Comparison of Coles and Woolworths supermarkets in Australia PDF

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Comparison of Coles and Woolworths supermarkets in Australia...

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Comparison of Coles and Woolworths supermarkets in Australia 1. Overview of two companies Coles is a chain of supermarkets, headquartered and operational in Australia. The retail and services oriented brand that started off as a small, local shop in Tasmania has now, during the course of over a century, been able to stake its claim as one of the powerhouses in the nation’s retail industry, with well over 100,000 workers employed in over 800 stores spread across Australia. The company, through commendable marketing tactics, as well as innovation and modernizing, has now resulted in billions in revenue and becoming a household name. It now holds one of the most uniquely differentiated and diverse portfolios of any retail chain the world, through strategic partnerships, as well as understanding the demands of its key demographic and providing them with a one-stop shop for all their needs. The company has used its large revenue stream and influence to maintain its position at the top through expansion and utilization of economies of scale in order to fend off competition. Woolworths, another major player in the Australian retail industry, makes up the second half of the duopoly. Founded in 1924, the company has grown to become one of the largest and most profitable chains in the nation, with over 1000 chains and 225,000 employees as of 2019. An analysis of Woolworths’ financial performance shows that the chain has continuously grown in almost all aspects of its organization. The company has one of the largest and most diverse range of products under its list of goods, with the aim of becoming a one stop shop for customers looking to purchase any good regardless of price or classification. With higher revenues and more employees being hired every passing quarter, the company has therefore proved itself as another powerhouse in the Australian retail industry. 2. Segmentation and targeting There is not a major difference in both Coles and Woolworths’ segmentation and targeting strategies. As both are large scale retailers, they need to have as many potential customers under their ambit of revenue as possible. Analysis of segmentation of any organization can be done by looking at a number of metrics, such as geography, demographics, behaviors and psychographics. Geographically, Coles and Woolworths cater to the entirety of local inhabitants of Australia, with density of both urban and rural areas. Similarly, they cater to all potential customers regardless of age, gender and life-cycle stage. When it comes to income classes, special attention is paid to individuals coming from lower and middle income class households. This is largely due to the fact that higher income groups are more inclined towards specialty stores and would much rather go to individual stores for certain goods rather than a one-stop shop. Targeting to lower income groups is also beneficial as it allows for a much larger number of people that would be likely to revisit and make your store their primary shopping outlet if they saw that your prices are lower than the competition. Occupational targets of Coles and Woolworths are also understandably diverse, as they aim to appeal to everyone looking to purchase goods on a budget, including students, workers, employees, and lower level managers that may be from either the public or private sector. Through these measures, Coles and Woolworths are both able to target a huge number of customers that have a behavior of looking for a cost advantage as well as those that can either be loyal or switchers with the purchase decisions they make. 3. Differentiation and Positioning

The core of Coles differentiation efforts lies in its “Down Down” pricing strategy, wherein the prices of goods that it keeps in its stock stay lower than the competition. The way it distinguishes itself is by keeping the cost of these goods low throughout the year, instead of holding sale events where the prices are drastically down. This allows it to be the primary location for customers to shop in regardless of whether there is a sale happening, potentially improving customer loyalty. Through this strategy, Coles has been able to earn the title of the most affordable supermarket chain, while providing the most advanced and modern goods to its customers. When it comes to positioning, Coles aims to attract customers that are price sensitive, while looking for a diverse range of goods for their homes and daily use. The huge variety of products that it sells, as well as the large number of stores that it operates shows that Coles has positioned itself as an affordable and convenient alternative to other stores that base their stake in the market primarily on sales and discounts that last for limited time only rather than the full year round. Woolworths, like its counterpart Coles, has taken a number of measures in order to diversify itself from the competition. One of the largest ways it does so is through its range of generic, private label brands. Taking a note out of Amazon’s strategy, Woolworths has a number of brands that range from everyday goods, food lines for health conscious demographic, and limited edition premium products. These goods are not only reliable, as they are backed by the chain itself, but also help the company increase its revenue as the profits from these goods do not go to a third party. The company’s “Fresh Food People” slogan is therefore clever differentiation in a market that is becoming increasingly competitive. 4. Market offerings Coles has a diverse range of products under its ambit of retail chains. The aim with any conventional retail chain such as Cole or Woolworths is to have as many different products as possible, so that the large store is the only place a customer needs to look for when going out to make a purchase. Coles excels in this in a manner that is unprecedented. While providing the conventional goods for sale such as grocery items, fresh foods, produce and electrical goods, it has also diversified itself by integrating fuel services as well as financial services in its repertoire. Along with this, it also markets self produced goods as well such as Coles Liquor and Flybuy. By diversifying itself and integrating itself in a vastly diverse range of products, Coles makes it so that it is nearly impossible for anyone to not have brand recognition of the chain’s vast product offerings. Moving on to Woolworths, while ensuring that all conventional and widely sought goods are available in their chains, the company also takes a step forward and ensures that premium goods that may not necessarily be for the majority are also available in its stores. The company has initiated a number of strategic sourcing partnerships with well known brands around the world, helping it ensure that goods from local and international manufacturers and brands are readily available for its customers. Like Coles, the chain has also offered subsidized petrol stations where its regular customers can avail various discounts and cashbacks. The company’s customer-centric services are therefore reflected by its immensely diversified market offerings. 5. Pricing Coles implements a pricing strategy that allows it to be a cost leader, and effectively helps it target those middle and lower income groups that are looking to buy goods on a budget.

