The existence of diverse supermarkets and the grocery stores in the Australian results in the shift of powers in which the power goes in hands of buyers where they can opt for the products whose prices are relatively cheaper providing daily use products. Moreover, the online business assists the customers to choose the best affordable options among all (Easton, & Sommers, 2018).
The power goes in the hands of suppliers when Western Australia raises its pricing, supplies goods of poor quality or doesn’t provide the goods of daily use to supermarkets industry and grocery stores. Hence, the companies buy the goods/services of daily use in a bulk quantity that gives them an advantage of saving their costs and time.
The cost leadership strategy and immense positioning in the market by the existing companies for instance- the supermarket namely the Coles group made it a bit difficult for the new entrants to establish their supermarket industry or the grocery stores. Hence, threats are relatively low in this sector.
The daily use products available by the supermarkets for instance- milk, butter, bread are basic items that the human consumes regularly hence, the low-cost strategy by supermarkets assists in the purchase of products by the consumers thereby retaining and attracting for the long run (Alexander, 2018).
There exists higher rivalry in the supermarket industry although the cost leadership strategy used by the supermarkets and grocery stores assists in dominating existing rivals and gain a competitive advantage as well as attract the target customers thereby gain market share in Australia that also impacts industries profit and ROC. Moreover, online convenience makes it easier to reach and provide products/services to its consumers. Coles group and Woolworth are some instances of the supermarkets based in Australia.
In context with the supermarket industry, the main competitors include the Coles group, IGA, the Woolworth supermarket, Aldi and the Wesfarmers based in Australia as depicted in the above diagram. All of them use strategies for gaining market share and competitive advantage for instance- cost leadership strategy and product differentiation strategy (HU, & XIANG, 2019). Moreover, there exist tough price wars between Coles and Woolworths for capturing the market share and attracting the customers in the long run. Additionally, the supermarket's industry provides fresh and organic products at affordable rates for ensuring maintained health of its target consumers and gaining loyalty. Moreover, the diagram portrayed the fact that the Coles group and the Woolworth are dominant with around 79.9% dominance in the market of Australia.
The theory came into existence in the year 199 and enacted by Barney that aims at the acquisition of the required resources- natural resources at cheap rates and then convert them into useful resources. Additionally, the implementation of the strategies is vital for growth and establishing a business in a competitive environment (Alexander, 2018). In context with the supermarket industry, the strategies such as pricing strategy and product differentiation strategies are used by leading supermarkets based in Australia for instance- Woolworth and the Coles supermarket for gaining the market share and purchasing of required resources at bulk quantity are done by supermarkets from Western Australia providing them with resources needed. Hence, it can be said that the resource-based theory emphasizes that acquisition and utilization of required resources are a must for gaining a competitive advantage from the existing rivals. Moreover, the purchased resources must be sold at a high price which can be more than its actual pricing for generating high- profitability in the competitive market.
The strength of supermarkets lies in profits generated by the cost leadership strategy and increased demands of fresh and organic products to its target customers at low rates hence, it assists in attracting and retaining its consumers in long run. Moreover, the consumption of daily products such as- bread, milk is easily available by the supermarket industry at affordable rates that strengthen its presence and profits in the Australian market (HU, & XIANG, 2019).
The Government tight policy for the Coles group and Woolworth supermarket in regards to non-flexible working and dealing hours restricts the growth of the supermarket industry. Moreover, problems arising from west Australia suppliers and the management weakens the industry.
Supermarket industry can follow the trend and preferences by its consumers such as – organic products, gluten-free products that assist in attracting its customers and gaining a competitive edge in the market.
The government interventions in Australia regarding fixed dealing and working hours and price-wars between the rival's presents as a major threat in the supermarket industry both online and offline.
Alexander, J. (2018). Financial planning & analysis and performance management. John Wiley & Sons.
Andjelic, S., & Vesic, T. (2017). The importance of financial analysis for business decision making. In Book of proceedings from Sixth International Scientific Conference Employment, Education and Entrepreneurship (pp. 9-25).
Competitor analysis, (2019), competitor analysis, retrieved from https://theconversation.com/factcheck-is-our-grocery-market-one-of-the-most-concentrated-in-the-world-16520
Easton, M., & Sommers, Z. (2018). Financial Statement Analysis & Valuation, 5e. HU, X. Q., & XIANG, C. (2019). Business Analysis and Valuation on the Burberry Group. DEStech Transactions on Economics, Business and Management, (ssemr).
Porter, (2019), Porter five forces retrieved from https://ukdiss.com/examples/coles-supermarket-analysis-swot.php
Woolworths Company (2019) business annual report of company, retrieved https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf
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