StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Australian supermarket - Essay Example

Cite this document
Summary
The objective of the paper is to market analysis of an Australian supermarket.The paper will delve on all the economic and business aspects of the supermarket industry.The paper contains a detailed review of the current market structure in this sector of business,encompassing a study about the pricing power policies and the demand,supply factors…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.5% of users find it useful
Australian supermarket
Read Text Preview

Extract of sample "Australian supermarket"

Introduction: The objective of the paper is to market analysis of an Australian supermarket. The paper will delve on all the economic and business aspects of the supermarket industry. The paper contains a detailed review of the current market structure in this sector of business, encompassing a study about the pricing power policies and the demand, supply factors. The paper will include a report of the chosen business with data and statistics about the industry's growth and competitors in the business. The purpose of the paper is to work on a detailed business review report touching on topics like price, income and cross elasticity, Input prices and cost of production, substitute services available in the market, products and services that complement this service, and a complete SWOT analysis. Industry Overview and Market structure. The paper under all subheadings will explain the microeconomic theory behind the heading in correlation to the supermarket industry. The Australian supermarket and the grocery store industry accounted for $69.5b as industry revenue in the year 2008. With an annual industry growth of 4.7%, the industry has 4300 establishments providing employment to 259,200 people. The two major players in the Australian market are the Woolworths and the Wesfarmers formerly known as the Coles. The Woolworths and Coles feature in the 22nd and 29th place respectively in the list of top 50 retailers around the world. In a report by Blake Dawson named 'Rising Grocery Prices and Australia's Anti-trust laws', Woolworths leads the supermarket industry with 750 stores holding a market share of 44% and Coles with 500 stores holding a market share of 34%. The New entry Germany's Aldi has 300 stores holding a market share of 4%. The supermarket industry like all other industries is under heavy pressure due to the current global turmoil and Dr. Ira Kalish, Deloitte Research's Director of Consumer Business, advised, "We are seeing this already with consumers shifting to more price focused retailers. For all retailers, this environment will require added attention to keeping costs under control." The paper will report a detailed analysis on the Wesfarmers Super Market. Find below and in the forthcoming pages the History, market share , pricing , competitors, costs, market forces and a SWOT analysis of the Coles the now Wesfarmers Supermarket. Body: The Coles opened its first store in the year 1914 by George Coles. Over years the company has grown and spread its wings far and wide and today Coles has over 740 stores in both New Zealand and Australia. The Supermarket caters to a whole range of customers and stands out remarkably for its services and is the number two chain of supermarket in Australia next to Woolworths. Employing more than 92000 people the Coles has specialized departments for Health, baby food, Health and Beauty Department, Meat Department Fruits and Vegetables Department, Deli (Pizza Bar) and the international and specialty Department. The Coles was acquired by Wesfarmers Ltd in the end of the year 2007. Pricing Power and Policies: The pricing power or market power of a firm is the power exerted by the firm to determine or influence the price of the products sold or the services provided. In other words, the freedom of Coles to set prices for their own products. Pricing power of a firm largely depends on the demand for its goods and services. A firm enjoys the maximum pricing power depending upon the price elasticity if its product or service. Price Elasticity according to Mulhearn and Vane in the book 'Economics' is "measures the responsiveness of the quantity demanded of a particular good or service to changes in its price ." Coles being the second largest supermarket chain in Australia to a certain extent does dictate prices and enjoys an edge over smaller retail stores. However in a Public submission report to the ACCA (Australian Competition and Consumer Commission) Coles has stated "Coles is committed to delivering value to customers every day. As well as seeking to offer our customers competitive grocery prices, Coles also offers customers a range of ways to help them reduce their cost of living: Each week, Coles provides a range of weekly specials on everyday items that help make a real difference to shopping bills. Over the past two years, Coles has revitalized its own brand or housebrands1 to introduce a new three-tiered range of products that offer customers quality products at a low price. Strong growth is being experienced in the sales of these products as more customers choose them to increase the value of their shopping budget. Housebrands together with traditional branded products give consumers more choice. The Coles fuel discount program, available to all customers who spend $30 or more in our supermarkets and liquor