Woolworths Limited is one of the leading companies in Australia. The company is specialized in selling groceries but also deals in selling magazines, stationery, and DVDs. Woolworths supermarkets is a focus center in this report. Supermarket includes vegetables, meat, fruit, packaged foods, etc. The company was founded in the year 1924, by F.W. Woolworth. The company operates 1000 stores across Australia that consists of 963 supermarket stores. The company provides rewards and loyalty bonus to the customers if they buy a product from the company's stores. The facility of the discount on the product is also available according to the regions. The competitors of the company in Australia include Coles, Aldi, etc. Woolworths serves around 18 million customers every week and they give value to each and every one (Woolworths Group, 2017).
The report talks about the industry analysis of Woolworths Company. This includes the market analysis as well that consist of the primary segment and target of the company. The paper throws light on the evaluation of the threats and opportunities of the company considering the Australian market. The analysis shows the condition of the market of the company.
Industry market of Woolworths includes the target customers of the company. The market gets influenced by the customer preference. Woolworth’s supermarket is leading market this only reason company is able to earn profit out of it. Further is a discussion of the current trends of industry analysis.
Growth and profitability are must for each and every company. The growth in the sales of the company rises 3.1% in the second quarter as compared to Coles; the growth posted by the Coles is 0.9%. The company said that their strategy for the growth of the supermarket is successful. Company registered growth in the sales of food division by 12.1%. Hence, there is an increase in the profit by 17.6% (Chung, 2017). The growth of the company can be determined by the shares that company is holding in the grocery market.
The above image clearly shows the grocery market share in Australia 2016-2017. Woolworths is holding the highest number of market share which is approximately 33.6%. Coles stands in the second position. The business of Woolworth's supermarket is increasing day by day. This clearly shows the growth of the company and also the amount of Profit Company is earning (Fin24, 2016).
The macro environment includes the external environment factors that affect the working of the Woolworth Company. The pestle analysis is one of the tools that can be used by the company to analyze the external factors (Kew, & Stredwick, 2017).
P- Political: - Woolworth got the advantage of the political close relationship between the Australia and New Zealand. This is the reason due to which company was able to establish trading cooperation between two companies, comprises of the single economy. Shareholders (domestic and foreign) of the company are also secure because of the economic stability among the countries (Adamkasi, 2016). Though, political disturbance can reduce the investors due to an enhancement of the risk factor (Bodie, Kane, & Marcus, 2014).
E- Economic: - The company operates in an economically sound country. Australia consists of relatively high living standard as compared to the other countries. According to the international monetary fund, GDP per capita of buying power stands at a 10th position. Though, a company faced a decline in sales at the time of recession. Apart from this company might face a problem of unemployment. This may create an impact on the working of the company.
S- Social: - Woolworth believes in delivering the customer delight by fulfilling the demand of the customers. The company identifies the changes in the customer preference according to trends. The company has kept relatively low prices of the product after considering the affordability of the customers (Fernie, Fernie, & Moore, 2015).
T- Technological: - Company is using information communication technology to bring innovation in the products. This innovation will enhance the efficiency of company's service and satisfy the demand of the customers. The company maintains a team of SOA (software oriented architecture) that monitors the business activity. Recently the company introduced Visa's pay Wave that helps in reducing the time of customers that they usually spent at check out queues. This is due to the adoption of the latest technology.
L- Legal: - In the retail sector each company needs to manage the food licensing requirement. If in case, the company wants to open retail outlets then company need to fulfill the legal formalities. These regulations can impact the working of the company. The quality of the food that the company is providing should be managed according to the country's regulations.
E- Environmental: - Company should always follow the environment-friendly business activities. They took part in the activities which reduce the harm to the environment. Woolworths has been participating its resources that help in minimizing the carbon footprint of the company. This will also reduce the waste of the natural resources. Investors and customers are aware of the environmental impacts so they like to invest in the company that takes care of the environmental factors.
Woolworths Company target different market segments. The markets which are targeted by the company include a demographic segment, behavioral segment, and psychographic segment (Culley, Graham, Kay, Norberry, & Wilson, 2017).
Demographic segmentation: - The economic condition of the Australia is favorable for the growth of the supermarket. The country comes under the developed country and standard of living of the people is quite high. The demographic segment also includes people of different age group, family size etc. Woolworth's supermarket targets all the age group people.
Psychographic segmentation: - This segment consists of the traits, values, and lifestyles of consumers. Generally, the company target people having the high-income slab. The purchasing power of the consumer in Australia is relatively high.
Behavioural segmentation: - The customers of the company spend a lot on shopping. Woolworth’s supermarket consists of all the required products of the consumers. The knowledge of the consumer defines the buying power of the consumer.
Primary and secondary target market
Each and every organization maintains some primary as well as a secondary target market. The primary target market is the segment where the company believes that they will be to give their best chance (Gitman, Juchau, & Flanagan, 2015). Woolworth also has a primary target market that includes customers having high-income slabs. The company aims at social development and concentration on the environmental needs of the customer. That is the reason the product is offered to the limited range of the people. Though, supermarket products are available for all age group people. The living standard or lifestyle of the Australians is quite high as compared to the other countries. More than 76% of the people like to buy products from the supermarket. This shows the living standard of the Australians. The product is available for both the genders. So it undoubtedly shows that the company can effortlessly earn a profit after targeting the primary market.
On the other hand, a secondary target market is a market which is second most important for the company. The people who buy the product according to their preference are second most important customers (Albuquerque, Cassel, Phalippou, & Schroth, 2017). The users of the particular product only generate a sale for one product. Hence, company focus on this market on the secondary basis. The attitude of the customer towards a product of the Woolworth comes under the behavior of the customer for that product. Ultimately company decided whenever customer preference is for a single product then it comes on the secondary market.
