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    Management

    Australian retailing industry

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    Australian retailing industry


     Introduction

    Australian supermarket and the retailing industry have a large participation in the economy of the country, where Woolworths and Coles are playing the role of duopolist. Both the companies have 80 percentage shares in the Australian economy. Apart from this, Wesfarmers is also playing a leading role in the country. This paper would shed the lights on the competitive strategy of Coles and Woolworths and also find the superiority of the firms in the competitive market. In this context, the business strategy and sustainability would also be described in this report. According to Merrilees and Miller (2015), Coles is at the top position compared to the other rival firms, and hence, the organisation has opportunity to explore its business more not only in the Australian market, but also in the market of the UK.

    Brief Summary of the case

    As per the case study, Coles and Woolworths are in the top 20 position also in the global retail industry. In the opinion of Merrilees and Miller (2015), both the firms have largest dominance in the domestic retailing and supermarket industry. Coles was at the supreme position than Woolworths a decade ago, nonetheless, after acquiring by Wesfarmers, the performance of Coles had started to decline. In addition, for expanding the business more, Coles had hired the UK retailing chain Asda in the year 2007. This performance of this new team and also by managing funding from Wesfarmers, Coles has started to rejuvenate and improve its services. The rivalry between the giant firms like Woolworths and Coles has sustained and it has become hostile over the years. The strategic difference of the firms is different and is dependent upon the pricing strategy. Therefore, Coles targets to minimise the price level of the goods for attracting more customers. In order to serve a large customer base their services, both Woolworths and Coles target to expand their businesses in the most populated area. Based on the participation of the retailing industry, it can be predicted that the growth rate of the revenue earnings of the Australian industry will be increased by 1.4% by the year 2022.

    1: Growth of revenue earnings by Australian retailing industry

    Similarly, Metcash, the leading wholesale distribution of Australia has also be growing with the passage of time. It has specialisation in the selling of food, hardware business as well as also in the selling of liquor. It is also the strong opponent of Coles. Based on the financial report, it can be observed that the sales of Metcash have been increased sharply over the years. Consequently, for increasing the sales as well as revenue earnings, Woolworths targets to increase 58000 working hours in order to maximise the productivity of the organisation. As per the discussion, though there are a large number of retailing firms across the Australian market, however, the giant firms like Woolworths, Coles, Wesfarmers, Metcash have large control in the industry.

    Overview of the organisation

    As per the given case study, Coles is at the better position in the duopoly Australian retailing industry as well as also holds a leading position in the global market. This is the reason, why the researcher would analyse the business strategy and the competitive strategy of Cole in this paper. Coles supermarkets serves the largest retail as well as customer service chain across the Australian market and its Headquarter is in Melbourne. The organisation was founded in the year 1914 by George Coles. The prime objective of Coles is to meet the demand of its clients by creating a better understanding with them. The organisation has been operating its services both in the online and traditional medium. Coles strives to serve the optimum quality of foods to the millions of Australians all the year round (Coles, 2019a). The long term objective of the organisation is to work for the development of the sustainable future. In this purpose, Coles aims at maintaining a strong association with the farmers and emphasize to grow the food industry (Coles, 2019b).

    Woolworths was founded in the year 1924, which is specialised in the selling of fresh groceries to the citizens of the country. Similar to the business strategy of Coles, the organisation also aims at the delivery of valuable and good quality products to the consumers. Woolworths also has a wide range of employees and approximately 201000 workers are engaged with the organisation. On the other hand, the organisation provides its services 29 million consumers every week. This refers that a large percentage of customers are relied on the services of Woolworths.

    Strategic issues

    It is noted that one of the most common issues of the Australian retailing industry is the price war. In order to increase the attraction of the more customers towards the organisation over the rival firms, the organisation targets to set lower prices of the products, so that the sales percentage of the business can be increased. It would in turn increase the revenue earnings of the firms. Cift (2018) argued that Coles has been suffering difficulties in the business for its price driven strategy. In this context, one question arose that how the organisation could sell the groceries in such the cheapest rate. It might degrade the quality of the products. As a result, the ‘Down Down’ campaign by Coles has gone towards the wrong direction. Merrilees and Miller (2015) mentioned that Coles lost the way and run just behind the position of Woolworths in the Australian market. For instance, the sales of Woolworths had increased by 4.9 percentages at the starting of 2018, than the growth rate by Coles (Inside Retail, 2018). Apart from this, after acquiring of Wesfarmers to Coles, the performance of the organisation had also dropped compared to the previous. Consequently, the position in the market had also replaced. In a nutshell, it can be mentioned that the excessive price wars among the participating firms of the industry would lead to increase collision across the Australian market.

