Supermarkets in Australia

In: Business and Management

Submitted By hariniw
Words 2693
Pages 11
Subject Code

ECON90015

Subject Name

Examining the Australian Supermarket Industry under Porter’s Five-Force Model comprising of:
1.
2.
3.
4.
5.

Internal Rivalry
Entry
Substitutes and Complements
Supplier Power
Buyer Power

And their impact on the profitability and welfare of different stakeholders in the market. In the big bad world of inflation, “Cheap Cheap” and “Everyday lower prices” have been the only words of solace. For the past 3 generations, Australians have relied on the consistent comfort of competitively low prices at supermarkets. It is no wonder then, that the supermarket industry has caught the eye of everyone in the spectrum – economists, global retailers (like ALDI, Lidl, Walmart, etc.) and (inspections by) the regulators alike.
Even though the market life cycle is developed, the outlook for the market looks positive, propelled by external factors population growth (1.6% YoY in 2014) and rise in average weekly earnings1. But the long-run duopoly in the market is witnessing a change in landscape with international competitors (like Aldi) swelling their market share in the subcontinent. This makes the supermarket industry in Australia interesting to analyse under Porter’s 5 Force
Model Analysis.
Defining the Market
This analysis set geographic boundaries for the supermarket or grocery retail industry over the Australian subcontinent. Given their large population size and concentrated pockets of inhabitancy, supermarkets are generally populous in the states of Victoria, NSW and
Queensland.
A common misconception is related to the product offered. The product offering is not the merchandise but the services that enable buyers to purchase merchandise.2 Given that the merchandise are groceries and staples (normal, necessary goods), the demand for these is fairly inelastic and disseminated over individual…...

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