grocery store that was established in 1879 by Frank Winfield Woolworth. The results of the
Woolworths were the poorest in the year 1969, as it failed to chalk out suitable
strategies essential to take on its rivals in the marketplace (Case Study: Why Woolworths Failed
as a Business, 2021). Woolworth sales began to decreased that negatively impacts on their
business performance and growth. Consumers were not satisfied or happier with the service
quality of the company. This is a biggest reason of falling Woolworths in the market.
REASON FOR CHOOSING THE TITLE
The main reason behind choosing this title is to identify the reasons of failing the
Woolworths in marketplace. This research is important because it helps in providing accurate
information regarding the ways for improving business performance in marketplace. This
research is important for the failed organisation by providing accurate information regarding
developing business again in effective manner.
RESEARCH QUESTIONS
Research question
Q1. What the challenges faced by Woolworths and its impact on their business?
RESEARCH AIM AND OBJECTIVES
Research aim:
The main aim of this research is “To identify the challenges faced by Woolworths and its impact
on their business”
Research Objectives:
 To identify the trends in retail sector
 To analyse the external environment using PESTEL and Porter’s Five Forces model
 To carry out primary data collection
 To provide recommendations based on secondary and primary data collection
 Primary data collection would be based on small survey questionnaire
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LITERATURE REVIEW
Trends in retail industry
As per the viewpoint of Bodolica, Spraggon and Soueid (2019), the retail industry is one of
the fastest industry in the world which has changed the shopping experience of customers.
Through analysing the trends in retail industry, company can better predict what is the need and
requirement of customers in future. It is important for the retail industry to understand the trends
of consumers in order to make them satisfied with the products and services. One of the trends in
retail industry is selling products online. It is a trend which helps in improving the performance
and productivity of business. Online shopping becomes priority of consumers as they have less
time for buying the products by visiting stores and outlets. The retailers are changing their
business models in order to gain success in market and also finding new revenue stream.
Retailers are focusing on increasing their presence on e-commerce channels and social media
sites in order to enhance the sale and profitability of business (Verma, Malhotra, D. and Singh,
2020). The other trend which is followed by retailers is adopting new and advanced technology
that helps in improving the performance and productivity of business. Retailers are focusing on
adopting automated technology in order to handle the labor shortages. Through automated
technology, company can track the orders, communicate with customers and also manage the
customer loyalty programs. These technologies also help in filling the staffing gaps and also
streamline the efficiencies for task. The retailers are investing in automated software in order to
meet the changing needs of hiring landscape.
Nowadays, retailers are also focusing on delivering the product on same day in order to attract
maximum number of people towards the brand. The retailers are grabbing the opportunity to
fulfil the need and requirements of customers in order to create strong customer base and
improving the branding of business. The biggest digital trends in retail industry is social media, it
is a platform which helps in reaching to wider segment of people in order to boost the sale and
growth of business. Social media platform helps in generating more and more revenues. It
becomes important for the retailers to create strong presence on different social media platforms
in order to attract maximum number of people towards the brand. The retailers are also focusing
on creating smarter services with AI technology in order to enhance user experience and also
meeting their expectation. Another trend in retail industry is providing personalized experience
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to customers. Through this trend, retailers provide suggestion to consumers based on their
location, taste, order history and previous searches (Malenkov and et. al., 2021). The
personalized user experience also includes chat bots which helps in increasing the customer
interaction and engagement level. Thus, it becomes important for the retailers to attract and
engage the customers in effective and efficient manner in order to enhance the profitability and
growth of business (Von Briel, 2018). The other trend of retailers is influencer marketing, as it is
used to generate interest among audience to buy the products and services. Companies generally
conduct influencer marketing by posting selfies, constructed captions and heavily edited product
shots in order to attract customers. The retailer brands have started to form partnership with
influencers so that they can create and share content on Tiktok, Instagram Live, IGTV and
Instagram reels for building digital communities. The organisation is also focusing on the health
of people and employees due to which they are increasing the products of personal hygiene.