    On the other hand, Woolworths also face strategic issues in its business and hence, the organisation has started to lose loyal customers from the business. Therefore, the organisation has suffered from the problem of slowing customer cycle (Meyer, 2015). It directly affects the annual sales revenue of the organisation and consequently, the net profitability earning by the firm would be declined.

    Business strategies used by the Australian retailing firms

    Business strategy of Coles

     

    The organisational strategy of Coles is to increase the values in the business as well as to successfully explore the brand in the market. After facing challenge due to the ‘down down’ pricing strategy, the organisation aims at the improvement of brand valuation and hence, offers the fresh products to the consumers. It is the only way to improve the shopping experience of the customers across the country. In addition, the organisation also target to maintain a long term association with the stakeholders, more especially with the suppliers. As a result, the organisation can get good quality of raw materials for manufacturing of final goods and can satisfy with its services to the consumers.

    2: Business strategy of Coles 

    In spite of strengthening the brand value, the organisation also develops ‘five-fresh tomorrow strategy’ for making the life of the consumers, suppliers, employees as well as the business partners easier. Instead of ‘down down’ strategy, Coles focuses to move towards the each of the day low prices and hence, consistently commits to increase the trusted value towards the consumers (Coles Group, 2019a). It would in turn increase the shopping experience of the consumers. In order to enhance their satisfaction level towards the organisation, the organisation offers the customers to shop from anywhere and anytime when they want. For instance, in case of online shopping, the customers can purchase the commodities of Coles by using its mobile application. In addition, with the passage of time, the ‘click-and-collect’ strategy of the organisation has become successful. However, again the argument arises that by minimising the price of the products, the organisation may reduce their net profitability earnings. In this context, it can be mentioned that for maintaining the net earnings, the organisation targets to streamline the cost of operation in the business by reducing the excess amount of investment for the marketing purpose. In turn, the organisation has invested in leveraging the technology. For improving its delivery services, the organisation also invested in the supply chain management process. (Mcllvaine, 2018) mentioned that digitisation is the major element behind the success of Coles as well as behindthe rising rate of its growth.

    Coles has strong responsibility in the managing of societal and environmental effect significantly. Apart from the effective business strategy, the organisation is focused in the minimisation of carbon footprint in the air. In order to sustain long term success in the business, corporate social responsibility has positive influence in the business (Coles Group, 2019b). For instance, Coles has focused on the minimisation of the dampen of wastages and also on the recycling process (Coles, 2019d). Conversely, the organisation also focuses on the implementation of resource efficiency and ethical sourcing process. In a nutshell, Coles tries to implement innovative process during operation, so that the organisational performance level can be improved with the rising of diversions and recycling program.

    Business strategy of Woolworths

     

    Similar to Coles, Woolworths also considers the consumers at its first priority and hence, the connectedness, personalisation and the shopping experience of the consumers has been increased. As opined by Lawleyand Birch (2016), Woolworths focus on the differentiation strategy of Food Customer Propositions for achieving competitive strategy in the business over the competitors. In addition, the organisation is looking for the implementation of innovation in the drinks business. Lastly, the organisation also adopted the E2E business processes for the purpose of providing better services for the consumers as well as also for the ‘simpler for stores’. In order to solve the problems, faced by the customers, Woolworths organises Customer programme. As a result, the customers get opportunity to provide their feedback regarding the products and services of the organisation. This in turn implies that the organisation aims at the continuous improvement for boosting up the shopping experience and the performance level of the organisation.

     3: Business strategy of Woolworths

    In order to improve the organisational performance, Woolworths focuses on the hard work and the business integrity (Woolworths Group, 2019b). It would lead to bring improvement in its performance level and hence, the long term relationship with the customers can be maintained. This refers that the giant firms of Australia are more likely to the customer loyalty approach and hence, these two companies are playing the leadership and the role of duopolist in the Australian market. Similar to Coles, Woolworths is also concerned about the building of trust with the stakeholders. The company obeys three principles and these are fairness, collaboration and source locally.More specifically, both of these companies have strong influencing power over the retailing industry of Australia. In addition, Woolworths also works on the sustainability in the business, which in turn helps to create better future for the Aussies. In this context, the business sustainability of Woolworths is beneficial for the economies of the countries, environment and also for the communities in future (Woolworths Group, 2019c).

    Conclusion

     

    In the conclusion, it can be inferred that the Australian retailing industry has large contribution in the economy of the country. For instance, the giant companies like Woolworths and Coles are accounted for more than 80% share of the sector. Since, the market structure of the Australian retailing industry is oligopoly, therefore, all of the giant firms are more concerned about the price war strategy and hence, more attracting a large number of consumers, the organisation try to set the lower price of the goods than the competitors. However, the business strategy was unsuccessful and hence, the organisations start to focus more on the brand improvement strategy since, the companies put the customers in their first preference.

     

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