Business Case Study: Strategies for Woolworths' Market Challenges

This case study examines the current problems faced by Woolworths, a major Australian retail chain, focusing on declining sales and dwindling market share. It analyzes these issues by applying relevant business models and theories, including democratic leadership, Herzberg's motivational theory, and strategic tools like PESTLE and SWOT analysis. The study identifies the need for a 3I intervention (Innovation, Improvement, and Initiation) to address these challenges. Innovation involves developing new products and services, while Improvement focuses on enhancing current operations and customer experience. Initiation entails implementing new policies and practices, such as restructuring the supply chain and workforce. The conclusion recommends strategies like adopting a Just-in-Time technique, investing in employee training, maintaining product quality, and forming stronger alliances with suppliers to regain market share and increase sales.

CASE STUDY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
The Current problem faced by Woolworths................................................................................3
Application of Models and theories in order to analyse the problem and its effect....................4
Designing Appropriate Intervention...........................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Woolworths commonly known as Woolies is a retail supermarket chain having their
headquarters in Bella Vista, New South Wales, Australia and their parent company is
Woolworths Group. The company at present has 1000 stores spread throughout Australia and is
also operating through online medium through their website. It was founded in year 1924 and
their slogan is “The Fresh Food People”. In this report, the major problem that the company is
currently facing has been discussed and appropriate models and theories have been Implemented
in order to solve these problems (Ferguson, 2018). This report also identifies the intervention
which the company should adopt in order to successfully resolve the issue that they are facing
and at last appropriate conclusions and recommendations have been made in the report.
MAIN BODY
The Current problem faced by Woolworths.
Woolworths is a retail store based in Australia and basically deals in grocery products.
Although the company is well established and has expanded its operations in many country,
there are currently increasing number of problems that Woolworths is facing. The sales of the
company is regularly declining and the market share of the company in Australia's Grocery
market is dwindling (Strategy and Objectives, 2019). The company ha been facing a tough
competition form its major competitor Coles and the increase in the trend of giving discounts and
selling goods at lowest price possible has led to decline of the popularity as the emerging
competitors like Aldi has implemented this strategy. They are presenting themselves as threat
despite their late entry because their products are priced at much lower rates and their focus is on
increasing their market share in the home country. The price war is further intensifying as the
prices are regularly falling lower so the management at Woolworths need to adopt and formulate
proper strategies which will help them ion dealing with the problem. The share price of the
company has already skewed down and the cash flows are regularly declining. This decline in
the revenue has led to the employees either being removed or increased employee turnover as
they are looking out for better options and hence the company is loosing their trained and
valuable personnel as well which is affecting the company doubly in a negative manner (Spillan
and Ling, 2015).
Therefore, there are series of problems that the company is experiencing due to decreased
sales and company needs to restructure their strategies and redefine policies.
3

Application of Models and theories in order to analyse the problem and its effect.
The major issues that Woolworths is experiencing is declining sales and this issue can be
addressed by critically reviewing the current policies and strategies. For changing the current
business practices, company can changing its leadership style. At present the company has
implemented autocratic leadership style in their organizational culture where they don't involve
their employees in the decision making process and the top management formulates all the
strategies (Andersson, 2017). The company should adopt Democratic Leadership Style under
which the company can change their current leadership practices and implement those policies
which will help them in taking shared decisions. Implementing democratic leadership will help
in following manner :-
 It will increase the engagement of employees of the company which will provide the
management with a fresh view point and they will be able to formulate a better view of
their company's position in the eye of the customers as employees are the people who
might be actually visiting Woolworths or know those people who are visiting the stores.
 When employees are involved in the decision making process, every failure or success of
the decisions taken will be treated as their own and they will try to determine on the
individual basis regarding what were the factors that led to success or failure.
 In the present case, the problem of decreasing sales can be adequately solved because
when employees will trust their leaders and their actions, it will automatically make them
motivated to work harder thus developing various marketing mechanisms and by
implementing them, they will be able to target their customers again (Hur, 2018).
Apart form leadership theory, another technique which will help in meeting the current
crisis that Woolworths is facing involves implementation of Herzberg's Motivational Theory.
This theory gives two factors which are Hygiene factors and motivating factors which help in
making the employee base motivated and dedicated. However, this theory can further influence
the sales of the company in a positive manner :-
Hygiene Factor :- Hygiene factor involves giving a healthy environment and providing safe
working conditions etc. in which an employee can work freely and concentrate on achieving
their targets. These hygiene factors will also help employees in understanding what the buyers
expect as when they themselves will understand the importance of these hygiene factors, they
4