They are supporting healthy lifestyle for shoppers, consumers and employers by cleaning more
surfaces and increasing the hand washes.
Pestle and Porter’s five forces model
Pestle analysis
Political factor:
Political factors create a great impact on the growth and performance of business due to
involvement of government. The factors mainly include environmental law, trade restriction,
political stability, tax policy and tariffs. Woolworths is one of the biggest brands that also face
various political issues within country. As the brand operates in various countries due to which it
becomes difficult to follow the rules and regulations imposed by government related to
producing and selling goods and services (Eberenz and Schröer, 2019). For example, one of the
political issue which influence the business performance is ban of single use plastic in 2019 has
slowed down the operational activities of business as they have to focus on more sustainable
products which is time consuming and costly. The political relations can influence the trade
volumes and import and export of Woolworths actively.
Economical factor:
Economic factors create a direct and indirect impact on the performance and productivity
of business. It influences the business and operational activities of organisation due to which it
becomes challenging to achieve the goals and objective of business. The few economic factors
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which can influence the business activities are growth rates, interest rates, inflation rates, tax
rates, wages rates and employment rates. Increase in competition becomes one of the economic
issues for Woolworths. In order to remain competitive in market, the brand is focusing on
organising loyalty programs but they failed to capture the market. The competitor of
Woolworths, Aldi is focusing on managing their market share in order to improve the
profitability and growth of business. The economic situation such as stock losses, competition
threats and various other factors contributes in the stability of company.
Social factors:
Social factors generally include the factors related to culture and social related that
influence the purchasing power of consumers and their consumption behaviour related to the
products and services. The social factors generally influence the lifestyle of consumers. It
becomes important for the company to attract and retain customers (Pantano and Vannucci,
2019). Woolworths is focusing on capturing the changing trend and work in order to satisfy the
consumers by offering fresh vegetables and fruits which are regulated by its “Grower Fresh
Campaign”. The brand also focuses on retaining their customers by organizing reward points
system.
Technological factor:
Technological factors also influence the performance and productivity of business. It is
important for an organisation to adopt latest and advanced technology that helps in improving the
performance and growth of business. Woolworths is also focusing on adopting latest and
advanced technology in order to improve their pace and satisfaction level of customers. The
brand has started smart stores in order to make their stores safer with the use of robots and ipads.
They also provide subscription models and home delivery services from an in app house.
Legal factor:
The legal factors also create an impact on the profitability and growth of business. It is
important for the company to follow the legal laws and legislation which are imposed by the
government of country in which they are dealing, It helps in staying away from any legal
conflicts and issues.
Environmental factor:
The brand also focuses on reducing the negative impact from the environment in order to
build strong brand reputation and image in market (Ermolinskay and Klimuk, 2018). The brand
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has integrated critical CO2 system under good business journey program. They are also focusing
on implementing natural refrigerator units in order to reduce carbon footprints.
Porter’s five forces model
Threat of new entrant:
The threat of new entrant in this industry is high as there are various companies that want
to create their presence in retail industry. But in order to enter into industry a lot of time and
investment is required which becomes difficult for the new entrant to invest and compete with
established firms. In order to compete with the competitors, it is important for new entrant to
bring new and innovative way for selling and attracting the customers.
Threat of substitute product:
The threat of substitute product in retail industry is high as there are various competitors
in market that sells same product at different price. Woolworths generally fulfils the basic needs
of customer. Thus the substitute products come up with different value proposition due to which
customer prefer most efficient and economical product.
Bargaining power of customers:
The bargaining power of customers is moderate as they have less control over the price of
the products of Woolworths. It makes weaker force of customers when it comes to the operations
of company. The brand sells differentiated products from its competitors. Therefore, the
switching cost for the customers to move on the new products is high as the value proposition of
the company is different from other companies.
