Background and History
Background of the organisation
Woolworths Australia is a subsidiary company which is operating in the retail industry. The parent company of Woolworths is Woolworths limited. Woolworths was founded in the year 1924 and its headquarter is located in Bella Vista, New South Wales, Australia. Woolworths is a supermarket chain which is located around 992 locations all around the globe. It is having a strong employee base of more than 111,000 employees. Woolworths is offering various brands to its customers so as to fulfil the expectations of the customers. The focus of Woolworths is on providing high-quality products to the customers and increasing the customer base of the organisation (Woolworths, 2017).
Seven values have been adopted by Woolworths for conducting the operations of the business and these values include quality and style, value, innovation, energy, sustainability, integrity and service. The strategy of Woolworths is to be placed at the first position by the customers of the company. Five priorities have been set by Woolworths for the attainment of the goal. These priorities include developing a healthy culture for the customers and team, attaining the sales target, emerging as a lean retailer, empowering the portfolio of the business and providing better drinks to convenience customers (Woolworths, 2017).
It has been analysed that Woolworths is continuously losing its grocery sales. Competitors of Woolworths are creating an impact on the performance and market share of the Woolworths. Various opportunities are available in the business environment which has been used by Woolworths for gaining a competitive advantage (Tonkin, 2016). High-quality products are being offered at low prices for gaining a strong customer base. There was a fall in the share price of Woolworths in the first quarter of 2015. Its sales drop from $27.87 to $23.60. This fall in the share price of Woolworths continued till the six months of 2015 (Prickett, 2017).
Mixed profit results have been seen in the income statement of Woolworths in the last five years duration. Profits of Woolworths have been poorest in the year 2015. The cost of the expenses has increased in the year 2015 due to the poor revenue generated by the operations of Woolworths. This increasing cost and decreasing profits affected the performance of Woolworths. Investment in the masters joint venture has been unsuccessful which has affected the shares of the company and profit margin of the company (Titman, et. al., 2016).
Traditionally, products or services were offered by the retail outlets but with the change in the business environment supermarkets entered the market. Supermarket and grocery stores industry in Australia is a competitive industry. The profitability of the industry is growing due to the different companies operating in the industry. Woolworths is operating in the supermarket and grocery stores industry of Australia. A massive shift has been identified in this industry due to the entry of the German-owned Aldi. Aldi offers private label products at discounted prices (Mudditt, 2017). Top four players of this industry of Australia are Woolworths Ltd, Wesfarmers Limited, Metcash Limited and ALDI Stores Supermarkets Pty Ltd. These companies hold the large market share. Shopping trends have been influenced by the discount operators Aldi and Costco. Supermarket industry of Australia has seen a fall in the profit margins in the last five-year duration due to the reduction in the prices by the companies for operating in the competitive industry in an effective manner (Wells, 2015).
Market Share and Performance of Woolworths
Competition in the supermarket and grocery industry in Australia can affect the economy of Australia at large. Economies of scale are getting affected due to the cost of the companies as fixed costs of the companies are higher than the variable costs. Entry to the industry is open but there is a need of large funds for the purpose of entering the industry. Buyers hold the power to create an impact on the performance of the company and industry. The forecast has been made that there will a growth of 3.3 % in the year 2016-2017 (PR Web, 2014). Supermarket and grocery stores industry of Australia is highly concentrated in nature. Rising competition in the industry has resulted in a reduction in the prices of the products or services offered. There are fewer chances of consumers getting affected as companies adjust the cost on their own and bear the additional cost (Roy Morgan, 2017, pp. 1-2).
Communication strategies are being adopted by the companies for the promotion of the products or services offered by them and making people aware of the products or services offered. Different communication strategies are being used by the companies for the attainment of the objective of the business. Primary goals of Woolworths are to attain sustainable competitive advantage and enhancing the sales of the company. Competition has increased the need for effective communication strategies for holding the market share. Impact of use of effective communication strategies can be seen in the profits and sales of the Woolworths. Woolworths has adopted various communication strategies for changing the perception of customers towards Woolworths and enhancing the sales of the company (Keller, 2009, pp. 139 – 155).
There are three key principles which Woolworths wants to achieve and these three key principles include offer, growth and efficiency. The first principle is to offer better products and services to the customers for ensuring customers prefer Woolworths. The second principle is to bringing innovations in the products and services for meeting the needs and expectations of the customers. The third principle is to create customer value for enhancing the chances of growth and success. For the attainment of these three principles, different communication strategies have been used by Woolworths (Woolworths, 2017).
