MGMT2007 Organisational Behaviour

The supermarket industry of Australia can be defined as the business that retails groceries and food lines. This type of industry is already characterized as mature industry. Coles and Woolworth in Australia, both are one of the leading companies that cover almost 80% of the market as compared to the other supermarkets. Slowing of the industry growth is one of the very common features of the mature industry. This industry has achieved the average Industry growth per year of 3.2 percent in between the years 2007 to 2012 and the future growth is estimated to be reducing a little to 2.9 percent till 2020 (World, 2018).

The Pestle analysis of the supermarket industry is as follows:

Political Factors: The nature of this industry is duopolistic as there are multiple companies which are into this industry like Woolworth and Coles. There is a lot of competition when there is existence of too many companies in the same industry. Hence, the rules of the government have very strict regulations for the duopolistic nature of the industry (Kolios, 2013).

Economical Factors: People in Australia spend fewer amounts on the supermarkets for buying the groceries and other things and this impact the economy of the country. The Australian government has eased the regulations on the retail industry and that makes the new entrants come to the markets and the competition increases (Kozlinskis, 2016).

Social Factors: Coles maintains very healthy and effective relationships with the community on the whole. It works with the NGO too for cancer people. On the other hand, Woolworth’s relations are very bad with the suppliers.

Technological Factors: Both the companies use good technology factors for the betterment of their own self as well as the industry. For Example: Woolworth has started using the SAP based merchandising system for improving the efficiency while Coles have increased the number of customers who uses internet facilities. They also give self check out facilities. Cloud infra is also being used by Coles.

Legal Factors: Both the companies have a battle with the Australian Competition and Consumer Commission. There is a recommendation for the strict codes by NFF (Gupta, 2013).

Environmental Factors: This industry has to use products which are sustainable as well as they should not create any harm to the environment. The supermarkets should be eco friendly. The carbon initiatives are incepted by Woolworth as well there are investments done for the efficient usage of energy to that a good environment can be maintained without any pollution and dirt (Rastogi, 2016).

Introduction: Coles was the very first super market in Australia which was founded in Melbourne in the year 1960. Later in the picture came Woolworth and Aldi named companies which also made its mark in this industry. Since Cole came into existence, it has taken over the markets since then. That is how all these companies were in the introduction phase.

Growth: Since the years 2004 till 2012, the industry was in the growing phase. Companies like Coles, Woolworth, West farmers etc all have grown since then. The reason of their growing was because the creation of the malls and the idea of super markets were at boom at that point of time.

Maturity: This stage of the product life cycle displays the point from where the companies or the industries face downfall in terms of the sales. Now since it is the case of Supermarkets and not one company, the industry kept on growing in good terms but because of the more new entrants like Aldi which is a German brand, Coles and Woolworth had to face serious issues. While there was still competition going on between Coles and Woolworth as well.

Decline: In the year 2017, there was a major crisis that the supermarket industry had to face in terms of the sales. Be it any company, the industry was on the whole down. However, it was just a phase of the industry that it faced. Recently, in 2018, there is again the boom of the supermarket industry in terms of sales and Coles and Woolworth, particularly are doing good.

Hence, it can be said that the industry on the whole was always in the maturity stage of the product life cycle.

                                                Figure 1: Supermarket Grocery Prediction in 2017-18.

                                                                             Source: (Foods, 2018).

Power of Buyers: The buyers have the reasonable power on the exchange relations when in the total purchases made displays the portion of the sales of sellers. All the super markets are very powerful buyers when they display or pose an integration threat. However, it is agreed upon that there is a trend within the huge and main Australian retail supermarkets to replace their suppliers increasingly with their own.

Power of Suppliers: The suppliers conventionally hold the power of the market since 1970’sand it was exercised via statutory marketing authorities and producer owned cooperation’s as they were required to gain the capital. The manufacturers exercised vital control since all supermarkets never wished to become powerful brands as there was a consumer demand for them (Tehrani, 2014).

Threat of Substitutes: In today’s world, convenience is the most important thing for the customers, the supermarkets offer a lot of one stop shop for the people who desires to buy wide range of fruits and vegetables at the same time. The stores like 7-eleven are actually the substitute of the supermarkets when the convenience perspective is thought of and in addition to that, they also offer a wide range of stocked items if compared with the companies like Coles and Woolworth (Ibis, 2018).

Rivalry between Competitors: The supermarket industry is quite big as compared to the other industries but the total number of competitors is 3500 and more. The combined profits are of $3.3 billion on $83 billion revenue of sales in the year 2011 to 2012. Still the Australian supermarket industry has 80% of the acquirement of the companies like Woolworth and Coles. These are the two main competitors in the market (Omsa et al., 2017).

Threat of New Entry: The industries that display good investment returns and those who have lower entry barriers are actually the probable entrants. The industry experiences reasonable amount of growth of 3.4 percent since 2012. The forecasts are estimated that the average growth annually would diminish to 2.4 percent till 2020 (Indiatsy, 2014).

The attractiveness of the industry is still maintained in people as people look forward to buy most of their stuff from one stop and what better can be an option if not supermarkets.

The resources of the industry or the company can be tangible, intangible as well as Human resources. Supermarkets are so many in number that they can easily resource many people who seek to earn for a living (Tuan, 2009). The outlets that the total number of supermarkets has are known as the tangible resources.  Intangible could easily be the investment that is done on the supermarkets and that is a lot of cost investment in supermarkets per annum. The humans are the most important asset in the resourcing as they need jobs and supermarkets are the ones that can provide them with so many jobs. Many people can earn their living with getting jobs in supermarkets (Ismail et al., 2012).

The capabilities of the company or industry   can easily be identified by just seeing the industries approach toward the customers.  The industry should have the capability to identify the needs of the companies as well as to fulfill the requirements of the customers by keeping lower prices. In this respect, Coles outstands the most as it started with the strategies of lowering the prices for the customer satisfaction. Hence the industry has the capability of the providing the customer satisfaction as well as fulfilling the needs of the companies as well (Galavan, 2015).

There are approximately 3500 supermarkets in Australia and many more are building or coming as new entrants. The core competencies should be able to fulfill these criteria of providing the customers the wide variety of markets. This is clearly a positive sign for the supermarkets as the customer literally has a wide variety to choose from. The core competencies of Australian supermarkets are good as they provide a good amount of their contribution to the benefits of the customers (Agha, 2012).

Going back to the porter’s five forces, as it is mentioned above that 7-Eleven type of convenience based stores are the threats of the supermarkets as they provide the wide variety of the stocked up products which supermarkets doesn’t (Czepiel, 2012).