Bargaining power of suppliers:
Woolworths deals with various suppliers in order to improve the business performance
and productivity. The bargaining power of suppliers is a weak force which influences the
operations of company. The switching cost regarding the supplier is less for the brand as they
have strong connections with multiple suppliers (Okorie and et. al., 2018). Thus, changing the
supplier is not costly for the company due to strong relationship with many suppliers.
Competitive rivalry:
Woolworths have various numbers of competitors that influence the profitability and
efficiency of business. The few competitors of the brand are Walmart, Amazon, Tesco,
Carrefour, etc. The competitive rivalry in this industry is high due to which it becomes
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challenging for the brand to attract and retain loyal customers. Thus, it becomes important for the
companies to focus on advertising and marketing efforts.
SWOT Analysis
Strength:
The strength of Woolworths is its market leadership in Australian market. They have hold
the wide range of market share due to which there is less threat of competition. The brand has
also managed their perceptions related to the products and services which helps in attracting
more number of people towards the brand.
Weakness:
The weakness of Woolworths is its confused positioning as they targets multiple income
segments by suing same products. They also have partial behaviour to certain markets which
influences the behaviour of consumers towards the products of brand. They generally give
attention to higher income segments and offer them better quality of products.
Opportunities:
The opportunity which can be grabbed by Woolworths is to adopt latest technology that
helps in offering better experiences to customers. They must focus on offering self checkouts,
personalized loyalty schemes, personalized services and artificial intelligence based shopping
assistants.
Threat:
The threat which influences the performance and growth of Woolworths is high
competition. There are various competitors of Woolworths that can create an impact on the
profitability of business such as Amazon and Walmart. The other threat which can be faced by
company is health issues. It is important for an organisation to provide organic and chemical free
products to customers.
Primary data collection
Frequency Distribution Table
Q1) What are the current trends adopted within retail industry? Frequency
a) Automated technology 5
b) Personalized user experience 4
c) Increasing presence on e-commerce channels 4
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d) Creating smarter services with AI technology 7
Q2) Do you think current trends within retail industry helps in improving
the performance and growth of company?
Frequency
a) Yes 8
b) No 5
c) May be 7
Q3) As per your opinion, what are the benefits availed by Woolworths
by adopting current trends?
Frequency
a) Improving brand image and reputation 9
b) Increasing customer base 4
c) Increase in market share 5
d) Gaining competitive advantage 2
Data interpretation
Q1) What are the current trends adopted within retail industry? Frequency
a) Automated technology 5
b) Personalized user experience 4
c) Increasing presence on e-commerce channels 4
d) Creating smarter services with AI technology 7
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Interpretation:
From the above graph it is being analysed that out of 20 respondents 5 thinks that
automated technology is one of the current trends which is adapted by retail industry whereas 4
have different perception they thinks that personalized user experience is current trends which is
adopted by retail industry. The another 4 respondents have opinion that iincreasing presence on
e-commerce channels is trend which is adopted by industry and remaining thinks that Creating
smarter services with AI technology is trendy that helps in improving the profitability of
business.
Q2) Do you think current trends within retail industry helps in improving
the performance and growth of company?
Frequency
a) Yes 8
b) No 5
c) May be 7
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Interpretation:
It is being interpreted from the above graph that out of 20 participants 8 thinks that
current trend within retail industry helps in improving the performance and growth of company
whereas the remaining have different perspective.
Q3) As per your opinion, what are the benefits availed by Woolworths
by adopting current trends?
Frequency
a) Improving brand image and reputation 9
b) Increasing customer base 4
c) Increase in market share 5
d) Gaining Competitive advantage in market 2
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Interpretation:
The above chart depicts that 9 out of 20 participants thinks that improving brand image
and reputation is the benefits availed by Woolworths by adopting current trends and it is highest
opinion of respondents.
Recommendations
It is being recommended from the above information that organisation must focus on
offering products and services according to the taste and preference of customers in order to
attract and retain consumers. It is important for company to satisfy the need and requirement of
customers as it helps in improving the profitability and growth of business. Organisation must
focus on adopting strategies for attracting customers such as offering discounts and sales
benefits.
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