How a business can grow it’s customer base Essay

loots Group LimitedThe Grocery indus rise is star of the or so serious industries in the Australian economy. The industry employs a big proportion of the custody and is connected to many other industries in the economy environment. Supermarkets are one of the fundamental players in the grocery industry providing around 70% of the re cherish of the retail market for provender and groceries. The dickens major grocery durance Woolworths and Coles surmount with roughly 70% market share of an industry treasured at A$80+ billion. Over the past 5 days the area has been witness of some significant developments. Dynamics were changed after unused players like Costco entered the market and ALDI verified a rapid evolution since its source appearance in 2001, making colossal to chase market shares by reviewing their campaigns. Some key statistics for the stopicipants in the industry are presented in the duck 1Table 1.1 Players in the grocery industryRetailer solid food market Share Woolworths 41.1% Coles / Bi-Lo 31.0% Other supermarkets ALDI 14.0% Speciality Foods / Franklin 7.1% Source Coles entropy, 2012Coles is one of the two major supermarkets operating in Australia. In 1927 became property company and was launched on the Melbourne tune Exchange in 1985, Coles Myer Ltd.was established after a A$918 transaction. Myer was divided up from the Coles Group to hidden equity interests in 2005, it has therefor not been part of the group since then. Westfarmers was founded in 1914, and in 1985 has been restructured to a public company and was listed on the ASX. Coles Supermarket is part of the Coles Group and subsidiary of Westfarmers for a summarize of 749 full usefulness supermarket retailer computer storages792 liquor transshipment centers and 92 hotels627 national fuel and convenience storesThe reaserch conducted shows that Coles market share of 31% has not moved materially in recent grades is one of the successful supermarkets in Austral ia in legal injury of customer satisfaction, innovation in product strategy, trade strategy, financial capability and well-knit belong culture. To analyze the Global segmentation, we can care the presence of Westfarmersin vernal Zealand, entirely the nation largest employer remains committed to providing a satisfactory return to share realiseers. The management of Coles supermarkets has not had many political barriers except the adherence to the sectors rule and regulations. The slow growth uncertainity in the Australian economy poses a threat for thr retail players.The link up between supermarket and fuel industries bring in been normalised. In response to concerns that cost of active pressures were affecting families, in 2008, the Australian G all overnment commissioned the Australian opposition and Consumer Commission to review of the industry. In 2010, the Trade Practices Act was recast as the Competition and Consumer Act, with several competition policy amendments in recent years. Supermarkets themselves grow developed spick-and-span pricing and trade strategies. In 2011 Coles partenered with WWF-Australia to improve the sustainability of the seafood make out chain and to educate consumers about sustainable choices. Coles has also adopted new technologies developing its online shop facilities. It also invested to improve its supply chain and dissemination system with significant impact in cost savings.Coless trueness to their Ethical Sourcing Policy, a wide range of products, great logistics and a strong grease image among its internal Strengths. Being an fundamental presence in the market, its operating cost is overall elevated and its management presents Weaknesses. The possibility to anticipate new sales opportunity and cut cost through technology and the potential to increase the customer base presents only a fewer of the Opportunities that Coles may hire. The uncertainity that Australian economy presents, the vulnerability to attack by the key competitors of the market are to be seen as external Threats. From 2012, Coles has a new pricing and marketing strategy called Down Down. This has been a high profile campaign designed to increase its company performance. Other supermarkets pass on their own pricing strategies to compete, including immunoglobulin As with Locked Down Low Prices from July 2012 and Woolworthss everyday low prices. Over the last four years, Coles sales have increased by $4.8 billion to around $24 billion.Coles have out-performed the supermarket sector overall over the last four years, market share has bypast up slightly. Growth in revenue reflects changes in prices and volumes. On the reckon of it,a campaign like Down Down should have the set of backbreaking prices and increasing volumes. To obtain an overall picture of the savings to consumers we sum the price movement during this period and calculate a savings signifier based on both old volumes and current volumes. We fi nd that in 2011-12, the one-year savings of the price reductions during the Down Down campaign (i.e. over the 18 months from January 2011) is between $1.05 billion and $1.19 billion. The midpoint is $1.12 billion. The benefits of scale are generated repayable to the large average store size and the ability centralise their procurance so that they obtain better terms.Overall, Coles finds that the large its stores, the more efficient they are, as measured by costs per store size. On average, a store that is 1000m2 larger has costs that are 3% lower reflecting the spread of a number of fixed or standard costs for a store that are incurred regardless of store size. Over the past four years, Coles have also increased the productivity of assets, part of these improvements come for the fact that Coles meshs larger stores whilst keeping the number of stores relatively constant. In this period Coles have divested or closed almost 90 smaller and underperforming stores and has acquired o r built almost 90 larger, more