Coles is a public company, operating under retail industry. Negative publicity provides competitor brands like Woolworths with the opportunity to enjoy competitive advantage. Hostile relation with the suppliers regarding hard line negotiation has adversely affected the public sentiments of the Coles personnel. Operating on lower margin is a challenge in terms of increasing the sales revenue for the food products (Coles.com.au 2018). Communication gaps through improper advertising confuse the customers regarding the brand image. As a result of this, some portion of the buyers might prefer the products offered by local retailers, which degrades the position of Coles. Apart from this, ever changing needs, demands and requirements of the clients along with innovation dwindles the position of Coles in the Australian market. This discussion attempts to address these issues.
· Political instabilities
· Low profit margin
· Easy switching costs
· Consciousness towards health and wellbeing
· Farms and niche market
· Social media marketing
· Consumer Protection Act
· Reduction of carbon footprint
· Greener marketing
Political unrests aggravate the complexities for Coles in terms of conducting the import and export activities. This deprives the customers from getting branded products. Along with this, harsh tax obligations turn the professional relationships into a hostile one. Low profit margins results in customer turnover. Along with this, negative publicity for the products degrades the relationship with the suppliers (Hill, Jones. and Schilling 2014). This degradation stalls the productivity. This is a challenge in terms of fulfilling the altering needs, demands and requirements of the clients and the customers. Within this, if social media marketing is adopted, it indicates increase of the trafficking of the audience towards the brand image. Uploading the image of the products on the website and social networking site is productive in terms of enhancing the awareness towards the current trends.
Adherence to Consumer Protection Act is beneficial for Coles in terms of preserving the privacy and security of the customers. According to the protocols of the act, the personnel are to maintain ethical codes of conduct in advertising the marketing strategies. Within this, Wheelen et al. (2017) proposes that environmental directives are crucial in terms of preserving the ecological diversity. This is in terms of preventing aggravation of pollution. This is conducted through the adoption of farm and niche marketing, where natural ingredients are used for the production of the food products. Along with this, reduction of carbon footprints is also one of the good practices of Coles towards preserving the ecological biodiversity.
Porter’s five forces
Threat of substitutes
Threat of substitutes is high for Coles due to the emergence of convenience stores, grocery stores and farmer markets. These stores pose as a threat for Coles in their business operations (Coles.com.au 2018). These alternatives provide the customers and the clients with easy opportunity to switch brands.
Coles faces intense competition from brands like Aldi, IGA and Woolworths. Lack of perceivable differentiation disrupts the balance between the brands in the competitive ambience of the market. Price is the main factor for competition, however, choice of the products and store location also influences competition. GPRS in the remote areas provides Woolworths with more competitive advantage than Coles (Coles.com.au 2018).
Bargaining power of the suppliers
Bargaining power of the suppliers is low in case of Coles. The suppliers have limited power in case of selecting the intermediaries. Coles or Woolworths is the sole purchaser. Mention can be made of the brands like Kelloggs or Nestle, which do not interfere into the business of retail. For example, The Australian Competition and Consumer Commission has increased the competition barriers for the industry, which provides Coles with the opportunity to reform their strategies and secure the market share (Coles.com.au 2018).
Bargaining power of the buyers
Currently, buying power of the buyers is low for Coles. Federal government and ACCC intervene to push the competitive barriers, adding to the competitors. This allows the customers to select their favoured brand. Uploading the images on the social media and the websites offers the clients and the customers with the opportunity to bargain (Morschett, Schramm-Klein and Zentes 2015).
Threat of new entrants
Threat of new entrants is also low. Lease agreements and loans have increased the number of grocery store sites. Overseas brands have expanded the scope and arena of the industry. Social media marketing has enabled Coles to increase the trafficking of the audience towards the brand image. Location enabled sites proves advantageous for Coles to attain competitive advantage (Coles.com.au 2018).
Life cycle stage of the retail industry
Retail or supermarket industry can be ranked as moderate to high for Coles. The major drive behind this is the monopolistic nature of the market, which provides it the opportunity to rule the market. High barriers to entry and weak bargaining power of the suppliers provide opportunity to Coles to rein the Australian market. These aspects points out a high profitability for Coles. According to the challenges, Coles is on the post maturity stage. In the maturity phase, the Coles emerged successful in accumulating 80% of the market shares in the industry (Coles.com.au 2018). Widespread presence has added to the competitive advantages, securing the position within the market.
