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.
The motive is to conduct a market or industry of the rival businesses present in the Supermarket and grocery stores industry.
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.
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 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.
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 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 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.
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 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.
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.
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).
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, 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.
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 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.
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 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.
Conclusion
In the end, it can be concluded that the Woolworths and Coles are biggest rivals who are performing their business operations in the market of Australia. The companies with the same industry leading to intense competition in the industry. The research reflects that a different author has shared their opinion about the structure of the industry and the market share of the companies. In addition to this, there are discussions related to the new entrance that can affect the working of the industry. Further, there are discussions related to the growth strategies that companies are following and it includes what all strategies they should follow in the near future. This has been found that Woolworths need to follow the organic growth strategy and Coles need to follow the horizontal growth strategy which contributes to the success and growth of business in the near future.
The pricing strategy discussion has been done with the help of different methods of research. This shows that both the companies follow the different strategies in the market which include competitive pricing strategy by Woolworths and low pricing strategy by Coles. Further, the aim of the pricing strategy is not the profit but it is valuable to the customers or to retain the customers in the competitive market. Further, the company retaining in the market needs to offer the product at low prices because no customer will like to invest more amounts in products.
References
Chernev, A. (2018). Strategic marketing management. Chicago: Cerebellum Press.
Coles. (2018). Our History. Retrieved from: https://www.coles.com.au/about-coles/centenary
Frynas, J.G. & Mellahi, K. (2015). Global strategic management. USA: Oxford University Press.
Grant, R.M. (2016). Contemporary strategy analysis: Text and cases edition. New Jersey: John Wiley & Sons.
Hogan, A. (2017). Coles sticks to pricing strategy, but slow progress on Coles Express and Liquor. Retrieved from: https://www.ausfoodnews.com.au/2017/05/01/coles-sticks-to-pricing-strategy-but-slow-progress-on-coles-express-and-liquor.html
IBIS World. (2018). Supermarkets and Grocery Stores – Australia Market Research. Retrieved from: https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/food-retailing/supermarkets-grocery-stores.html
Kakulas, V. & Messurier, D. (2015). Aldi winning supermarket price war against Coles, Woolworths. Retrieved from: https://www.ntnews.com.au/lifestyle/aldi-winning-supermarket-price-war-against-coles-woolworths/news-story/3b46cd4f92499f53a3e463b1c91252d8
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.
Mackey, A., & Gass, S. M. (2015). Second language research: Methodology and design. New York: Routledge.
McCauley, D. (2017). Why your groceries are getting bigger at Coles and Woolworths. Retrieved from: https://www.news.com.au/finance/business/retail/why-your-groceries-are-getting-bigger-at-coles-and-woolworths/news-story/5bb6c2016d72d44c192c6fe1409188f5
Nakos, N. (2017). Coles market share in Australia has declined. Retrieved from: https://www.ausfoodnews.com.au/2017/10/18/coles-market-share-in-australia-has-declined.html
Pash, C. (2017). Hot competition is back in Australian supermarkets. Retrieved from: https://www.businessinsider.com.au/hot-competition-is-back-in-australian-supermarkets-2017-10
Rice, J. & Martin, N. (2017). Company results: how competition is transforming Australia’s retail sector. Retrieved from: https://theconversation.com/company-results-how-competition-is-transforming-australias-retail-sector-72844
Roy Morgan. (2018). Woolworths increases lead in $100b+ grocery war. Retrieved from: https://www.roymorgan.com/findings/7537-woolworths-increases-lead-in-$100b-plus-grocery-war-201803230113
Wesfarmers. (2017). 2017 Annual Report. Retrieved from: https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-annual-report.pdf?sfvrsn=0
Woolworths Group. (2018). Home. Retrieved from: https://www.woolworths.com.au/
Woolworths Group. (2018). Strategy and objectives. Retrieved from: https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives/
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