Woolworths has used advertisements for the promotion of the petrol and grocery discounts and premium label products with the celebrities. This has helped the company in creating a positive impact on the sales and performance of Woolworths. The advertisement has helped in covering the large demographic area of Australia by incurring a low cost. It has introduced animal trading cards for the purpose of attracting a large number of children towards it. One of the most common communication strategies which are being used by Woolworths is newspaper and print media. Newspaper and print media helps in communicating regarding the details of the products or services to the customers. These forms of communication are in regular touch will the people which help in promoting the products or services of the Woolworths. Newspapers and print media have helped in forming a strong customer base as well as enhancing the sales of the business (WHL, 2016, pp. 31-38).
Financial Performance and Analysis
Social media platforms are being used as a communication tool by Woolworths for the purpose of interacting with the customers in a better manner. Social media platforms are used for making people aware as well as enhancing the customer base of the business. Social media has helped Woolworths in enhancing the customer base as well as reduced the cost of the company involved in the promotion of the products offered by it. Customers are being updated with the use of social media platforms on regular basis for making them aware of the current offers offered by Woolworths. Woolworths is engaged in the events taking place in Australia for the purpose of attracting the customers towards it. New stores and refurbishments are being opened by Woolworths at different locations for being in an easy reach of the customers and gaining the advantage over the other companies in the industry. Capital expenditure in the new stores at new places will help in promoting Woolworths as well as enhance the performance of the business. This strategy has helped in attracting the customers and being at first place due to the easy reach of the products or services (Keller, 2009, pp. 139 – 155).
Online services are also offered by Woolworths which has enhanced the effectiveness of the communication process between Woolworths and its customers. It has invested in the multi-channel customer experience for enhancing the experience gained by the customers. Products are being offered through online as well as an offline mode for reaching the customers and increasing the sales and profits of the company. For the promotion of the products and services offered by Woolworths, it has adopted a pricing and range strategy. The motive behind adopting this strategy is to deal with the increasing competition and gaining the market share (Khan, 2011, pp. 105-107).
Online as well as offline communication strategies are effectively being used by Woolworths for the attainment of the objectives of the business. An online communication strategy has helped in the expansion of the area covered as well as the expansion of the customer base of the organisation. Customers are free to order the products while sitting at home. This strategy has enhanced the trust and loyalty of the customers towards Woolworths. Offline strategies are equally important for Woolworths as these strategies have helped Woolworths in communicating with a large number of people with the most common modes used by the people (Mack, 2013, pp. 1-2).
References
Keller, K. L., 2009, “Building strong brands in a modern marketing communications environment”, Journal of Marketing Communications, vol.15, no. 2 – 3, pp. 139 – 155.
Khan, S., 2011, “Marketing Mix Strategy Adaptation: A Retail Organisation’s Response To The Global Economic Downturn”, Cape Peninsula University of Technology, pp. 105-107.
Mack, M., 2013, “A sneak peek into Woolworths’ strategy”, Supermarket & Retailer, pp. 1-2.
Mudditt, J., 2017, “Spotlight on Australia’s supermarkets and grocery industry”, Retail World.
PR Web, 2014, “Supermarkets and Grocery Stores in Australia Industry Market Research Report Now Updated by IBISWorld”, PR Web. Accessed on: 19 September 2017. Retrieved from: https://www.prweb.com/releases/2014/09/prweb12143687.htm
Prickett, A., 2017, “An analysis of the performance of Woolworths ltd through financial statements”, Linked In.
Roy Morgan, 2017, “Aldi hits new high in supermarket wars”, Roy Morgan Reseach, pp. 1-2.
Titman, S., Martin, T., Keown, A. J. & Martin, J. D., 2016, “Financial management: principles and applications”, 7th edn, Pearson Australia, Vic.
Tonkin, B., 2016, IBIS World Industry Report: Supermarkets and Grocery Stores in Australia”. Accedd on: 19 September 2017. Retrieved from: https://clients1.ibisworld.com.au/reports/au/industry/default.aspx?entid=1834
Wells, C. B., 2015, “Australian supermarket competition is great for consumers but it could ruin the economy”, Business Insider Australia.
WHL, 2016, “2016 integrated report”, WHL, pp. 31-38.
Woolworths, 2017, “About us”, Woolworths. Accessed on: 19 September 2017. Retrieved from: https://www.woolworths.com.au/shop/discover/pick-woolies
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