Australian supermarket Essay Example | Topics and Well Written Essays - 1750 words

Australian supermarket - Essay Example The objective of the paper is to market analysis of an Australian supermarket. The paper will delve on all the economic and business aspects of the supermarket industry. The paper contains a detailed review of the current market structure in this sector of business, encompassing a study about the pricing power policies and the demand, supply factors. The paper will include a report of the chosen business with data and statistics about the industry’s growth and competitors in the business. The purpose of the paper is to work on a detailed business review report touching on topics like price, income and cross elasticity, Input prices and cost of production, substitute services available in the market, products and services that complement this service, and a complete SWOT analysis.Industry Overview and Market structure.The paper under all subheadings will explain the microeconomic theory behind the heading in correlation to the supermarket industry. The Australian supermarket an d the grocery store industry accounted for $69.5b as industry revenue in the year 2008. With an annual industry growth of 4.7%, the industry has 4300 establishments providing employment to 259,200 people. The two major players in the Australian market are the Woolworths and the Wesfarmers formerly known as the Coles. The Woolworths and Coles feature in the 22nd and 29th place respectively in the list of top 50 retailers around the world. In a report by Blake Dawson named 'Rising Grocery Prices and Australia's Anti-trust laws', Woolworths leads the supermarket industry with 750 stores holding a market share of 44% and Coles with 500 stores holding a market share of 34%. The New entry Germany's Aldi has 300 stores holding a market share of 4%. The supermarket industry like all other industries is under heavy pressure due to the current global turmoil and Dr. Ira Kalish, Deloitte Research's Director of Consumer Business, advised, "We are seeing this already with consumers shifting to m ore price focused retailers. For all retailers, this environment will require added attention to keeping costs under control." The paper will report a detailed analysis on the Wesfarmers Super Market. Find below and in the forthcoming pages the History, market share , pricing , competitors, costs, market forces and a SWOT analysis of the Coles the now Wesfarmers Supermarket. Body: The Coles opened its first store in the year 1914 by George Coles. Over years the company has grown and spread its wings far and wide and today Coles has over 740 stores in both New Zealand and Australia. The Supermarket caters to a whole range of customers and stands out remarkably for its services and is the number two chain of supermarket in Australia next to Woolworths. Employing more than 92000 people the Coles has specialized departments for Health, baby food, Health and Beauty Department, Meat Department Fruits and Vegetables Department, Deli (Pizza Bar) and the international and specialty Department. The Coles was acquired by Wesfarmers Ltd in the end of the year 2007. Pricing Power and Policies: The pricing power or market power of a firm is the power exerted by the firm to determine or influence the price of the products sold or the services provided. In other words, the freedom of Coles to set prices for their own products. Pricing power of a firm largely depends on the demand for its goods and services. A firm enjoys the maximum pricing power depending upon the price elasticity if its product or service. Price Elasticity according to Mulhearn and Vane in the book 'Economics' is "measures the responsiveness of the quantity demanded of a particular good or service to changes in its price ." Coles being the second largest supermarket chain in Australia to a certain extent does dictate prices and enjoys an edge over smaller retail stores. However in a Public submission report to the ACCA (Australian Competition and Consumer Commission) Coles has stated "Coles is committed to delivering value to customers every day.