Groceries market Australia


Elaboration, 2008
27 Pages, Grade: 80%

Excerpt

Table of contents

1. Define and map the market
Describe the needs, solutions, value chain, all producers through all channels to all consumers
1.1. Structure of the grocery industry (retailing, wholesaling, grocery supply)
1.2. Competition
1.3. Buying power
1.4. Industry participants
1.5. Market concentration
1.6. Grocery retail developments
1.7. Increased market segmentation and differences in product range
1.8. House branding, private label as a trend
1.9. Drivers of food price

2. Identify the customer
Identify the key players in the value chain, How are suppliers selected and on what basis?What is the decision making process?Who are the key decision makers and influencers?
2.1. Consumer behaviour and choice of grocery retailer
2.2. Consumer demand factors
2.3. Consumer issues
2.4. Spending patterns of consumers in different kind of supermarkets
2.5. Decision making process
2.6. Decision-makers and influencers

3. Identify the Key Buying Decision Making Criteria
What are the key determining, needs for each decision-maker in order of priority in the buying/supplier selection decisions?Identify unmet or poorly met needs
3.1. All grocery shopper segments

4. Discover segments
At a relevant level in the value chain, group customers with similar needs or behaviour. Create your segmentation framework. Using the marketing ability matrix measure segment attractiveness and competitive position for your company and select your “target” market/s.

5. Validate segments
Do the segments make sense and fit your knowledge of the market

6. Develop a Customer Value Proposition (CVP)
Using the CVP framework discussed in the course, develop a CVP for the launching of a business or product to meet the needs of your chosen market segment.

7. Marketing Mix
Briefly describe the marketing mix required for the development of marketing strategy to achievethe company`s objectives in the chosen segment.

8. Appendices
Grocery retail- what determines prices?
Mean weekly equivalised household expenditure
National overview of the retail and grocery industries
Product segmentation and share of revenues in the grocery retailing
Raising food price of Australia compared to OECD countries
Comparative change in income, wealth and selected consumer prices between 1985 and 2005

9. References

Define and map the market

- Describe the needs, solutions, value chain, all producers through all channels to all consumers
- Identify the key players in the value chain

The focus of this report will be the groceries industry in Australia. The author of this report decided not to take into account liquor products, fuel and petroleum products, takeaway, restaurant and other food retailing products as they are sold outside the grocery retail sector. However, these components may be referred to at some stage throughout this report.

Structure of the grocery industry general

The grocery industry can be divided into three main categories: Grocery retailing, grocery wholesaling and the production and supply of grocery products (ACCC, 2008).

The price consumers pay at the checkout counter is dependent on the competition among grocery retailers, wholesalers and suppliers and also the pricing along the supply chain (ACCC, 2008).

Figure 1 (own creation)

illustration not visible in this excerpt

Apart from the number, size and market shares of the retailers, wholesalers and suppliers, also the vertical relationships between providers at different levels and the scope for providers to enter markets or expand their businesses, affect the nature of competition in the grocery industry and therefore (as shown in figure 1) the price outcomes for the consumer.

Figure 2 gives an overview of the grocery industry in Australia (own creation)

illustration not visible in this excerpt

Grocery retailing

Grocery retailers stock and display grocery consumers and make them available for sale to consumers (ACCC, 2008).

Wholesaling

Grocery wholesalers act as a intermediary between grocery retailers and product suppliers. Their tasks are to re-package, store, transport, market and distribute products to grocery retailers. However, in some cases there is no need for a wholesaler as delivery goes directly to the supermarkets. Woolworths and Coles are vertically integrated in grocery wholesaling and retailing whereas Metcash is an independent grocery wholesaler and serves a range of grocery retailers (ACCC, 2008).

Grocery supply

As shown in figure 2, the grocery supply sector covers farmers and manufacturers by whom the products are being produced. But additionally importers, processors and providers of transport and logistic services are needed. Importers bring products which are not available into Australia from foreign countries. Processors help to transport goods from the manufacturers or farmers to the wholesalers. Transport and logistic companies are needed to get the groceries from the whole salers (or in some cases from the farmers and manufacturers directly) to all supermarkets across the country (ACCC, 2008).