outlets, continues to be extremely popular, with millions of customers choosing to redeem their fuel discount offer every month. Since its inception in 2005, the fuel discount has delivered tens of millions of dollars of fuel savings to Coles' customers. Coles' customers also benefit from an extensive range of rewards through the Fly Buys program, Australia's most popular shopper loyalty program - there is no cost to this program and it is available to all who wish to participate." The report highlights the customer centric policy Coles intends to follow in terms of pricing. Demand, Supply, Substitute and Complement Services: Lipsey and Chrystal in their book 'Principles of Economics define demand as "The amount of a product that consumers wish to purchase is called the quantity demanded." Supply is defined as "The amount of a product that firms are willing to offer for sale is called the quantity supplied." The Coles and the Woolworths with their omnipresence as a supermarket all over Australia have together created a duopoly or an oligopoly market. Many Australian consumers have had increasing disposable incomes over the last several years and this has heavily benefited the retail food industry (Supermarkets). The demand for a wider range of food products and better quality has for sure enhanced the growth of Supermarkets and Coles has quickly capitalized over the same, spreading its wings far and wide. A report on the Australian Retail food sector by the Australian Bureau of Agricultural and Resource economics explains the growth of the demand and supply side economics as follows "Food safety concerns have also ensured that the standard of food quality and handling practices at the retail level have improved and assisted in the vertical integration of food supply chains. Food safety and quality concerns have resulted in the development of effective supply chains to deliver the high standards that consumers have demanded. Both Woolworths and Coles have extensively used supply chains to source fresh produce from agricultural producers. The development of supply chains has improved the traceability of produce and any contamination or similar food quality and safety issues can be traced back to the source or origin more efficiently. Coupled with the food safety and quality benefits derived from the use of supply chains, the biggest driver of supply chains has been the supermarkets' objective of achieving cost savings and efficiency gains from economies of scale and economies of scope. Large supermarket chains have the ability to benefit from large purchase volumes and can achieve lower per unit costs because of the scale of their operations. Economies of scope have been possible due to the related nature of some of the goods and services sold by supermarkets. For example, by supplying fresh chickens it is possible to also provide cooked chickens at a lower cost than if both tasks were performed separately. Supermarket transport and distribution plants also create economies of scope, where it is cheaper to transport and distribute many products jointly than on a single product basis. Substitutes to these large supermarkets and its scale of operations are the smaller retailers or smaller retail chains that can offer value only through proximity or price. Aldi the German retailer is a serious competitor for Coles. Elasticities of Demand for the Coles Supermarket Chain. As explained in the above pages the price elasticity of demand for Coles or the market power that Coles is able to inject is evident in the market share held by the company. Looking at Income elasticity of demand, Income elasticity is the change in the quantity of goods and services demanded when there is an increase in the income level of the consumer. As we have seen, the growth of the food retail sector in Australia has been mainly due to the increasing disposable income available to the Australian consumers over the years. A retail report from the state of Victoria states "Real disposable income is expected to average at 3% per annum over the five years of 2011-2012. It is expected that this will result in an increase in retail sales." Cross elasticity of demand is where the demand for the product increases or decreases based on the demand for the substitute. In this case substitutes are the competitors of Coles. Cross Elasticity for Coles is the increase in the sales volume of Woolworths, Aldi or any other small retailer who can make a difference in the value of the goods or service in any given geography. Cross elasticity of demand for a supermarket simply means the increased business competitors are making at the expense of Coles. Market Competition, Size and Growth. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Australian supermarket Essay Example | Topics and Well Written Essays - 1750 words”, n.d.)
Australian supermarket Essay Example | Topics and Well Written Essays - 1750 words. Retrieved from https://studentshare.org/macro-microeconomics/1510590-australian-supermarket
(Australian Supermarket Essay Example | Topics and Well Written Essays - 1750 Words)
Australian Supermarket Essay Example | Topics and Well Written Essays - 1750 Words. https://studentshare.org/macro-microeconomics/1510590-australian-supermarket.
“Australian Supermarket Essay Example | Topics and Well Written Essays - 1750 Words”, n.d. https://studentshare.org/macro-microeconomics/1510590-australian-supermarket.
  • Cited: 0 times

