Coles And Woolworths Market Share Essay
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1 August 2013
supermarket
Coles and Woolworths, account for around 75 per cent of Australia’s sales of packaged groceries. by Graeme Samuel and Stephen King
Is the Australian retail grocery sector concentrated? Yes!
Coles and Woolworths, account for around 75 per cent of Australia’s sales of packaged groceries with Metcash-supplied stores accounting for another 20 per cent. These market shares fall if we include fresh grocery items, such as meat, fruit and bread. However, they are still high by world standards.
Australia’s ‘big three’ account for 95 per cent of grocery sales. Equivalent ‘big three’ shares in other countries range from around 65 per cent in Canada and Sweden, to 50 per cent in the UK and Austria, down to about 40 per cent in Germany.
High concentration often signals a lack of competition. But that doesn’t seem to be the case for supermarkets in …show more content…
Aldi was identified as a competitive force by the ACCC in 2008 and it has continued to grow. But its market share is still small. Costco has expanded, but is also a minor player. According to the ACCC, Metcash supplied stores had little ability to compete on price with Coles and Woolworths in 2008. This does not appear to have changed. And innovative competitors, like the specialist organic supermarkets and ‘high end’ gourmet outlets that have opened in the US, are almost non-existent in Australia.
The real competitive problem for Coles and Woolworths is – well – Woolworths and Coles.
Normally, in a concentrated market with high barriers to entry and expansion, major competitors seek to differentiate themselves. Competitors appeal to different customer segments, increasing prices and profits while avoiding a head-to-head fight.
In contrast, Coles and Woolworths have played a decade long game of copycat. From ‘everyday low prices’ to ‘fresh food’; from ‘home brands’ to ‘discount petrol’; where one has gone the other has rapidly
1 August 2013
supermarket
Coles and Woolworths, account for around 75 per cent of Australia’s sales of packaged groceries. by Graeme Samuel and Stephen King
Is the Australian retail grocery sector concentrated? Yes!
Coles and Woolworths, account for around 75 per cent of Australia’s sales of packaged groceries with Metcash-supplied stores accounting for another 20 per cent. These market shares fall if we include fresh grocery items, such as meat, fruit and bread. However, they are still high by world standards.
Australia’s ‘big three’ account for 95 per cent of grocery sales. Equivalent ‘big three’ shares in other countries range from around 65 per cent in Canada and Sweden, to 50 per cent in the UK and Austria, down to about 40 per cent in Germany.
High concentration often signals a lack of competition. But that doesn’t seem to be the case for supermarkets in …show more content…
Aldi was identified as a competitive force by the ACCC in 2008 and it has continued to grow. But its market share is still small. Costco has expanded, but is also a minor player. According to the ACCC, Metcash supplied stores had little ability to compete on price with Coles and Woolworths in 2008. This does not appear to have changed. And innovative competitors, like the specialist organic supermarkets and ‘high end’ gourmet outlets that have opened in the US, are almost non-existent in Australia.
The real competitive problem for Coles and Woolworths is – well – Woolworths and Coles.
Normally, in a concentrated market with high barriers to entry and expansion, major competitors seek to differentiate themselves. Competitors appeal to different customer segments, increasing prices and profits while avoiding a head-to-head fight.
In contrast, Coles and Woolworths have played a decade long game of copycat. From ‘everyday low prices’ to ‘fresh food’; from ‘home brands’ to ‘discount petrol’; where one has gone the other has rapidly