Woolworths – Australia’s Biggest Supermarket Chain

Woolworths prides itself on coordinating with local farmers to provide fresh produce

Company

Woolworths is the biggest supermarket based chain in Australia. The company mainly operates more than 900 stores all across Australia. The organization relies on 115,000 members who are a part of the team. The support offices and the distribution centres are able to provide superior levels of service, value, range and convenience to the customers. Woolworths mainly prides itself based on its working based style and the ways by which the company is able to coordinate its operations with the farmers. The various Australian farmers and growers are thereby able to provide the best products which are available to the customers. The fresh fruits and vegetables are sourced by the company from local farmers and further provided to the customers (Woolworthsgroup.com, 2018).

Product or service or location

Woolworths provides different types of products under several brands which include, the products under the brand named Farmers’ Own, products which are offered under the brand category of free from gluten. The company also provides different types of products under the brand of “gold”, the essentials are another major brand which is operated by the company. The products which are offered to the customers are mainly based on different needs and demands of the consumers. Woolworths has been able to serve the customers in Australia and New Zealand in such a manner which has been able to fulfil the needs with the help of different fresh raw materials (Woolworthsgroup.com, 2018).

Consumer

The people who are mainly interested in the fresh products and are highly health conscious in nature are an important part of the consumer group of Woolworths. The company aims at providing the freshest products to these consumers in order to increase their levels of trust in an effective manner. The community in the areas in which the company operates play a key role in the operations of Woolworths (Barros, Hernangómez & Martin-Cruz, 2016). 

The Australian retailers have started facing huge competition in the industry from the different global players from all over the world. The competition that is provided to the company from various retailers is a significant share of the revenues and profitability of the organization in the industry. Many new players have recently entered the Australian retail industry in the past few years. The international retail organizations which have entered Australia have provided huge levels of competition in the market. Another major competition that has been faced by the retailers is from the major online retail store Amazon (BBC News.com, 2018). 

Woolworths offers a variety of products under different brands

The entry new organizations have also led to major disruptions in the retail industry of the country. The online retail store has developed its infrastructure in the retail industry which has been able to affect the operations of different retail organizations. However, the booming retail industry of the country has been able to maintain the momentum of growth with the help of various economic and social developments. The major factors that have affected the growth of this industry include, rise in population in the country, the huge economic growth and the rise in the purchasing power of customers (Businessinsider.com, 2018). The high flexibility of the Australian market has led to frequent rise and fall of the industry. The retail industry of the country has thereby expanded at the rate of 2 percent in from the year 2013 to the year 2018. The total size of the retail industry in the year 2013 was more than 120 US Dollars.

• Political factors – The political environment and factors are able to determine the levels of profitability of Woolworths in the past few years. Woolworths has operated in the industry of Food and Staples retailing based industry in the last few years. The company has thereby been able to achieve success in the industry with the help of proper diversification of the risks that are related to the political environment. Australia has thereby been ranked as the best country to live in based on the international comparison of education, wealth and the quality of life. The retail organizations like Australia like Woolworths and its policies will be affected by the type of consumers who are present in the country. The trade based regulations of the country will also affect Woolworths and its revenues as well (Ibisworld.com, 2018).
• Economic factors – The different macro environmental factors that are able to affect the operations of Woolworths include, the savings rated, the inflation rate, foreign exchange rate and the economic cycle. The micro environment based factors like competition in the industry is also able to affect the proper processes of Woolworths. The intervention of Australian government in the free market will affect the food and staples based industry which in turn has an impact on the revenues of Woolworths (com, 2018). The analysis of the financial position of Woolworths in the last few years has shown that Woolworths has improved its figures in the last few years. The liquidity based levels of the company has been increased with the help of its high revenues. The discount based departmental stores that have been developed by Woolworths have been a major part of its profitability in the market (Trent Duvall, 2018).
• Social factors – The local culture of Australia has been a major factor that has affected the operations of Woolworths. The attitudes and shared beliefs of the consumers have affected their needs and demands for the products that are offered by Woolworths. The understanding of the consumers and their needs will play a major part in the need based analysis that can be made by Woolworths. The skill levels and demographics of the consumers are important parts of the social factors that affect the revenues of Woolworths. The culture which is followed by the people is able to affect the operations of Woolworths in the Australian retail industry (Trent Duvall, 2018).
• Technological factors – The fast disruption of technology in the country and the retail industry has affected the ways by which Woolworths has provided its services to the customers. The entry of many global organizations in the Australian retail industry has further disrupted the operations of Woolworths. The use of high levels of technologies have influenced the profitability levels of the company. The recent developments which have taken place in technologies have been implemented by Woolworths in its current business operations. The cost structure and value chain of Woolworths has also been affected by the improvements in the technologies in an effective manner (Businessinsider.com, 2018).

The PEST factors have thereby helped in understanding the effects of external environment based changes on the revenues and profitability of Woolworths. The consumer base of the company can further be analysed based on the effect of these external factors (Daspit, Chrisman, Sharma, Pearson & Long, 2017). 

Woolworths faces high levels of competition in the Australian retail industry from major organizations like Coles. Woolworths has been able to beat the competition with the help of its discounted prices. Coles has provided tough competition to the company with the help of aggressive discounted prices. The levels of competition in the market has increased in a huge manner from the year 2017 (Ibisworld.com, 2018). The dynamics of competition have further been affected by the major organizations like, Aldi and Amazon. According to the industry analysts named IBIS World had invested in a huge manner with an effective reduction of prices in order to compete with the companies like Aldi and Coles. The average prices of the company had fallen by 2.1 percent in the last few years. The company has thereby increased its focus on the hardware business which had been underperforming in the years 2016 and 2017. The prices of Coles also fell by 2% in the year 2018 in response the prices that have been decided by Woolworths (Ibisworld.com, 2018).