CHECK THESE SAMPLES OF Australian supermarket

Strategic Management of Aldi Supermarket

?? (Undertake a full value chain (complementors) analysis of the Australian supermarket industry and its implications on the each of the three super market chains (Woolwoths, Coles and Aldi) 2009, para.... The term Aldis is the abbreviated form of Albrecht Discounts stores that commenced operations in Germany, way in the1960's, by two brothers- Karl Albrecht and Theo Albrecht....
4 Pages (1000 words) Essay

A Bid by Wesfarmers

hellip; The author states that Wesfarmers originally started as a farmers' cooperative in Western Australia but now became the largest private australian employer with about 200,000-plus employees.... ith a well-diversified portfolio of business operations, Wesfarmers has very minimal risk compared to other single-industry businesses as it is not subject to the downturn of any one sector of the australian economy.... Including the australian outlet units of K-mart and Target, Wesfarmers owns and operates a total of 3,000+ supermarkets, liquor outlets, hardware, and office-supplies stores (Arnold, 2007:1)....
2 Pages (500 words) Essay

Industry and Company Analysis - Strategy of Management

This is because of a general move towards supermarket sales in general, plus many of the supermarket chains entered into the convenience store sector.... In the convenience store sector, the entrance barriers are low: there are no specific patents involved with creating a convenience store and it is very simple to set up an independent effort....
4 Pages (1000 words) Assignment

How two major supermarkets in the Australian market carry out their business

on the way feelings have a straight firm effect on store loyalty and reassure the proposed theory if a customer holds an optimistic feeling towards the supermarket; they are probable to be faithful.... However, this study contrasts the research by Yoo and Macinnis that accounts for just supermarket site to have a straight impact on the general store feelings.... The study below is a comparison of two major supermarkets in the australian market; on how they carry out their business and how they maintain and attract new customers....
8 Pages (2000 words) Assignment

Marketing Channels Issues: Coles Supermarket

It controls about 80 percent of the Australian supermarket sector along with Woolworths supermarket.... A marketing channel comprises of individuals and This paper will focus on Coles supermarket and its marketing channel, as a retailer in Australia's supermarket sector.... Australia is one of the countries that have the most concentrated supermarket sectors in the whole world and the practises of the two major supermarkets (Coles and Woolworths) that have characterized the sector as a duopoly....
8 Pages (2000 words) Essay

Developing a Strategic Approach to Human Resources in China

hellip; Aussie Best can confidently establish their supermarket chains in China because of the immense stability and population size in China.... Aussie Best, the large supermarket chain that successfully operates 250 stores across Australia and New Zealand can think about exploiting the Chinese market for their own advantages considering the stiff competition in their domestic country and the huge market size of China.... nbsp;Cultural adaptation of business from an australian cultural spectrum to the Chinese cultural scenario seems to be the main issue....
8 Pages (2000 words) Case Study

Introduce a New Product to a Potential Market

This work called "Introduce a New product to Potential Market" describes a marketing plan to create a brand presence in Coles supermarket in Australia.... The direct selling approach will be targeting regular visitors to supermarket stores (Cousins and Lawson, 2007)....      It is an existing product of Goodness Superfoods and the marketing team is aiming to create brand stock in the 800 Coles australian based supermarkets....
6 Pages (1500 words) Case Study

Components of Information System at Woolworths Business

2- Introduction The Australian supermarket business is in its highly grown stage of life cycle with high rivalry along with the two main players in this marketplace; Coles and Woolworths.... Woolworths as an Australian supermarket business leader has been the main strength of new information technology based working and operational stature that is facilitating Woolworths to attain its basic economies of scale....
8 Pages (2000 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us