Australian Retail Grocery Market Case Study: challenging the dominance of Coles and Woolworths
Report description
This case study on the Australian grocery retail market forms part of Datamonitor's case studies series which explores business practices across a variety of disciplines and business sectors. It looks at how the market is increasingly in the spotlight due to recent attempts to liberalize it, the growing strength of private label and the growing challenge posed to the Big Two, Woolworths and Coles.
Reasons to Purchase- Gain insight into the methods used by important industry players to give them a competitive edge
- Identify specific areas for operational improvements
- Capitalize on the knowledge of experienced companies when entering a new niche or market
Table of contents
CATALYST
SUMMARY
Analysis
The evolution of the Australian grocery market has been characterized by retail consolidation
Competition Commission findings in 2008 provide optimism for rival retailers
Retail concentration reportedly impacts healthy eating
High rental prices and large geographic spread hinder competition
Freshness and quality of products are the key determinants of where Australians do most of their grocery shopping
Australian consumers consider a store's location to be influential in choosing retailers
Private label penetration in Australia is still behind that of the US and Western Europe
Just a tenth of Australian consumers regard private label products as superior to leading brands
Woolworths and Coles have utilized economies of scale and vertical integration to grow market share
Strong supply chain efficiencies, a tiered private label architecture and growing consumer trust make Woolworths the "best in game"
Woolworths' expansion of private label lines has driven store loyalty
An emphasis on value for money characterizes Woolworths' marketing
Expansion through acquisitions and product development
Wesfarmers is reinventing the Coles shopping experience
Coles is placing a renewed emphasis on private label
A focus on on-shelf availability, providing better value to customers and expansion of house brands characterizes Coles new strategy
Online presence presents opportunities
Greater pressure on suppliers has attracted criticism for Coles
The dominance of the Big Two is coming under increasing threat from Aldi, and more recently Costco
Aldi poses a considerable competitive threat to the Big Two
The 2009 Australian Retail Innovation of the Year award demonstrates Aldi's considerable impact on the Australian retail sector
Growing consumer acceptance demonstrates continued potential for Aldi in Australia
Consumer perceptions have moved away from just cheaper pricing to quality
Costco's low cost model and diverse range of products are well suited to the Australian retail sector
Conclusion
APPENDIX
Case study series
Methodology
Secondary sources
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
List of Tables
Table 1: Total private label penetration and spend ($ millions) in Europe, Asia Pacific and the US, by country, 2002-2012
Table 2: Australian consumers are divided on their opinions about how famous branded food products, soft drinks and hot drinks compare to private label equivalents
List of Figures
Figure 1: Freshness and quality has more influence on Australians than overall quality of products sold and proximity to home
Figure 2: Woolworths private label range has two distinct price points
Figure 3: Woolworths' expansion of private label lines drives store loyalty
Figure 4: Woolworths intends to expand its private label beer offering
Figure 5: Coles unveiled a three-tiered private label strategy in 2005
Figure 6: Coles has extended its private label offering into ethical offerings and also alcoholic beverages
Figure 7: Aldi has been recognized for its innovative approach to retailing by the Australian Retailers Association
Figure 8: Aldi's private label stock does not have a common brand for all ranges (unlike Coles and Woolworths)
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