Currently, there is a decline in the sales revenue and profit margins, stalling the productivity. These issues have resulted in the switching brands, creating a downmarket scenario. However, planning for convenience style stores, acts as an opportunity in terms of attracting more customers towards the brand image (Morden 2016).
Cole’s resources and capabilities
Wide supply chain network is both a resource and capability for Coles. This is because of the inbound and outbound logistics. Usage of efficient technologies by the suppliers helps in maintaining the balance in cost savings. Offshore management helps the personnel in strengthening the stability in the professional relationship. Cost saving benefits is irreplaceable by any other resource, unless and until skilled and efficient workers are hired. Negative publicity aggravates the complexities in the supply chain network, indicative of hostile relationships. This negativity contradicts the food quality. As per the opinions of Engert, Rauter and Baumgartner (2016), consideration of the consumer experiences reflects the effectiveness of the procedures through which quality is assessed. This approach projects the initiatives towards maintaining the smooth functioning of the network.
Advertisements like Super Saver Weeks, Happy Hours add value to the brand image. These advertising campaigns enhance the buying power of the customers. This is mainly due to the effective management, which strives to enhance the efficiency in the business operations of Coles. Strategic management helps in regulating recessionary pressures and inflations. Effective coordination with the top level managers is assistance in terms of maintaining the pace with the current trends of competitive brands like IGA (Coles.com.au 2018).
Using latest technologies helps Coles in conducting the in-bound logistics programs. These technologies are assistance in terms of quality procurement for the food items. Transportation services widen the scope and arena of Coles in terms of distribution. This service prevents workers strike, reducing the delays in shipments of the orders (Trigeorgis and Reuer 2017).
Quality assessments and inventory management enhance the convenience of the customers. These activities are rare, providing Coles with the opportunity to attract more customers. For example, Sophisticated Point of Sales help the personnel to keep a track of number of stocks, stock units sold, and re-dispatch of the order once it falls beneath the stipulated level (Stead and Stead 2014).
Coles imitates Woolworths in terms of in-store promotions, which boosts the sales. Sales catalogues are distributed among the customers to inform them about the discounts and offers. These activities are done after thorough research of the marketing strategies of Woolworths, Audi and IGA (Coles.com.au 2018).
Divisional organizational structure helps Coles in enhancing the efficiency in the business activities. Effective communication between the management levels results in development of strategies, which are circulated in the departmental units. The personnel act according to the plans, which maintain the balance in the business operations. Audits help in evaluating the effectiveness, appropriateness and feasibility of the plans (Coles.com.au 2018).
Australian retail industry is filled with 140,000 stores, which aggravates the competition for attracting the customers. Lack of understanding towards the generic difference of the goods intensifies the degree of competition. Woolworths is one of the immediate competitors for Coles. Widespread presence along with salary hikes and development of new stores enabled Woolworths to become one of Australia’s leading gambling business. Competition between Coles and Woolworths is consistent with little difference in the prices of the products. Focus on quality helped Coles to overpower Woolworths (Coles.com.au 2018).
Mention can be made of downmarket scenario for Coles in terms of price, which enabled Woolworths to sell goods at a cheaper rate. In terms of establishing stores, the competitive rivalry between Coles and Woolworths is less. Both carry out demographic analysis before developing any new store (Coles.com.au 2018).
Cost leadership and differentiation are the two main strategies, which Coles adopt for marketing. Advertisements clarify the doubts of the customers regarding the price of the products. Through cost leadership, Coles generates value for the products, which offers quality products to the customers at low prices. Scaling the approach of the clients helps in maintaining the balance between the activities. Within this, market segmentation occupies an important position (Apenko 2017). For example, campaigning is done in offices, where the working mothers are interviewed for bringing innovation in the baby products.
If meetings are arranged between the top and middle level managers, strategies can be developed for enhancing the efficiency in the business operations. Market research would be effective for gaining an insight into the current trends adopted by the competitors. Street campaigns would be fruitful for gaining feedbacks from the clients and the customers. Social media marketing would help in increasing the trafficking of the audience towards the brand image. Offshore management needs to be secured with security policies for maintaining the confidentiality of the organizational data.
Coles is one of the retail companies in Australian market along with Woolworths, Aldi and IGA. Currently, the sales revenue and profit margin is experiencing downmarket scenario. Strategic planning is the need of the hour, which would help in maintaining the pace with the competitors. Within this, market research would be fruitful for analysing the tactics of the competitors. Considering the viewpoints of the clients would be helpful for upgrading the standards and quality of the operations. Audits and quality analysis is needed in terms of securing the market position and generating value for the business.
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