will accommodate these aspects into their products and at Woolworths, they will focus more on
quality. This will help in increasing their sales as they will be able to target the customers in a
better way.
Motivators :- Motivators involve those extra benefits apart from the basic salary that are given to
employees in order to increase their motivational and satisfaction levels. These involve giving
employees recognition, awards to the employees (Alexander, 2016). However, these techniques
will help the employees in honing their sales technique and they can develop new strategies for
their products like Giving better offers, lucky winners, better after sale services, training staff to
increase their persuasion skills etc.
Collectively these models will help in improving the marketing campaigns of the
company and help them in projecting their services in a better light. Apart from these theories,
there are many strategic tools that can be implemented so that Woolworths can re-establish their
brand. These involve PESTLE Analysis, SWOT Analysis, Defining Core Competencies etc.
PESTLE Analysis :- These involve six factors i.e. Political, Economical, Social, Technological,
Legal and Environmental and these factors collectively influence the marketing environment in
which Woolworths operates. Politically, the market in which Woolworths operates is stable and
hence the risk of generating losses due to political environment is marginally lower. Amongst
various parts in which Woolworths operates, Australia economy is the most stable and profitable
one for the company. The company helps in increasing the benefits of the society as they try to
market healthy products and increase the lifestyle standards like removing confectionery items
from the checkout counters in all their stores. The technology has not been updated regularly at
Woolworths along with the changing trends and therefore, the company needs to adopt and
implement those changes that will make the company stronger (Jones and Tadajewski, 2016).
Core Competencies of Woolworths Group :- The goods offered by Woolworths Group is highly
developed in quality and is available at affordable prices. Their approach has always been
Customer-Centric and the focus has been on supplying fresh products to the customers which has
helped in giving them competitive advantage.
However, in order to further develop their services and reoccupy the lost market share,
these competencies can be further developed by exploiting various factors like diversification of
product range, increasing the customer loyalty, utilising the experience of management teams
etc. Customer should be the focal point behind all strategies and plans.
5

Designing Appropriate Intervention.
In order to successfully solve the issue of declining sales of the company and dwindling
market share, the company needs to implement the intervention which is formulated on three key
concepts :- Innovation, Improvement and Initiation (3I Intervention).
Innovation :- Under this, the management of Woolworths Company needs to formulate
newer and better products ad services for their customers (Ferguson, 2018). This can be done by
developing a separate division which will be responsible for identifying the new product
categories as per the changing tastes and preferences of the consumers. They need to formulate
new partnerships with food manufacturers so that they can also target the emerging segment of
ready to eat products or heat and eat meals. The company also needs to find innovational pricing
techniques which can be used to beat their competitors like Coles and Aldi. Recently, the online
market has developed enormously and the company needs to expand their marketing techniques
in this field as well. For this the company can open Click and Collect points along with drive
through Collection points so that the number of online shoppers can increase for the company.
Such innovational practices will give a fresh face to the company and the employee engagement
will increase leading to increase in revenue.
6
Illustration 1: Competencies of Woolworths Group
Source :- Strategy and Objectives, 2019