The level of involvement primary segment in Woolworth Company plays an important role. This involvement can affect the decision making of the company. Woolworth supermarket is popular in Australia.
The demographic segment includes the people of different age group have different preferences. This makes the company introduce a new product that can attract customers. Considering the people who can’t cook company decided to provide ready-to-heat meals which provide convenience to the customers. The company also provide the facility of ready-to-cook food products. The company is increasing the range of the meals this is because of the change in the lifestyle of the customers (Battersby, & Peyton, 2014).
The demand for the products is continuously increasing which makes the company from decision considering the customer lifestyle. The level of involvement of customers is continuously increasing. Some primary segment customers were not able to visit supermarket every time. To enhance the convenience of the customer company took a decision to provide the products online. The company took a step to invest the amount in multi-channel (Arli, Dylke, Burgess, Campus, & Soldo, 2013). The company offered new click and collect locations to customers within Australia.
The sales of the company get affected because of the price of the products. Company target high-income slabs people. Reason being the prices of the product provided by the customer is relatively high. Comparing the pricing strategy with the competitors it's quite high (Pollard, Landrigan, Ellies, Kerr, Lester, & Goodchild, 2013). Woolworths tries to understand the range of the price customer wants or the affordability of the customers. This affected the company to bring higher quality and better prices.
New stores and refurbishments
The company is said that they are trying to manage the balance between new stores and existing store refurbishments. At the time of the refurbishment company will take help of the local customers for the designs. The company wants to design according to the preference of the local customers. Customers made the strategy to open the store outlet where they can find the huge number of the potential customers. Considering the primary segment company took the decision for new outlets (Australian food news, 2015).
The above given are the few points which show that the primary segment influences the decisions of the company. These decisions enhance the growth and fulfill the demand of the customers. This helps in enhancing the customer loyalty towards the brand.
The competition of the Woolworth supermarket in Australia is continuously increasing. The current competitor of the Woolworths Company is Coles. As per the data, Woolworth is 42% expensive than Coles. The keep same or similar prices of the product across the world but on the other hand, Coles Company changes the prices according to the regions. The company also claims that they ensure that their customers provide a great quality product at the excellent prices. Strength and weakness of the company show the internal analysis of the company. As Coles is the biggest competitor of the Woolworth so below are the strength and weakness of both the companies. Woolworth has a direct connection with the suppliers which helps the company for smooth operations (Murray, 2014).
- The company is well-known brand and oldest brand in Australia. That consists of a large number of outlets.
- The company has a strong commitment to sustainability and environment. They also take care of the CSR programs that help the brand in creating a good market in Australia (Grigg, 2015).
- The company provide a product at relatively high cost and avoid offering a discount to the customers.
- The company doesn't have an international presence.
- The company provides attractive pricing strategy to their customers along with the promotional offers.
- The promotional strategy of the company made the brand popular within the country and outside the country. This is the initial step to expand the business internationally.
- Coles company is not able to fulfill the social responsibility and not able to fulfill CSR. That leads to the negative image of the brand in Australia.
- The company operates on low margin as compared to the competitors such as Woolworth.
The above description shows the strength and weakness of the company as well Competitors Company. Woolworth strength is a weakness of Coles and Cole’s strength is a weakness of Woolworth or vice versa. The competition among both the companies is neck to neck. It is also said by the company that they are making 3-year strategies that will help the companies in enhancing the trust of the customer. The strategies formed by the company focuses on the lowering the cost of the products and improving the customer satisfaction.
The positioning of the Woolworth supermarket in Australia market is relatively high than its competitors. The position of the company can easily be measured by analysing the amounts spent by the Australian on the supermarkets (Heffernan, 2016).
The above image throws light on the amount spent by the grocery buyers on supermarkets. Australian spends $32.6 billion at Woolworths which is comparatively more than other supermarkets. This clearly shows the popularity of the brand and the position of the company. The company stands on 1st position in Australia. On the other hand, the amount spent by the grocery buyer on Coles was $29.8 billion. This was possible because of the involvement of the primary segment of the company. Company sales, profit, position, etc. rely on the involvement of the primary segment (Richards, & Devin, 2016). The brand plays an important role for a company to lead in the market. The position of the brand is directly related to the brand value of the company.Positioning map
It is a map that categories the company on the basis of the quality and prices. The map helps in understanding the position of the company. The price and quality of the products play an important role for the company.
Positioning Map of Woolworths Supermarket
The above image is a positioning map that shows the position of the Woolworths Company. The company lies in the quality and high price. On the other hand, the competitive company Coles lies under the category of the medium quality with medium prices. This shows that the company Woolworth believes in delivering quality services to their customers. Maintaining a stable positioning in the market is a must for the company.
The report talks about the analysis of the company Woolworths. Company supermarket is a focused market in the report. The analysis and evaluation throw light on the market condition of the company. It also shows the opportunities and threats of the company that can help a company in taking the right step. The competition among Woolworth and Coles is continuously increasing. The company needs to take care of the strategies they are implementing. Woolworth needs to improve the weakness of the company to gain the competitive advantage in the market. The company makes strategies related to the market penetration which enhance the number of customers. A company can also offer the attractive offers on the occasions or lean season which enhances the demand of the customers. It also makes the international customers aware about the brand.
The company should try to work on the pricing strategy. So that company will be able to offer the affordable price range to the middle-income group range as well. This will help the company in acquiring the middle-class people attention. This will also enhance the brand value of the company. Later on, the company should try to expand the business not only domestic but international as well.
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