Coles And Woolworths As A Retailer

Operating on very thin profit margins, players in the supermarket industry traditionally either focus on a premium segment or follow a discounter strategy at the low end. Premium players address educated and more price elastic consumers who value healthy, natural and organic food; the share of perishable items for these players is normally distinctly higher. Players that focus on a discounter strategy offer a higher share of simple necessity items and value price competitiveness over premium features like healthiness or organic origin. Independently of the focused customer group it is imperative for players in the supermarket industry to be cost efficient and optimize operations

There is intense rivalry among grocery stores In Australia. As more stores open up regularly, rivalry determinants has taken in the form of price competition which is undoubtedly the primary form of competition in this industry where stores are undercutting each other with perks like promotions, points collecting system and the most commonly seen is by giving generous discounts to consumers with membership or reward cards.

In 1975, Hi-Value Supermarkets became a division of Hall Consolidated, a privately owned wholesale and retail food distributor. In 2002, Hi-Value had sales of $192.2 million, which was the smallest out of the three supermarket chains owned by Hall Consolidated. Although Hi-Value is considered small against industry standards, they were the number one or two ranked supermarket chain in each of its trade markets measured through market share. The primary problem that Hi-Value has developed is that they are the highest priced compared to the competitors within the region. The Hi-Value Supermarket Shopper Interview Results (Exhibit 7 in case) demonstrates this through the question “Liked most about other regular store,” the most popular answer across the board was “Price.” So what is Hi-Value supposed to do?

The threat of substitutes in the food retail industry can be high among the ‘Big Four’ as switching costs are relatively low and products can be similar. However, most have their own private labels and also target slightly different markets, such as Sainsbury’s having more upmarket positioning and Tesco’s cost leadership. Waitrose offers unique and differentiated products, which are, in the eyes of the consumer, significantly superior. No other supermarket offers such premium quality products with great service and such a large range of organic products as Waitrose, so this makes them extremely difficult to substitute. (Euromonitor, 2008).

Woolworths and Coles would have agreements with farmers to supply exclusively to them, in exchange for the firm purchasing all of their quality produce. Woolworths and Coles are also more likely to be able to purchase products, including fruit and vegetables, for a cheaper price than small, independent sellers, as they are purchasing in bulk. According to McKenzie (2002) "No major supplier, no matter how big or powerful they are, can afford to be offside, or out of favour, with Coles or Woolworths".

The pricing of small stores such as convenience stores and corner stores has a higher price on fruits and vegetables than supermarkets and farmer markets (4). The pricing of foods are different due to location because of the lack of supermarkets in the area making residents more likely to go

Critical assessment of Superior Supermarket’s current pricing practices, recent consumer research, competitor behavior, and a SWOT analysis can give credence to a more effective pricing strategy and help assess whether a ‘Everyday Low Prices’ strategy is justifiable.

In this report I will be comparing methods used by two different retailers on how they distribute two chosen products, of my choice, in two different retailing sectors. Seeing as the food and clothing sector both have very different styles of how they meet their product requirements, I will compare Tesco and JD; The products from these two companies itself that I’m going to compare is ‘Tesco Value Bread’ and Nike hoodies.

Founded back in 1914 in Victoria by George James Coles, Coles Supermarkets Australia Pty Ltd has undoubtedly developed and expanded over the century since its humble beginning. Starting out its early days as an average retail store selling groceries, Coles has now successfully become a well-established brand as well as having its name known to the majority of households throughout the nation. Looking at the rapid progress of the company, Wesfarmers, one of Australia’s biggest public company announced its purchase of Coles for 22 billion dollars and officially took control of the entire group’s retail businesses on the 23rd of November 2007, making it the largest successful take-over in the Australian corporate history yet (Peters, 2007). However, in terms of market share in the industry, Coles comes only in second place with 37 per cent of the $83.7 billion grocery sector losing out to Woolworths at number one with 43 per cent based on the analysis released (Morgan, 2014).

b) The market has found that, on average, there is no more than 5% produce damage at Coles’ stores in other states. Based on this information carry out a t-test to see if the average % of produce damaged at Coles stores in Sydney and Melbourne is less than 5%. Mention any assumptions, include relevant hypotheses and report the result and conclusion in the conventional manner. [6 marks]

Australian supermarket chain Coles started a partnership with Optus, a telecommunications company, to address the high demand for low-cost prepaid options. IT Wire reported that Optus recently ended its partnership with Woolworths earlier this year to cut a new deal with Telstra. Moreover, Coles Mobile is set to offer two prepaid plans that will operate under the Optus 4G plus network.

The Australian Supermarket Industry is the very hot topic that’s why very interesting topic now days. The Australian supermarket and grocery stores have a very severe competition in Australia mainly because of organizations competing in this mature industry are going towards cost reduction initiatives with competing advantage rather than product differentiation strategies, In other words business in this industry increase market share by charging lower prices while making reasonably fair profit. The growing popularity of ALDI – German based company of introducing its own label goods (products manufactured and sold under the retailers own brand) with low cost has forced the two giants –Woolworths and Coles to cut price

The UK supermarket industry resembles an oligopolistic industry, with several characteristics. Oligopolistic markets tend to be characterised by high concentration ratios, barriers to entry and…Since the turn of the century, the industry has been scrutinised by both the Office of Fair Trading and has been referred to the Competition Commission on two occasions. (Seely, 2012)

2.3 THREAT OF SUBSTITUTES Substitutes do not entirely replace existing products but may introduce new technology or reduce the costs of producing the same product (Porter, 1980). Substitutes may limit the profits in an industry by keeping their prices down (Porter, 1980). The threat of substitution is quite high in this industry because consumers are able to substitute to other major retailers, convenience stores, niche product outlets, restaurants, bakeries, butchers and farmers (Coriolis Research, 2004). Supermarkets like Tesco and ASDA have a range of products and services that have close substitutes, effecting price elasticity of demand because the market is sensitive to price (IBISWorld). The demand for a particular brand or retailer will increase or decrease concurrent to the movement of price in comparison to its competition (IBISWorld). The UK supermarkets are always trying to increase the quality of products and services resulting in a constant need to differentiate products and services from competition to make them less price sensitive.

| | |Woolworths Ltd. | |Account Assignment | | | |Kavindi, Justin & Gurleen | |17/01/2011