Improvement :- This is the second aspect of the intervention and under this the company
needs to focus on their present operations and methods that they are currently using (Iqbal,
Anwar and Haider, 2015). The management of Woolworths Company need to re formulate their
strategies keeping consumer at the main focal point and then devising strategies which will give
maximum benefit to the consumers. The company should emphasize upon increasing the
customer satisfaction and improving their overall experience. For this the company can replace
the former 20 metric system with the new 8 metric system which will help the company in
putting the customer experience at top of their system while giving ranks. Further, the company
needs to employ a capable and properly trained staff which should be made available during the
entire working hours so that the consumer can take their assistance whenever they require it. The
loyalty cards that Woolworths Company gives to their customers can be improvised by giving
them better offers and by developing a targeted customer approach. This can be done only when
the company improves their present technological system by updating it with current practices
and software.
Initiation :- This is the last aspect amongst the relevant interventions that can help
Woolworths company in gaining back their initial position. Initiation here refers to developing
and implementing newer policies and practices which are more efficient. For this they need to
restructure their present supply chain model and segregate the redundant activities which are
simply consuming time and resources of the company (Rastogi and Trivedi, 2016). The
company also needs to cut back on the extra workforce and remove those employees who are
inefficient in the duties assigned to them. They can formulate a renewed operating model which
7
Illustration 2: Woolworths Loyalty Card
Source :- Strategy and Objectives, 2019

will help them in reconstructing their back office practices and other activities interconnecting
the departments. Altogether, this will help in reducing the cost incurred in production and
maintenance which will help them in giving their products at lower prices so that they can
compete with their competitors and regain the lost market share ultimately increasing their sales.
CONCLUSION
After conducting the research, it can be concluded from this report that Woolworths
needs to cut back their prices and implement newer and better practices in order to target and
reoccupy the lost consumers. The problem of declining sales can be solved only when they
reformulate their strategic practices and alter their pricing policies. For solving these problems
effectively, the company can follow certain recommendation which have been made below :-
 The company can adopt Just-in-time technique which will help them in developing cost
based leadership in the present market.
 Developing additional training and development mechanisms which will help in creating
a skilled work force assisting the customers visiting their stores.
 The company should not make any compromises with the quality of their products as this
will lead to the customers losing the trust they place in the company 's product which will
further decrease the goodwill of the company.
 The company also needs to form better alliances with the manufacturers and suppliers so
that they can coordinate in a better way with them and simplify the activities and
operations.
Therefore, Woolworths Company can tap the retail industry by restructuring the various
activities of the company and taking into their purview the changing consumer trends and
practices.
8

REFERENCES
Books and Journals
Alexander, A., 2016. The study of British retail history. The Routledge Companion to Marketing
History. p.155.
Andersson, S., 2017. Assessing Job Satisfaction Using Herzberg’s Two-Factor Theory: A
Qualitative Study Between US and Japanese Insurance Employees. IAFOR Journal of
Business & Management. 2(1). pp.22-35.
Ferguson, T., 2018. Local public space, global spectacle: a case study on South Africa's first
shipping container shopping center (Doctoral dissertation, Massachusetts Institute of
Technology).
Hur, Y., 2018. Testing Herzberg’s two-factor theory of motivation in the public sector: is it
applicable to public managers?. Public Organization Review. 18(3). pp.329-343.
Iqbal, N., Anwar, S. and Haider, N., 2015. Effect of leadership style on employee performance.
Arabian Journal of Business and Management Review. 5(5). pp.1-6.
Jones, D.B. and Tadajewski, M., 2016. The study of British retail history: progress and agenda.
In The Routledge Companion to Marketing History.(pp. 179-196). Routledge.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Spillan, J.E. and Ling, H.G., 2015. Woolworths: An Adizes Corporate Lifecycle Perspective.
In Business History Conference. Business and Economic History On-line: Papers
Presented at the BHC Annual Meeting (Vol. 13. p. 1). Business History Conference.
Online
Strategy and Objectives. 2019. [ONLINE] Available
through :<https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-
and-objectives>
9

10

11

12