Competition Analysis: Woolworths and Coles Growth Strategies Report

This report provides a market analysis of the competitive landscape between Woolworths and Coles, two major players in the Australian supermarket and grocery store industry. The analysis investigates the state of competition, growth strategies, and pricing strategies employed by both companies. The methodology includes primary and secondary data collection to assess market share, competitive dynamics, and the impact of new entrants like Aldi. The report examines the literature review, growth strategies such as organic and horizontal growth, and the pricing strategies, including competitive and everyday low pricing, used by Woolworths and Coles. The findings highlight the aggressive competition, the need for strategic expansion, and the importance of understanding customer loyalty in this dynamic market. The report concludes with insights into the challenges and opportunities for both companies in the face of evolving market conditions, emphasizing the importance of core competencies, differentiation, and strategic pricing to maintain and grow market share. This analysis helps in understanding the competitive rivalry in the industry and the factors influencing the success of these supermarket giants.

Economics and finance
11/29/2018

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Abstract
In the present era, the competition among the companies is increasing in the industry of the
supermarket and grocery stores. The company that has been selected for the analysis and are
rivals include Woolworths and Coles. The report includes the investigation related to the state of
competition, the growth strategies of the company and the pricing strategies with the help of the
primary and secondary data. The findings of the report say that the competition in the industry is
aggressive that have brought certain developments. Further, the operations of both the companies
are growing but still, there is the scope of expansion of the business. The Woolworths and Coles
need to apply the growth strategies which include organic growth strategy and horizontal growth
strategy. In the end, the pricing strategy of both the rivals has been found that they follow in this
competitive industry so that they can deal with it. The purpose of the report is to understand the
strategies of the rivals in the same industry.

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Contents
Introduction......................................................................................................................................3
Objective......................................................................................................................................3
About companies.........................................................................................................................3
Methodology................................................................................................................................3
Literature review..............................................................................................................................4
Growth strategies.............................................................................................................................7
Pricing strategies..............................................................................................................................9
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
The aim of the report is to conduct an analysis related to the market or industry analysis of the
rival businesses in an industry. The industry that has been selected for the analysis is Australian
supermarket and grocery stores. The company on which the analysis is based include
Woolworths and Coles rivals deals in the industry of supermarket and grocery stores.
Objective
The motive is to conduct a market or industry of the rival businesses present in the Supermarket
and grocery stores industry.
About companies
Woolworth’s supermarket is an Australian supermarket and grocery stores chain that came into
existence in the year 1924. Similar to this, Cole’s supermarket is an Australian supermarket with
the head office in Melbourne. The beginning of the company was done by the GJ Coles in the
year 1914 by opening the first Coles store in Smith ST, Collingwood, Victoria (Coles, 2018).
This has been found that Coles and Woolworths together form a near-duopoly of the Australian
supermarkets that is approx. 80% of the Australian market. In the present market, both
companies are rival in the same industry in Australia. Both the company is able to manage the
numerous stores in Sydney city at the prime location due to which the competition among the
companies is increasing.
Methodology
The research report includes the gathering of fact and figures in the set procedure with the
intention of obtaining the research in a methodological manner. The researcher makes use of

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different methods to collect the facts and figures which can be named as the primary and
secondary data.
Primary data: - Primary data is gathered by a researcher with the help of the real-life
observation, by visiting the sites of the Australian company’s deals in the same industry (Mackey
& Gass, 2015).
Secondary data: - Secondary data is pooled with the help of the data that is available on the
published sources which include news articles, books, journals, reports and investigations related
to the industry.
The report covers the overview related to the state of competition present in the industry and the
market share of the companies in Australia. The analysis has been conducted with the support of
the literature review which includes the views of different authors. Further, the research helps in
analysing the growth strategies that are used by both the companies in Australia. Moreover, it
also includes the future growth strategies that the companies should follow to give tough
competition and to achieve success in the market. Further, there is the discussion related the
pricing and non-pricing strategies implemented by the two business and the ways through which
the pricing can help them in boosting their sales and capturing the market share for their stores in
Sydney. In the end, the report concludes the major discussion, analysis, information that has been
found by the researcher while collecting the information.
Literature review
According to the author, the market structure is defined as the organisational and other
characteristics of the market where the companies are performing their business operations. The