 

Figure 1

Source – (Ibisworld.com, 2018)

Major market segments

Segmentation is mainly based on the proper division of the total market area into various different sections based on numerous criteria. The different segments further comprise of customers who have similar types of needs and demands. The demographic process of segmentation is based on the ways by which Woolworths divides the customers into different groups based on their age and gender. The food based products and clothing products that are offered by Woolworths can be provided to different groups of customers (Durand, Grant & Madsen, 2017).

Woolworths faces competition from other major retailers including Amazon

The income based levels of the company are able to affect the purchasing based power of the customers who are a part of different groups. The product line which is provided to the customers is thereby based on their personal choices with respect to different attributes. The growth of different products of Woolworths are also determined by the characteristics of customers. The annual income based levels of the consumers are also an important part of the operations and market segmentation based activities of Woolworths (Hill, Jones & Schilling, 2014). 

Primary and secondary markets

The target market of an organization is selected with the help of market segmentation based process. The target segments of the company can further be divided into primary target market and secondary target market. Most part of the revenues of an organization are thereby earned from the primary target market (Venter, Wright and Dibb, 2015). The consumers of this primary target segment are able to affect the services and products that are offered to the consumers. The secondary market segment on the other hand consists of those consumers who can become the future primary target market segment. The primary target segment plays an significant part in increasing the revenues of the company (Hitt & Duane Ireland, 2017).

Woolworths mainly relies on its primary target market segment which is able to influence its revenues and profitability in an effective manner. The promotional messages which have been developed by the firm are also built on the ways by which Woolworths is able to affect the primary market based segments. The primary target market of Woolworths are those people who belong to the communities that are a part of the areas in which the company operates (Kasemsap, 2014).

The consumers of the primary segment are thereby concerned about the health based products that are offered by Woolworths. The consumers are thereby able to form an important part of the operations and product formations of Woolworths. The company has aimed at providing the best levels of fresh products to the consumers in order to create a loyal base. The coordination of Woolworths with the local farmers has been helpful for the company to provide fresh products to the consumers (Makgosa and Sangodoyin, 2018).

The secondary customer segment of the company are those consumers who are influenced by the communities which are supported by Woolworths. The consumers who belong to this group mainly tend to place their orders from the online operations of Woolworths. The secondary market of the company is thereby able to further increase the revenues of Woolworths in the Australian retail industry (Nair and Ndubisi, 2015). The secondary target market of Woolworths is thereby decided with the help of the demands and needs based on different services and products that are offered by the organization. The customers who belong to the secondary target market can also be termed as influencers. The influencers are able to develop an effective customer base with the help of their choices and preferences (Milichovsky and Simberova, 2015).

The company relies on market segmentation to target its primary and secondary customer segments

The process of market segmentation is able to influence the decisions that are made by different organizations. The segmentation process is thereby considered to be the first step of the entire decision making of the company. The household segment based customers have thereby proved to become the major target market of Woolworths. The products and the services that are thereby offered by the company are affected by the desires of the target market. The market share in the retail industry of Australia has been hugely dominated by Woolworths for the last few years (Schlegelmilch, 2016).

The company has been able to maintain its position in the industry with the help of active promotional activities. The different promotional messages of the company are also based on the ways by which these consumers can be influenced. The company has been capable of facing the tough competition in the market with the help of this primary customer segments. The company has also aimed at targeting the young female customers with its different range of products. The main part of the operations of the company has thereby been played by the target market segment (Serrat, 2017). 

The perceptual map or positioning map of the company can be developed with the help of different competitors of the company which operate in the Australian retail industry. The market segment in which Woolworths is able to operate is based on the position and brand image that has been developed by the company. The retention of the brand image is a major part of the positioning map of a company. The company has also developed many different marketing based campaigns with the help of place which has been formed by Woolworths in the retail industry (Tanner and Raymond, 2015). The purchase of products that is made by Woolworths is based on the ways by which the company is able to collaborate with the local farmers. The company is able to maintain the place in the market with the assistance of its unique operations and collaboration with local farmers. The positioning map will thereby be developed with the help of the ways by which Woolworths is able to provide the services and products to the customers in comparison to its competitors like, Coles, Aldi and the online retail company named Amazon (Thoeni, Marshall and Campbell, 2016).

 

Source: Created by author

Conclusion 

The report can thereby be concluded by stating that Woolworths has been able to maintain its profitable operations with the help of proper analysis of the external environment based factors. The different external factors like, the political situation, the economic condition, the social condition and technological changes have been able to affect the processes of Woolworths in an effective manner. The retail industry of Australia also has been able to provide huge chances for the proper growth and profitability of Woolworths in the market. The different segments of the customers have been divided in such a manner which has helped the company to offer proper products to them. The positioning map of the retail industry has been developed with the help of proper analysis of the competitors of Woolworths which exist in the Australian retail industry. Woolworths has thereby been able to maintain its place with the help of proper products and services that have been offered to the customers in an effective manner. 

References 

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Woolworthsgroup.com (2018). Woolworths Supermarkets – Woolworths Group. [online] Woolworthsgroup.com.au. Available at: https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/Woolworths/ [Accessed 26 Aug. 2018].