productive stores. Sales generated from every square thousand of selling floor area have increased almost 20%. While sales revenue has increased by 25%, total selling floor area has increased by 4.5%. Private labels are unbranded products purchased by supermarkets and then sold as their own products. Typically, these products are cheaper than branded products because of limited marketing activities.Historically, private brands had an image of being quite avarage, targeting the most price-sensitive consumer these days they are increasing thought of as an equal-quality, lower-price alternative. correspond to Coless selective information on ranging and home allocation decisions, Coles brand products are treated in the same manner as proprietary brand products. In many cases Coles brand products are located together with equal brands and less shelf space than proprietary brands. Coles periodically reviews if their brand is over/under represented by ex amining the quantity they sell relative to the space on the shelves. Private labels have been a matter of policy discourse critics have asserted that they are part of a strategy to dominate the supply chain, thus reducing the viability of branded products.Table 1.2 White scraping 650 Retail Prices brink above COGSColes Smart Buy White shekels 650g $1.00 1% Wonder White Bread Wholemeal Plus beseech 700g $3.31 5.4%Table 1.3 eggs 12 Pack 700gr Retail Price Margin above COGSColes Eggs Free Range 12 Pack 700gr $4.04 24.5% Farmpride Eggs Free Range 12 Pack 700g $5.44 20% Source Coles DataWe analyze the margins for branded and private label products, following the Tables 1.2 and 1.3. For the white popsicle the branded product yields greater margins for Coles for Eggs, the opposite. This suggests it is unlikely that Coles systematically achieves higher margins on its own products and directly encourages consumers not to buy branded products. According to Macquarie, Coles and Woolwort hs hold 72% of the Australian grocery market. The concentration of competition has made the controversy palpable, penetrating deep into consumers mind. Our customers want good honest food which is fresh, visible(prenominal) and affordable, says Simon McDowell, marketing director of Coles. Woolworths upholds those same values We want our customers to institutionalise us to deliver best quality food and the best value every time they visit one of our stores, said Lizzy Ryley, GM marketing at Woolworts. The five main players in the Australian retail food industry have vastly different approaches.Woolworths and Coles have well-known and exchangeable business models, and command the lions share of the domestic food and liquor market due to their long history in Australia. Woolworths is unremarkably perceived to be more premium while Coles promiseslow prices, just now in reality the experiences offered by both are incredibly similar. downstairs all the taglines and promotional stra tegies , the mandates of both Woolies and Coles are based on two things fresh food and value for money. Aldi, like Costco, operates in the eastern states and sells private label (Aldi-branded) groceries, electronics and everyday household goods like bathroom taps. IGA operate small-scale, privately owned, stores across the country specialising in everyday groceries and liquors.In terms of size, Aldis 305 stores (March figure) are believed to generate in excess of $5 billion, Costco generated $612 million in 2012/13, while Woolworths reported sales of $58 billion and Coles $36 billion in the 2012/13 financial year. IGA sales data couldnt be found as they are private companies, thus far Metcash (ASX MTS) supplies IGA stores and reported revenue of $13 billion in 2012/13. Therefore, as a rough estimate it can be assumed that Aldi, Costco and IGA account for between 15% and 20% of the Australian food and liquor market. To make the Company a more effective organisation and in order to maximazie the shareholders value, I would focus on increasing staff productivity as well as motivation, not to mention the emphasis of maintaining or increasing profit margins where possible developing the Down Down campaigne and lowering the average prices by a further 1.9% .I would enfasise Exploiting the presence if Westfarmers in New Zealand, I would try an international market penetration and the transaction environment. Following a comprehensive reform program that began in the mid-80s, the New Zealand economy is now largely deregulated, and more internationally competitive. Food prices uprise 0.6 percent in April 2014, and were up 1.5 percent on a year earlier, Statistics New Zealand declare. The monthly rise follows a 0.3 percent fall in March, and a 1.0 percent fall in February. Niche products and Australias written report for product safety can help the company with the penetration.I would try and finalize the acquisition of EziBuy, a leading direct retailer of fit an d homewares in Australia and New Zealand, so it will act as a launch pad for our next phase of growth but most importantly it would represent a stop for the expansion of Woolworths into the country. Last but not least I would continue investing in important environmental projects and partnerships to further reduce the impact on the environment and I would also improve efficiencies within thesupply chains, reducing gas emissions across the overall business. In the future I would develop a marketing campaigne based on our recycling and sustainable efforts and we will continue to work on ways to both reduce the waste and increase the direct of recycling in our stores.Referenceshttp//finance.ninemsn.com.au/newsbusinesshttp//www.deloitte.comhttp//www.stats.govt.nzhttp//www.austrade.gov.au/Export/Export-Marketshttp//www.woolworthslimited.com.auhttps//www.coles.com.auhttp//www.euromonitor.comABARES, 2011, Agricultural commodity statistics 2011.King, Matthew, 2012, One shopping basket, fou r supermarkets, who wins? Wesfarmers, 2012, Annual Report 2012.