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market structure explains the state of competition among the different companies who are
operating in the same industry. Thus, this helps in the analysis of the state of competition for
companies like Woolworths and Coles which is very aggressive at present in Sydney. This shows
that in the industry there is the presence of Pure Competition.
Agreeing to IBIS World (2018), the supermarket and grocery stores industry is considered one of
the most fiercely competitive industries in Australia. Coles and Woolworths are one of the
biggest competitors who compete in the industry and also makes numerous strategies that help
them in dealing with each other. Australia industry is expanding as there is the presence of the
new entrance like Foodworks. Though, in front of the existing giant's new entrance struggles in
the price-intense industry.
Disagreeing to this, the author has been witnessed that the rapid expansion of the Aldi in the
market of Australia in the past five years has created a significant impact on the Woolworths and
Coles. Aldi entered the market with the popularity of the low-cost private label products
underpinning the strong growth. The researcher believes that this was possible because of the
effective strategy of the Aldi that affected the industry and made the industry aggressive. The
rise in the outlets of Aldi Company has forced the two giant companies, Woolworths and Coles
to reduce their prices in the market and to expand the private-label product ranges in the
response. The rise in the entrance in the industry has brought a decline in the profitability of the
industry.
Contradicting this, the researcher has found despite the low prices of the products and services
that are offered by the company the industry is able to make the profit from their stores available
in Sydney. The staple nature of much industry’s product in the whole industry has strong demand

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for the grocery and supermarket stores in Sydney. Considering this, the rise in the industry
revenue is expected to be an annualised 2.1% in the five years by the year 2018-19 to $103.4
billion.
According to McCauley (2017), the competition of the company is not limited to sales and
revenue but it is not focused on the market share of the companies in the industry. The researcher
found the Woolworths has had a good year, nudging ahead of its competitors in terms of the
market share. Though, on the other hand, Coles has appeared to be discounting the prices
aggressively in the response to capture the huge marketing share. This has been found that
Woolworth’s supermarket business has captured the market share 36.8 in the year 2017-2018.
On the other hand, the Coles Company remained on 30.9% in the market share (Nakos, 2017).
This shows that it is giving the tough competition to the Woolworths in the industry. In addition
to this, the Aldi is struggling in the race of the market share with 8.6% in Australia.
(Source: Pash, 2017)
Further, Rice & Martin (2017) exhibits, that there is unfolding competition in the companies
brought the change in the industry. The developments took place in the form of convenience to
the customers in the market for getting the appropriate products. In the industry, there is
development related to the packaging of the products as Woolworths and Coles has supersized

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their packaging for the products which give value to the customers and reduce their own cost
according to the Morgan Stanley analysis. Contracting this, Roy Morgan (2018) reflected the
intense competition of the companies in the industry leads to the lack of loyalty from the
customers. This has been found that very few customers are shopping from the supermarket's
stores in Sydney. For instance; 72.7% of Australia buyers shop at Woolworths, a much lower 8%
shop with the company. The situation is the same with the Coles with 70% shop but only 6.6%
shop exclusively (Roy Morgan, 2018). The situation reflects that the customers are not loyal
towards the brand being it Coles and Woolworths which is one of the major changes that took
place in the industry.
Growth strategies
Woolworths and Coles Company maintain the core competencies in the market which helps
them to achieve the growth in the market. Talking about Woolworth's core competencies, the
company has positioned their stores with the fresh food people slogan which is an effective
branding.
(Source: Woolworths Group, 2018)
This helps the company in creating the image of the provider who offers the quality and healthy
products range at effective prices. Coles believes that supply chain of the company is one of the
core competencies which help the country in managing the unnecessary expenses due to which
they are able to offer the value to the customers (Frynas & Mellahi, 2015).