Competition in grocery retailing

Woolworths and Coles offer a wide range of products and brands in large stores located in outsized metropolitan shopping malls or stand-alone retail sites. These operate on a national scale and have its own wholesaling operations. (See figure 2)

Independent supermarkets such as IGA and Foodworks usually retail a smaller range of products and brands in mostly medium-sized stores.

Aldi on the other hand stocks a high proportion of private-label or less well recognised brands.

Specialist retailers usually retail a single category of grocery products and often attempt to differentiate themselves from supermarkets through service and quality.

Woolworths and Coles dominate the national grocery landscape in Australia(ACCC, 2008).

This might be the case because they offer a one stop shopping experience meaning that consumers can get all what they need in just one shop. The importance of convenience for the consumer will be explained at a later stage in this report.

Competition in grocery wholesaling

As already mentioned, there are three grocery wholesalers (see figure 2) of whom two are vertically integrated and serve their own supermarket chain. The third one (Metcash) serves independent grocery retailers(ACCC, 2008).

Buying Power in grocery supply markets

Figure 3 (own creation)

illustration not visible in this excerpt

As seen in figure 3 the buying power plays an important role for the prices and therefore a very crucial role for grocery shopping consumers. Especially with having on mind that since 1996 the food price inflation has been greater in Australian than in any other developed country, with having increased by 43.6 % (Choice, 2008).

Due to this development with the price for food, some grocery shoppers might be dependent on going shopping at Woolworths, Coles, Pick n’ Pay or Aldi as those are the ones that can achieve cheaper prices for the consumer due to their bigger buying power. But those socioeconomically disadvantaged members of society are often not able to access the big supermarkets due to the lack of private transport. This will be explained in more detail at a later stage of this report.

Market share concentration

Since the early 1990s, the supermarket industry has undergone significant restructuring. Australia’s grocery market has become one of the most concentrated in the world (Australia on number 2, New Zealand on number 1 in the worldwide ranking). (PricewaterhouseCoopers, 2007) (Coriolis Research, 2008)

Current ACNielsen estimates indicate that the two major supermarket chains Woolworths and Coles own approximately 78-79 % of the market (PricewaterhouseCoopers, 2007).

The Australian market share growth of these two Major Grocery Retailers (MGR’s) over the past three decades has been significant- growing from approximately 35 % to around 79% as shown in figure 4.

Figure 4 (Retail World, ACNielsen)

illustration not visible in this excerpt

This market dominance entails certain benefits and risks.

Benefit:

Due to economies of scale and reduced unit costs for businesses a better price for the consumer is expected.

Risk:

Such powerful companies might misuse their position against suppliers and smaller competitors (PricewaterhouseCoopers, 2007).

A lot of people are concerned about this 79 % market share by Woolworths and Coles.

John Cummings, chairman of the National Association of Retail Grocers of Australia (NARGA) said in March 2008:

“In any market, the more people there are offering the goods or services the lower the price to the consumer. Two competitors in a market are not enough. If we don’t do something about hyper-concentration now, we’ll arrive where we’re headed. When Coles and Woolworths have 100% of the market, there is no turning back.”

(Just Food, 2008)

[...]

Excerpt out of 27 pages

Details

Title
Groceries market Australia
College
University of Western Sydney  (University of Western Sydney)
Course
Marketing Management (Postgraduate course)
Grade
80%
Author
Year
2008
Pages
27
Catalog Number
V116045
ISBN (eBook)
9783640175376
File size
1814 KB
Language
English
Tags
Groceries, Australia, Marketing, Management
Quote paper
Nina Rakowski (Author), 2008, Groceries market Australia, Munich, GRIN Verlag, https://www.grin.com/document/116045

Comments

  • No comments yet.
Read the ebook
Title: Groceries market Australia


Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free