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Description

Strength (S)

Weakness (W)

S1: CS is the second largest W1: CS’s revenue player with a strong market growth is slower than presence and a high market share their competitors. of 29%. W2: CS has a high S2: Capable of using cutting- employee turnover rate edge technology to optimise with low working supply chain operations and morale and motivation. process. (SCA) Opportunity (O)

S - O Strategies

O1: Socio-cultural (Online Shopping) The online grocery industry is forecasted to grow by 21.7% yearly due to click and collect services. Online sales and home delivery groceries services rose quickly, and are expanding at a greater rate than physical stores. Covid19 further accelerates the trend of online grocery shopping. By tapping into the online grocery sector, overall sales revenue could be increased.

S2 + O1: Utilising cutting-edge technology to improve the efficiency of Coles’s online operations given the opportunity of growing the online grocery industry.

O2: Threat of New Entrants Significant capital investments needed to enter the industry and strong price competition among key players serve as a barrier for new entrants. These factors prevent major players such as Coles from losing market shares and revenues, due to low threat of new entrants (P5).

O3:Socio-Cultural (Convenience) Australia has become a nation of ‘convenient consumers’ due to their busy lifestyles. Thus, they seek convenient options in meals and shopping. By catering to consumers’ needs for convenience, it allows supermarkets in the industry to attract shoppers and earn revenues. Threat (T) T1:Socio-Cultural Customers in this industry are price sensitive. Players compete with price to attract customers and increase market share. Players could not greatly raise prices even after price competition had been slightly reduced. Price competition is forecasted to continue over the next 5 years. Profit margin for each player will be affected. T2: High bargaining Power of buyers Price sensitive consumers have low switching costs. As products sold in this industry are homogeneous, consumers switch between supermarkets easily. These consumers compare prices and are likely to shop at stores that provide them with cheaper alternatives. This thus affects sales revenue and profits across all industry players.

Opportunities

Threats

Socio-Cultural: (Online Shopping) Due to click and collect services available, the online grocery industry is forecasted to grow by 21.7% yearly. Online sales and home delivery groceries services rose quickly, and are expanding at a greater rate than physical stores (Youl 2019; Lane 2019). Covid-19 further accelerates the trend of online grocery shopping (Youl 2020). Overall sales revenue could be increased by tapping into the online grocery sector (PESTEL).

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Threat of New Entrants: Significant capital investment is needed to enter the supermarket industry (Youl 2020). There is also strong price competition in the industry which serves as a barrier for new entrants. Supermarket players such as Coles may potentially avoid losing market shares and revenues, due to low threat of new entrants (P5).

Socio-Cultural: Customers in this industry are price sensitive (Youl 2020). In order to maintain market share, players in the industry are competing with each other in terms of pricing (Youl 2020). They are unable to greatly raise prices even after price competition tone down. Price competition is forecasted to continue over the next 5 years. This may potentially affect the profit margin of each player and also, Coles (PESTEL).

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Social-Cultural: (Convenience) Australia has become a nation of ‘convenient consumers’. Due to busy lifestyles, Australians are struggling to manage their work-life balance as they feel more time-pressed and are looking for more convenient options (Lane 2019). Hence, they are leaning towards online shopping and togo meals. By catering to consumers’ needs for convenience, it allows supermarkets in the industry to attract shoppers and earn revenues.

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High bargaining power of buyers: Food products and groceries sold across supermarkets are generally similar. Customers are able to purchase these products at any supermarkets which indicates that consumers have low switching costs. Furthermore, consumers are price sensitive (Youl 2020) and thus, it is likely that they will shop at stores which provide cheaper alternatives. As they are able to compare prices and switch easily between supermarkets, they have high bargaining power. This affects the sales revenue and profits of all supermarkets which includes Coles (P5).

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