Woolworths Ltd

The supermarket industry has been considered one of the most prosperous industries for Woolworths. Woolworths is operating in several different industries. In 2007, examples of the major brands operating under Woolworths Limited included Woolworths/Safeway supermarkets, Dick Smith Electronics and Dan Murphy’s. The supermarket industry consists of very few major players, which is kind of an oligopoly market type. In this industry, businesses retail a large range of products, especially focusing in groceries and non-specialised food lines.

Products that are involved in this industry can be classified into categories. For example, bakery, fruit and vegetable, dairy, meat, beer and wine, canned food and household cleaning. Businesses that retail in a specific range of products and convenience stores are not included in this industry. In 2008, Woolworths was at the top of the market share in the supermarket industry, following by Coles, Metcash/IGA and ALDI. In recent times there have been a few key changes to the Australian supermarket industry, including the entrance of ALDI from Germany.

In the economic and business environment point of view, the government is significant for the supermarket industry and has directly impact on it, such as legislating trading hours. Technological developments have been involved in this industry; examples include GEMMnet (Global Electronic Marketing and Merchandising Network), on-line shopping and investment in supply chain, distribution centres and systems. Changing societal concerns, attitudes and lifestyles have been impacting the industry’s market demand. Competition has been increasing due to new competitors, which put pressure on store to provide consumers with low competitive prices.

Chain stores have invested in their supply chain and distribution centres to minimising costs, which can be passed to consumers in the form of lower prices. The supermarket industry offers very little differentiation in terms of products; therefore supermarkets have mainly focused on differentiating their homogenous products through marketing. The homogenous nature of the products has provided consumers in the supermarket industry with extremely high bargaining power. On the other hand, bargaining power of supplies in the industry varies depending on the brand name of the supplier and the size of the supermarket.

There are a number of substitutes for consumers in the supermarket industry, such as convenience store, pharmacies and online stores. A business model describes how an organisation creates, delivers and captures value. The process of business model construction is part of business strategy of an organisation. The purpose of a business more is to define how the business enterprise creates value for the brand, delivers value to customers, then attracts customers to pay for value and converts those payments into profit, which is know as capturing value.

Woolworths creates value for itself through a number of primary activities and support activities, which are inbound logistics, operations, outbound logistics, marketing and sales customer service, infrastructure, human resources management, technology development and procurement. Woolworths uses its own distribution centre, which provides significant cost savings, so the consumers can benefit in the form of lower prices. The increased use of on-line shopping and company website is also a value-adding approach that has given Woolworths a first mover’s advantage when competing in the industry.

Woolworths uses an in-store vendor quality management system, this helps to ensure the quality and freshness of products. Woolworths mainly focuses on creating value by marketing. It spends more on marketing expenses, such as advertising. Furthermore, Woolworths created the ‘Fresh Food People’ slogan, which contributes the fresh food image. Customer service such as refund policies, reduced waiting time and on-line shopping has been making customers more convenient. Woolworths has outside directors to avoid conflicts of interest.

Human resources management such as online recruitment, psychometric testing and training programs are significant for the recruitment process. Technology development has been used for maintaining quality and creating competition among vendors. Woolworths runs its own logistics, trucks, distribution centres and supply chains in order to get more control of the cost of sales. Woolworths has been successfully increased its brand awareness and added value to itself by these activities.