Woolworths Vs Coles Case

WOOLWORTHS VS COLES

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1. Executive Summary

The Australian retail sector is dominated by two firms: Woolworths and Coles who act as a duopoly with the two firms competing intensely in the food grocery and liquor retail business. In this report, the two firms are analysed by comparing their strategic positioning, expansion strategy, sustainable competitive advantages innovation, and cost minimization.

This analysis found that both firms adopt different strategies to grow their revenues. While Woolworths seems to favour opening new stores, Coles appears to prefer to relocate some of its stores to more favourable locations with minimal store increases while growing its revenue per store. Both firms have resorted to engaging in price wars in order to grow and maintain their market shares which has hindered their differentiation efforts and helped erode Woolworths’ brand equity as it has emerged as an imitator to Coles.

Although Coles’ sales are growing at a faster rate than those of its rival, they will not be sustainable in the long term unless it opens more stores. Woolworths seems to have a brighter future as its new stores become more profitable.

Table of Contents

1. Executive Summary 2

2. Introduction - Market Definition 4

3. Industry Analysis - 4

3.1 Internal Rivalry 4

3.2 Barriers to Entry 5

3.3 Substitutes and Compliments 5

3.4 Buyer’s Power 5

3.5 Supplier’s Power 6

4. Firm Analysis 6

4.1 Background 6

4.2 Expansion Strategy and Strategic Positioning 7

4.3 Sustainable Competitive Advantages 8

4.4 Challenges to sustainable competitive advantage 8

4.5 Innovator/Imitator 9

4.6 Cost Minimization 10

4.7 Demand and Price Elasticity……………………………………………………….10

5. Findings 12

6. Recommendations 13

7. Conclusion 13

8. Bibliography 15