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While visiting the store in Sydney, this has been experienced that the company make use of the
experienced employees more in the stores that can offer the effective values to the customers
which is missing in their competitor Coles. Further, the hiring of the experience employees
reduces the cost of the training of the company. Coles has appointed most of the young workers
who can manage the work with their new and innovative thinking which makes them stand out
against their competitors (Chernev, 2018). In addition to this, the competition among the
companies is intense due to which they focus on differentiation strategy and offer a wide range
of products and services to the customers which will meet the needs.
The researcher believes that Woolworths and Coles Company should grow or expand their
business in the market. This has been found by the researcher that the Woolworths company
apply the vertical integration growth strategy on some of its suppliers by manufacturing its own
inputs to enhance its market power and to respond to the private level trend. Thus, they need to
think broad to this which helps them to grow in the market. According to the research, the
company need to plan the growth in four key areas which include extending the leadership,

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maximizing the value for the customers, growing the new business and nurturing the talent
(Woolworths Group, 2018). This shows that the company need to organic growth strategy, in
which the company make use of its own core competencies to introduce the new product and to
expand the value of the customers.
Coles Company should make use of the growth strategy in which they continually improve the
operational productivity, cost control and capital discipline that can be expanded in the near
future for expanding their market share (Wesfarmers, 2017). This can be done by the company
by acquiring more companies in the market that can make Coles leader in the Australian market.
This reflects that the company should follow the horizontal integration strategy in which they
need to acquire the business activities which are performing the business at the same level.
Pricing strategies
A business in the market can keep different pricing strategies while selling their products in the
market. The pricing strategies are essential to be determined by the company as the profit of the
company is directly related to the pricing strategy of the company (Kotler, 2015).
Woolworths follow the competitive pricing strategy in the market, in this strategy the company
analyse the prices kept by the companies for similar products and accordingly they keep the
prices of the products. This has been found by the researcher that the service to the customer's
segment in low as well as premium prices. On the other hand, the rival of Woolworths that is
Coles keeps the everyday low pricing strategy (Hogan, 2017). In the low pricing strategy, the
company tried to increase the sale of the products by keeping the low profits. The company is
maintaining this pricing strategy to win the customers present in the market. In addition, non-
pricing strategy of the Woolworths includes long hour opening of stores and easy availability of

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the products. This helps the company to grab the attention of the customers in comparison to
their customers. Both the company follows the different pricing strategies and non-pricing
strategies but keeps the same prices of the product. The below image reflects that the company’s
price for the similar sort of products.
(Source: Kakulas & Messurier, 2015).
This is possible because the competitive strategy of the Woolworths analyse the prices of Coles
which are generally low due to which the company need to keep the low prices of the products
that they are offering to their customers (Kakulas & Messurier, 2015). The goal due to which the
Woolworths Company makes use of the competitive strategy is that they want to retain the
customers and don’t want to any company to grab the attention of the customers. Moreover,
keeping the same price will give the tough competition to the other companies who think that
they can compete in the market (Grant, 2016). This is evidence that the Woolworths have
invested in reducing the prices which helps them to compete in the market. Further, the Coles

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Company have effective supply china management due to which they were able to source the
products at the low cost. This shows the effective non-pricing strategy of the company that helps
them to work in the effective manner. Along with the low prices, the Coles Company put efforts
in enhancing the service quality of the products because keeping the low price is not effective
when the quality of the products is low. This reflects that Coles Company ensure that they offer
quality products. Thus, offering the products at the low prices with quality products will help
them to win the attention of the customers.
If I were one of the two businesses, I would have kept the low pricing strategy for the products
and services that I am offering to the customers. This shows that I would have followed the
pricing strategy followed by the Coles. In addition to this, I would have added the premium
pricing strategy also for the customer who makes the purchase of the premium products. In
addition to this, being the supermarket I would have offered the advantage in terms of the offers
and cashback which grab the attention. The reason to keep the same pricing strategy is that no
customers like to pay more prices on the products in the market where there is the presence of
the competitors who offer products at low prices.