Situation Analysis and W ebsite audit Essay Example

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Environmental Analysis


We are in the digital era with new communication technologies coming up at a high rate. The internet has changed the retail industry to a great extent. Several retail firms are now using the internet to conduct business. Each of the four supermarkets has a website that it uses for various purposes such as advertisement, internet selling and communicating with key stakeholders such as customers and suppliers. Australia is well connected to the internet and the government has established necessary infrastructure to facilitate internet connectivity a such as satellite coverage, fiber-optic cable network and mobile networks. With the introduction of internet-enabled mobile devices, the use of internet is expected to increase, which provides the four retailers with the opportunity to utilise the internet to conduct business. Such opportunities include, for example, internet selling. Two of these four retailer, Coles and Woolworths, have already seized this opportunity since they have already started selling via the internet (Mitchell, 2014). Aldi and IGA are yet to start.

Competitor Analysis

Coles Supermarket

  • Second largest supermarket chains in Australia in terms of market share and operating revenue

  • Its operations are concentrated within Australia

  • Coles operates 741 stores that are spread throughout Australia

  • It employs over 100,000 employees

  • The company has been accused of using unethical business practices especially with suppliers causing supplier prices to fall down. This is so because the company has a high buyer bargaining power owing to its huge size.

  • For over a long time, Coles Supermarkets has used creative promotion programs that resulted to the attraction of customers. An example is “Sports for Schools” program where customers could collect coupons for their preferred schools. The company exchanged the coupons with sports equipment. The programs have resulted to significant growth of the company in terms of brand image.

Woolworths Supermarket

  • Woolworths is the largest in Australia in terms of operating revenue and market share

  • The market share of Woolworths and Coles combined is over 80%

  • The company’s operations are limited to the Australian market

  • The company uses attractive discount offers to attract customers to its stores, which has consequently enabled the company to increase turnover and brand prominence. An example is subsidizing the price of petrol for motorists who fuel at Caltex Woolworths and offering discounts for bulk purchase.

  • The company also uses shopping cards that allow customer to earn points for the purchase they make, which they can redeem at any Woolworths outlet

  • Another promotion program that the company uses is the frequent shopper club whereby customers earn a $20 voucher for every 2000 points that they accrue through shopping

  • This multinational chain of supermarkets operates over 9000 stores in more than 18 countries

  • In Australia, Aldi is a fast growing chain of supermarkets and a major threat to Coles and Woolworths especially due to its low prices. It affords to sell its products at low prices due to low staffing levels making it enjoy the benefits of low-cost strategy. Moreover, it has a highly motivated workforce since despite having low staffing levels that other supermarkets, it compensates its employee attractively.

  • In the UK, Aldi has won quality awards for its focus on high quality products.

  • Compared to other prominent supermarket chains, IGA uses a franchising business model that allows small-scale business people to own and operate a store through franchising agreement.

  • The competition strategy that IGA uses is deep market penetration through the operation of numerous but small family owned stores that operate even in remote parts.

  • In Australia, IGA operates over 1400 stores. Although these may not be as large as Cole’s and Woolworth’s they are more widely spread than those of Woolworths and Coles are.

Situation Analysis and W ebsite audit

Figure 1: Strategic Group Analysis. The analysis shows that Woolworths and Coles combine product diversity and high geographical distribution. IGA focuses on wide product range

SWOT Analysis


Coles Supermarkets

The company manages a significant percentage of the Australian market. The combined market share of Coles and Woolworths is about 80%, which has given these two market giants the power to control market prices (Chris, 2009). In terms of market share, Coles is the second largest after Woolworths (Chris, 2009). This means that Coles is controlling a significant market share greater than 30%, which is a major strength of the company since its large customer base gives it competitive advantage over its market rivals. Currently, Coles is operating 741 outlets throughout Australia (Wefarmers Limited, 2011), which implies that the company has a significant customer base that it uses to compete with other supermarkets in the market. Another strength is the excellent financial performance of the company; the company’s operating revenue as at 2011 was A$32.07 billion (Wefarmers Limited, 2011) giving it sufficient financial resources to implement strategies to enhance its market competitiveness.

Woolworths Supermarkets

The supermarket controls the largest share of the market. It is the largest supermarket in Australia in terms of revenue and the number of stores it operates since it operates 933 stores and annual revenue of A$54.3 as per 2011 (Chris, 2009). Excellent financial performance and wide customer base give Woolworths competitive advantage in terms of resources. Further, Woolworths has about 190,000 employees, which is a major strength of the company since the large human resource enables the company to compete well in the market. The company has established training and development programs that have resulted to a highly motivated workforce that provides the company with the necessary human resource to compete effectively in the market (Woolworths, 2014).

Aldi is a prominent discount supermarket worldwide operating over 9000 stores worldwide. A major strength of the company is its strong brand name. The strong brand name makes it the fastest growing supermarket chain in Australia, which is challenging the duopoly created by Coles and Woolworths supermarkets (Chris, 2009). The multinational nature of the business is another major strength because it enables the company to have high turnovers and operating revenues that provide required resources to establish and implement market competition strategies. Additionally, the multinational operation strategy enables the company to engage in price competition in highly competitive markets such as Australia.

Aldi is well known for selling high quality products. Although the company had initially been suspected of selling low quality products at low prices, it has recently convinced the public that it sells high quality products at reasonable prices, which enabled it to win the Grocer of the Year Award in 2013 and Which? Award for two years (2012 and 2013) (Sayid, 2013 & Yeomans, 2013). These recognitions will attract customers to the company.

IGA operates in more than 30 countries, which has enabled the brand name to become prominent. The business model that IGA employs gives it a major strength against its competitors. Unlike other prominent supermarket chains, IGA uses franchising models. As such, it is possible to find IGA stores remote sections of the Australia since a majority of these stores are owned by families. Therefore, even if IGA may not be able to operate large stores, it has managed to reach out to people in remote people through the operation of numerous, small stores. For instance, IGA has over 1400 stores in Australia (IGA, 2014).


Chris, Z November 9, 2009, Supermarket Duopoly Blamed for Soaring Food Prices. The Sydney Morning Herald. [Online] Retrieved from <> [Accessed October 24, 2014].

IGA 2014, IGA. [Online] Retrieved from <> [Accessed October 24, 2014].

Mitchell, S 2014, Coles, Woolworths Feeling Online Bite from Retailers. The Sydney Morning Gerald. [Online] Retrieved from <> [Accessed October 24, 2014].

Sayid, R June 19, 2013, Aldi Wins Supermarket of the Year at Which? Awards for Second Year in a Row. [Online] Retrieved from <> [Accessed October 24, 2014].

Wefarmers Limited 2011, Appendix 4E- Preliminary Final Report for the Year Ended 30 June 2011. [Online] Retrieved from <,%202011%20Full-Year%20Results.pdf> [Accessed October 24, 2014].

Woolworths 2014, Our People. [Online] Retrieved from <> [Accessed October 24, 2014].

Yeomans, J January 12, 2013, Aldi Scoops Grocer of the Year Award at Grocer Golds. The Grocer. [Online] Retrieved from <> [Accessed October 24, 2014].