Coles Supermarkets Australia Pty Ltd is established in 1914 in Collingwood, Melbourne by George Coles. It has a total of 809 stores all over Australia. Coles follows unique strategies which help in surviving in this competitive market like using attractive advertising and slogans like ‘Proudly Australian since 1914’ specially for price-conscious customers, allotting different levels of generic brands for different customers and with effective online order and delivery/pickup service.
Business Environmental Scan
Environment scan is the process where members of the organization analyze various external factors, trends, opportunities or threats which have an impact on organization decisions directly or indirectly. It helps the organization to adapt itself according to the external environment as there is no control over it.
Cole’s supermarket is also affected by various external macroeconomic factors like-
- Political factors– Federal government has recently taken several steps to decrease the entry barrier so that new player can also enter and run their businesses which help in the increasing of the bargaining power of customer (Dutta, 2018).
- Economic Factors – The Cole Supermarket can move to private label where the company can manufacturer products in its own brand name and thus able to save cost and earn more rate of profit.
- Social factors – People of Australia are now more sensitive towards their health and so there is a continuous change in taste and preferences of the consumers. This can be an opportunity for the Cole Supermarket to offer healthy and organic products to the people to create a strong brand image. Currently, Cole Supermarket creates Cole’s express which serves as convenience stores and acts with consumer needs.
- Technological Factors – There is a tremendous change in technologies during the last decade and Australian population has also adopted these technologies for shopping and variety of purposes. Therefore, the company is required to use the latest technology for the processing of stocks along with analyzing consumers demand and preferences.
- Demographic factors -Cole has developed itself in almost all of the capital cities of Australia and majority of the population is youth. The population of Australia is grown by 1.4% in 2015 (As per Australian bureau of statistics, 2015). So, the company should focus on the people between 20 to 65 years as they consist majority people of the population.
- Legal factors - The Australian Competition and Consumer Commission (ACCC) accused Coles Supermarket over the retailer’s alleged unconscionable conduct with suppliers in 2014 and they also won that action. ACCC also want Coles to divest supermarket development site to secure approval for a new superstore at Lakelands, Western Australia. Coles currently controls a superstore at Meadow Springs, which is within 5km of Lakelands, and now the company was showing a keen interest in the retail site at Singleton so that to start a new superstore. This will make Coles operate up to three full-line supermarkets and ALDI was the only supermarket which was trying to open in that local market by 2016. This addressed the competition at a prior stage and the ACCC assumes that there was no need to conduct a full public review of the proposed acquisition and it can also oppose the acquisition if there is a breach in section 50. So, for the protection of the interest of the consumers, ACCC can stop these anti-competitive practices.
Challenges faced due to external factors
Former managing director of Coles Supermarket - Peter Scott stated that half-year drop in the Coles earning was due to the annualization of the company’s investment in customer service made in 2017 (Hatch, 2018). Around five years ago, Coles was accused of using wrong market practices which make force to the supplier to lower down the prices (Grimmer, 2017). With the policy of globalization, there is a free exchange of people and goods throughout the globe and various retail companies are acquiring cheap labours from different countries as in Australia, the cost of labour is very high. There is also a tight competition in the market as various rivalries are present with their own strategies and mission. Woolworths and Coles supermarkets are the biggest competitor in the industry (Knox, 2015).
Coles Supermarket should more focus on technology advancement to achieve their goal with the help of effective strategy. They should use the help of social media marketing and internet marketing to make their consumer segments bigger. There are various opportunities available in national liquor market (Dutta, 2018), insurance sector and finance sector. Cloud infrastructure can be used effectively which will help in saving costs. Greater control over the supply chain can also help to gain profit at multiple levels. In this competitive economy, Sponsorship and Franchising will also help the company in boosting their business.
Australian Demographic Statistics. (2015). JUNE KEY FIGURES. Retrieved from: https://www.abs.gov.au/AUSSTATS/[email protected]/Previousproducts/3101.0Main%20Features1Jun%202015.
Curtiss, G . (2015). Environmental Scanning. Retrieved from: https://groundfloorpartners.com/environmental-scanning/.
Dutta, S. (2018). Coles Group Limited SWOT & PESTLE Analysis. Retrieved from: https://www.swotandpestle.com/coles/.
Grimmer, L. (2017). The diminished stakeholder: Examining the relationship between suppliers and supermarkets in the Australian grocery industry. Journal of Consumer Behaviour, 17(1), e13-e20.
Hatch, P. (2018). Coles earnings fall, adding to Wesfarmers' Bunnings UK woes. Retrieved from: https://www.smh.com.au/business/companies/coles-earnings-fall-adding-to-wesfarmers-bunnings-uk-woes-20180220-p4z109.html.
Knox, M. (2015). Supermarket Monsters: The Price of Coles and Woolworths' Dominance. Australia: Redback.