While the cost of living in Australia only grows higher, Coles has reportedly decreased its prices for six straight years, claiming in its annual report that a person can as much as $700 every year by exclusively shopping at their chains as compared to the competition. Along with an overall lower pricing strategy, known as the “Down Down strategy”, Coles also continuously initiates discount campaigns, loyalty programs and other promotions in collaboration with different brands. Woolworths, similar to most other retail chains throughout the world, also focuses on providing discounts and loyalty rewards to its customers, in an effort to cut costs. Its manufacturing wing of the organization also helps it to provide goods at a lower cost as they can save the money they would otherwise give a third party to produce. While also working towards keeping its prices down so that it can cater to as many customers as possible, Woolworths has also been able to capture higher income classes by introducing premium products in its product line. This is improved through the company’s private label “Gold” brand, that allows them to produce and sell goods at a lower cost. 6. Promotional Mix The promotional mix is a number of ways by which analysts can understand how a company markets itself in order to improve its brand value and recognition. There are a number of aspects that can be seen while analysing a company's promotional mix including advertising, personal selling, sales promotion, public relations and direct marketing. Coles has become synonymous with lower prices over the years, something that it aims to emphasize further on through promotion. The company’s tagline, “Why Pay More”, reflects this, and is highlighted through multiple conventional as well as contemporary marketing campaigns, that are done through newspaper, television, endorsements and multiple sponsorships. Loyalty programs and discount campaigns are common promotional schemes that it implements and have helped the brand’s recognition immensely, as its FlyBuy loyalty program was found to be one of Australia’s most well known schemes with an estimated 6 million active Australian users. The company also has state of the art planning for its stores so that the products are placed in such a manner that they can be instantly found and recognized. Its discounts on these products are incomparable, with customers often being able to purchase goods as low as one sixth of the price as compared to smaller competitors. Woolworths uses a myriad of different methods to promote its product line and offerings. It uses conventional methods of advertising such as newspapers, radio, magazines, newsletters, billboards, hoardings, and leaflets in order to make its customers aware of its updates and new initiatives, while also improving awareness of its brand. Along with this, modern promotional tactics such as Facebook, Twitter and other social media platforms are regularly utilized for enhanced tapping into its younger markets. Its public relations as well as sales promotions are exemplified through its Loyalty Programs, that gives its customers an incentive to continue shopping at their retail outlets. Furthermore, a similar tactic known as Everyday Rewards gives customers the ability to maintain a log of all the different discounts that are available to them upon certain purchases made through all the chains that come under Woolworths. Through these measures, Woolworths is able to successfully promote all the benefits that it provides its customers, and increase the chances of them becoming loyal to their brand. 7. Place or Distribution

Coles employs one of the most intricate and successful distribution channels in any major retail chain. With over 800 chains, it has been successful in its aim of provided unmatched availability of all goods that a customer may demand. Being a retail store, its distribution is divided into the category of products that it puts up for sale. These categories are then given intensive channels by which they are able to go from their relevant warehouses to the chains where they will eventually be sold to the customer. Through these measures, the chain ensures that its locations can never fall behind on demand and, because of this, it has earned a reputation of being reliable with the stock it maintains. Woolworths is one of the best known brands in the Australian continent, and a large factor that helps this is that they have captured almost every city and area through over 1000 locations. The chain has been able to maintain the quality of these locations through strict standard operating procedures that all branches are obligated to abide by. Cleanliness, attractiveness and ease of mobility for the customers are emphasized on in all stores under the Woolworths name. Along with physical locations, Woolworths has modernized its distribution through its online presence as well as its mobile app that allows customers to shop from home and have their orders delivered to them in a quick and convenient manner. The chain emphasizes on the employees that it hires to keep its locations efficient and reflective of the company’s commitment to providing an ideal experience for its customers. Through these measures, Woolworths is able to fully capitalize on its large scale production to provide welcoming and attractive locations as well as modern and efficient distribution to its customers....