Trends in the Australian Supermarket Retail Industry

By;

Silja Bohry 7042108

Tri Mai 6900453

Rishi Kanojia 6642748

Jatin Mehta 6665675

Selected Industry: Australian Supermarket Retail Industry

Selected Organisation: Woolworths Selected Market: Australia

Australian supermarket retail industry is one of the world's largest industries

Accounts for 62% of the total retail trade

Woolworths and Coles together amount to 80% of the market

Strong price competition between the major retailers due to high consumer demand

Industry and Market Analysis

Source: Woolworths 2010.

Woolworths - Background

Largest company in the Australian supermarket retail industry

Serving 95% of grocery items Shareholders and employees -

420,000 One of the most trusted brands

in Australia

Justification of chosen trends

Green consumption: Woolworths serves people’s concern about environmental and

health issues

Businesses joining Social Networking Sites: Expansion of target market

Green technology companies: Social responsibility about climate change and global

warming Giving an example to society

E-Business: Opportunity to conduct business cheaper

Scenario scope: Chosen trends could lead Australian supermarket retail industry into an economic boom (best case) or into a recession (worst case) within the next 5 to 10 years

Trend 1 – Green Consumption

Definition: Increasing numbers of consumers demand goods that are organic, locally grown and involve eco-friendly packaging

Evidence: - In recent years every business sector has

been impacted by the green movement (Agriculture and Agri-Food 2009)

- Green product popularity has grown over the past five years (Raybin 2009)

Strategic relevance: Increasing number of retailers include green products into food and grocery line

Preconditions- Customers’ concern for environment- Willingness to spend more on green products

Post-conditions- High income level of individuals- Endurance of the concern for environment

Trend 2 – Businesses joining Social Networking Sites (SNSs)

Definition: Social Networking is one of the biggest trend on the web and businesses increasingly use it as an inexpensive marketing tool

Evidence: Facebook (created in 2004)- More than 100 million members in 2008 and currently more than 500 million users (Facebook 2010; Zuckerberg 2008)

Strategic relevance: Online users as potential customers

Preconditions- Increasing number of users- Cheap marketing tool

Post-conditions- Continuation of high number of users- Increase in business growth and profit

Trend 3 – Green technology companies

Definition: Increasing green policies in the stores including energy efficiency, limiting carbon emissions from food transportation

Evidence: Companies are increasingly innovating to have a green image through operations (Makower 2010)

Strategic relevance: Supermarkets are setting a good example to the society of how to act environmentally friendly

Preconditions- Environmental concern- Companies feel environmental pressure

Post-condition- Pressure from the government

Trend 4 – E-Business Definition: Application of information

and communication technologies in support of all the business activities

Evidence: More than 75% of businesses operating a website (Internet Business Blog 2009)

Strategic relevance: More activities online

Preconditions- Cheap opportunities for business operations- Increasing number of people using internet

Post-conditions- Government developing new ADSL system- Cheap and fast internet

Deductive approach

Note: T 1-2 = Income level T 4-2 = Business Profit

Generic Deductive Framework

Scenario # 1

Name: “Boom”

Description: In this future individuals have a high income and Woolworths has increasing profits due to SNS appearance

Narrative: This scenario could happen if real GDP in the Australian market grows faster than the trend rate of economic growth and SNS users spend their money on Woolworths due to the supermarket’s online appearance

Scenario # 2

Name: “King Customers”

Description: In this future the individuals have a high income and Woolworths has decreasing profits from its SNS appearance

Narrative: This scenario could happen if individuals and SNS users avoid Woolworths and choose competitors instead

Scenario # 3

Name: “Flying low”

Description: In this future individuals have a low income and Woolworths has increasing profits due to its SNS appearance

Narrative: This scenario could happen if Woolworths was addressing low income customers through an attracting SNS appearance

Scenario # 4

Name: “Recession”

Description: In this future individuals have a low income and Woolworths has decreasing profits due to its SNS appearance

Narrative: This scenario could happen if there is a fall in economic growth and individuals either do not have the money to spend it on Woolworths or are not addressed through Woolworths’s SNS appearance

Risk and opportunity identification:

“Boom”- Opportunity to increase green products to serve the exclusive and wealthy customers - Opportunity to expand the online appearance- Risk that competitors copy Woolworths’s strategies- Risk that boom leads to downturn as economic peak is already reached

“King Customers” - Opportunity to restructure online appearance- Risk that Woolworths neither has innovative methods nor marketing opportunities to address potential customers

“Flying low”- Opportunity to expand online marketing

strategy to attract even more individuals with low income

- Risk that demand decreases as people have only little income

“Recession”- Opportunity for government initiatives- Opportunity to expand the market to other

countries- Risk of too little demand- Risk that cheap online marketing options are not addressing potential customers as they have only little money

Scenario Indicators

Percentage of estimated increased sales due to SNS appearance Competition

“Boom” High (about 80%) increased sales due to SNS appearance High competition

“King Customers” No increased sales due to SNS appearance No competition

“Flying low” High (about 70%) increased sales due to SNS appearance High competition

“Recession” No increased sales due to SNS appearance No competition

Conclusions“Boom” - Best future for Woolworths

“King Customers” – Woolworths has disadvantage against its customers, so the company needs to overcome the disadvantage of having no money

“Flying low” - Woolworths tries to get the necessary resources to attract people with low income

“Recession” - worst future for Woolworths

Note: The low income scenarios “Flying low” and “Recession” are quite improbable to occur in Australia!

Thank you for your attention…

ReferencesAgriculture and Agri-Food 2009, ‘Going Green: The Future of the Retail Food

Industry’, viewed 08 October 2010, <http://www.ats.agr.gc.ca/amr/4531-eng.htm>.

Facebook 2010, ‘Press Room’, viewed 05 October 2010, <http://www.facebook.com/press/info.php?statistics>.

Internet Business Blog 2009, ‘E-Business Growth Statistics’, 19 September, viewed 10 October 2010, <http://blog.internetbusinessesforsale.co.uk/e-business/e-business-growth-statistics-2009>.

Makower, J 2010, ‘State of Green Business’, GreenBiz.com, viewed 12 October 2010, <http://www.greenerworldmedia.com>.

National Association of Retail Grocers in Australia 2002, viewed 10 October 2010, <http://www.narga.com.au/docs/NARGA_ISSUES_2002.doc>.

Raybin, A 2009, ‘Green is Gold’, Air Dye, 08 June, viewed 08 October 2010, <http://blog.airdye.com/goodforbusiness/2009/06/08/green-is-gold/>.

Woolworths 2010, ‘How We Do Business’, viewed 07 October 2010, <http://www.woolworths.com.au/wps/wcm/connect/Website/Woolworths/About-Us/Woolworths-Facts/How-we-do-Business/>.

Zuckerberg, M 2008, ‘Our First 100 Million’, Facebook, 26 August, viewed 05 October 2010, <http://blog.facebook.com/blog.php?post=28111272130>.