ustralian groceries market was very fragmented during the 19th century and was typically solely operated, region specific and served a very small community. Improvements came about in the 20th century with the development of supermarkets which provided one stop shop for its customers (Deloitte, 2012). The supermarket and grocery sector is a major contributor to the retail turnover of Australia, (Alexander) with revenues in excess of A $ 80 Billion in 2013-2014 contributing to a little over 7% of the economy while the grocery industry alone contributes approximate 20% of that of the supermarket and the grocery sector. The industry also employs well over 280,000 people (Tonkin, 2014).
Market definition
While the supermarket industry is massive, including a range of products from groceries to electrical goods, kitchenware, household supplies and other products, (Tonkin, 2014) we will confine our analysis to only the retailers in the grocery industry. There are two main players in this industry which forms a near duopoly of the market with a total combined market share of over 70%. (Tonkin, 2014) These players are Woolworths and Coles. While fringe players like ALDI, IGA, and Costco, to name a few have the remaining market share. A more vivid illustration of the market share is shown in Figure 1.
Figure 1: Grocery store market share (Tonkin, 2014)
In 2008, the Competition and Consumer Act was commissioned to ensure that there is fair and effective competition in Australia which applies to all businesses regardless of their size (ACCC inquiry into the competitiveness of retail proces for standard groceries, 2008) Change location
The industry is comprised of two separate distribution channel which are the vertically integrated chai...
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...market is quite high as consumers have very low switching cost. Since, the products sold at different stores lack differentiation, are located very close to each other and factors like Out-of-step pricing, poor quality of offer or service and empty shelf space each influence (Australian Government, Department of Agriculture) consumer’s decision and thus making it rather easy for consumers to switch stores. For this reason, the price elasticity of demand becomes very elastic.
Buyer power significantly affects the profitability of a firm as the price elasticity of demand of these products are very elastic and therefore, a slight increase in a product’s price might cause customers to switch to other stores as they have very low switching cost which could decrease the quantity sold and in turn reduce the firm’s revenue.
Buyer power is very high in the grocery industry.
They anticipate competition between supermarket chains will be fierce this year as food prices continue to stay low. The Canadian grocers have been grappling with declining food prices, especially for meat, and Loblaw’s said “The notion of a shift into a steady inflationary environment is going to be offset by what we see as a continued level of competitive intensity”
To create a sound piece of writing it is imperative to develop skills that make the piece both enjoyable and understandable to the reader. By doing so we become academic writers who acknowledge the importance of careful and concise writing. The piece of writing that I found best exemplifies an academic piece in its use of Craft tips is “The Supermarket: Prime Real Estate”, by Nestle. I believe this because of its meta-commentary, outstanding framework while quoting, and use of transitional phrases. This particular essay pulls together ideas about a modest subject, the grocery store and its’ setup, in a way that is intriguing to the reader by the expansion of simple ideas,
RNRA Team, “Supermarkets, Fresh Produce and New Commodity Chains: What Future for the Small Producer?” Hot Topics: February, 2004.
The retail grocery industry consists of the following strategic groups: grocery chains, small and large discount grocery (e.g. Dollar Stores and Walmart), wholesalers, and fresh-focused and specialty markets. Trader Joe’s could be categorized as a specialty fresh-focused store and it is often compared to Whole Foods, another organic store, defining it as its key competitor. Yet, it still competes with the large grocery retailers and now, Amazon grocery services.
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
catalogue promotions. These are some of the factors enabling low priced products providing many points of difference over competitors. Aldi’s approach circumnavigated many of the usual barriers to entry into this extremely competitive oligopoly. An example of an existing barrier within this market is the agreements between both Coles and Woolworths with shopping centre organisations including Westfield to have equal prime positioning and exclusivity to have stores within these prime centre locations. Aldi have considered this barrier of entry and looked at how they could work it to their advantage to differentiate themselves from the other two major retailers.
The competitive pressures that Oliver’s Market must be prepared to deal with are the pressure associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry and the pressure associated with the threat of new entrants into the market. They must be prepared to face with the rival stores, Trader Joe’s, Costco, and Whole Foods who had recently entered in the sales territory with brand new stores and so far Wal-Mart and Target also had announced plans to develop regional supercenter, that is, large –format discount center into their territory.
The framework that will compare Publix Super Markets and its competitors is the Five Forces Model of Competition. The five aspects that will be discussed are the threat of new entrants into the market, the bargaining power of suppliers and buyers, threat of substitute products and rivalry among competing firms. Striving for the optimal position in each of these categories has given Publix Super Markets the reputation it has pride towards earning. It is important to every compa...
This threat is especially high when The buying industry has a higher profitability than the supplying industry. Forward integration provides economies of scale for the supplier. The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products). The buying industry has low barriers to entry. In such situations, the buying industry often faces high pressure on margins from their suppliers.
A close look towards the enquiry set up by the competition commission , a proactive form of supermarket was sought by this group so as to investigate situations of abuse or even rule them out from the supermarket power keepers. If we consider the share of retail environment of the top super markets we would find that Tesco has a maximal share of about 20.8%, Morrisons have a share of 10.9% which is closely followed by Sainsbury which has a total share of about 10.6% and next in competition happens to be Walmart/ASDA having 9.5% share respectively. In an update, the coalition government in the UK had agreed to put forward plans so as to create intermediaries of supermarket so as to monitor the kinds of relationships which exist between a retailer and a producer. The main objective of this adjudicator is to address the different dimensions of the complaints being lodged by the farmers and suppliers as a measure to ensure that the supermarkets do not use their power in an undue manner.
Preface: Australian food industry is quite vast. It is big in the sense there are number of diversities associated in the industry as well the sector is one of the big contributors to the country economy. The GDP of the country is reliant more on the Australian food industry. The current discussion is about the ways how the Australian Food industry is facing the competitive challenges and opportunities in the contemporary business times. The focus of the discussion is made on the meat sector of the Australian food industry.
Challenges in Today's U.S. Supermarket Industry. 2014. Challenges in Today's U.S. Supermarket Industry. [ONLINE] Available at:http://msdn.microsoft.com/en-us/library/aa479076.aspx. [Accessed 31 March 2014].
The major players of retailing industry include Coles , Franklins and 7-Eleven. Obviously, Coles and Franklins are the major competitors of 7-Eleven. Coles is a full service supermarket operating 431 stores throughout Australia, its offers
According to Microeconomics, Price Elasticity of Demand is the responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product’s price (Hubbard & O’Brien, 2015). Demand is considered elastic when the quantity demanded for a product increases or decreases in response to price change. Normally, sales increase with price drops and decrease when prices rise. Coca Cola products are considered to have an elastic demand because quantity demanded for its products often change when prices change. If the price of Coke goes from $1.50 a bottle to $2.00 and the price of a 20 oz. Pepsi remains at or around $1.50
The food and staples retailing is an increasingly competitive industry. The market giants (competitors) are Coles (owned by Wesfarmers) which has 741 stores across Australia and plans to add 70 m...