Situation Analysis
Discuss About The International Of Multidisciplinary Research.
Supabarn is an Australian based supermarket chain headquartered in Canberra. The foundation of the company was laid in the year 1991. The company is not as bigger as other supermarket giants in Australia such as Coles and Woolworths; however, Supabarn has significant existence in few parts of Australia (Supabarn.com.au, 2018). It is one of the brick & mortar formats of stores that uses a more or less the same strategy for departmentalization such as administration, liquor, service and others (Supabarn.com.au, 2018). The number of employees in this company is more than 800 (Supabarn.com.au, 2018). The first store of Supabarn had come up in 1991 in Canberra City which had closed its door in 2016 (Supabarn.com.au, 2018). According to the suppliers, the marketing strategies of Supabarn is hampering its growth and causing problems for the company in keeping a race with giant companies such as Coles and Woolworths. Suppliers have found Supabarn as highly concerned for the quality of products and pricing strategies; however, it has not been able to influence the family, quality and community as being done by Coles, Woolworths and Aldi (Supabarn.com.au, 2018). Additionally, the company also fall behind to its competitors in terms of investments in infrastructural changes and the strategic plans for ‘out of stock’ issue.
The political factors in Australia largely influence the business of Supabarn. The duopoly of Coles and Woolworths is vastly popular and their dominance in the supermarket industry has actually prevented smaller retailers from being into the competition. One of such factors is the recent announcement made by the Australian Federal Government on the competition policy. As per the policy, the dominance of duopoly will no longer prevail and will ease out ways for others as well (Austrade.gov.au, 2018). To support the policy, the government is also allowing the potential retailers, the attractive land spaces for stores, approving their infrastructural investments and supporting their market expansions. The supermarket industry which at once was challenging for others has now gone through a radical change. Consequently, the change can be evidently observed in the incrementing success of Aldi in the Australian supermarket industry. The German based retailer with its innovative supply chain strategies and the cost-effective business model is continually creating worries for giants such as Woolworths and Coles (Alley, Bentley & James, 2014). It means that the changed political factors can be supportive to the growth of Supabarn if it works efficiently on its marketing strategies.
The tough economic condition in Australia has benefitted the supermarket industry. The economic conditions have encouraged people for preferring to eat at home than by going outside for it. Additionally, customers could not resist their temptation from purchasing at the supermarket stores as they now have the incremented desires to cut on their household costs. They are concerned with the rising utility bills and childcare costs. In the highlighted circumstances, the supermarket stores as such the Coles are highly preferred for their cheaper pricing strategies (Wardle & Chang, 2015). The rising threats from Aldi have forced the giant supermarket brands Woolworths and Coles to consider a reduction in prices and offer customers the competitive prices (Wardle & Chang, 2015). Supermarket giants may face the challenge in maintaining its competency in the pricing strategies as the energy costs and the input costs are climbing. Despite the fact, suppliers of giant supermarket brands believe that it is very difficult to increase the prices to compensate the incremented costs as the customers of Coles will not accept it (Zulqarnain, Zafar & Shahzad, 2015).
Political Factors
Few of the consumer trends in the Australian supermarket industry are a matter of concern for Supabarn. Increasing demands for private label products are one of those trends. Such products are much cheaper than the branded products. Hence, Australians have shown an inclining trend for such products which is also justified considering the challenging economic conditions. This is also the reason why Aldi is ahead to Coles in terms of rate of sales (Glynn & Widjaja, 2015). Shopping online is another trend which is a threat to Supabarn as it does not have a competitive platform like Amazon has. The platform is still underdeveloped which means it has ample of opportunities for e-commerce service providers like Amazon (Thananuraksakul, 2018). Buying the fresh grocery items is growing in demand due to the rising awareness of environmental threats. The coverage on environmental facts on the various media resources like Newspapers and the News Channels has produced the ample of accessible information resources. Hence, customers are now getting educated on environmental facts which are why it is important that Supabarn is able to offer customers the fresh items (Vu, Phan & Cao, 2015).
The Australians are yet to get the opportunity to purchase through Amazon as it is still to initiate its business in the country. However, it is also notable that customers, once they shop through Amazon they get to know the range of products and the shopping experience offered to them. The range of products and the shopping experience on Amazon play an utmost role in influencing the perception of customers (Pappas et al., 2016). On the other hand, the supermarket giants have struggled to flourish their online shopping platforms. They have failed to improvise the online services due to low investments in the system. This means supermarket brands are not in a place to put any competition to Amazon. Hence, there is a need for technological advancement in the online shopping platforms, so that, Coles is equally competitive in terms of providing the online shopping experience to customers (Pappas et al., 2016).
There are certain legal restrictions which may be the factors of worry for Coles. The Federal Government of Australia has made significant changes to the competition laws. The new competition law is against the dominance of duopoly of Coles and Woolworths. This would rather allow others such as Aldi to capitalize the advantages from (Austrade.gov.au, 2018). Additionally, the quality of products is also strictly monitored as in some cases customers are misled by premium features sold to them that never exist. In addition to it, the innovation fails when it does not maintain the integrity issue (Austrade.gov.au, 2018). The changed legal landscape may certainly prove to be a boost for Supabarn. The company had struggled due to the duopoly dominance of Woolworths and Coles; however, the changed competition policies will favor smaller retailers like Supabarn.
Bargaining power of suppliers (Moderate): Supabarn claims to work with suppliers that are inaccessible to Coles and Woolworths. It means that the company has suppliers who provide the company the freshly produced goods. The company claims that they are unmatchable in terms of fresh products. However, the suppliers of supermarket giants may be inaccessible to Supabarn. It means that smaller and larger supermarket brands have been able to fulfill their requirements from their selected list of suppliers.
Economic Forces
Bargaining power of customers (High): The changing trends of consumer behavior such as shopping online and finding a one place solution for all are the threats for supermarket stores in Australia (Nguyen, de Leeuw & Dullaert, 2018). The situation is challenging for giant companies like Cols and Woolworths because both have struggled to innovate with their online presence. This is even more challenging to smaller retailers such as Supabarn because the infrastructural changes required to respond to the technological disruption may not be feasible with the resource capabilities of
Threat of new entrants (Moderate): The threat of new entry is higher due to the amendments to the competition laws. Such changes will not only support a few of new ventures but will also provide the opportunities to groom with possibilities for infrastructural development, technological advancement, use of effective business models and others. All these facts just support that there are supportive environments for a new entrance. However, the level of threats from new entrants will depend on how those new ventures execute the operation and strategies the plans. There are a number of smaller stores and bigger stores as well in Australia and Supabarn is one of those; however, only a few of such stores had appropriately applied all the essentials of business. Smaller stores struggle to attract a wider customer base due to the presence of supermarket giants in the market. The market size for such stores is also very limited in comparison with the supermarket giants. Hence, the possibilities for a new entrance are higher; however, sustenance and success as well is quite challenging (Lal, Alvarez & Greenberg, 2014).
Threat of substitute (Moderate): The threat of substitute is high due to the varying shopping behavior of customers. With convenience being of uttermost significance to customers who are time-specific and want their required items on just one floor, markets keep on offering a ‘one-stop shop’ for the individuals. Convenience stores, for example, 7-Eleven, are a substitute to stores from a comfort viewpoint; however, the stock capacity and size of such stores are not as big as Woolworth’s, Coles and Aldi grocery stores. Supermarket stores particularly the convenience stores emphasize on gaining a larger market share of convenience market format by offering customers the private labels products, providing self-checkouts and positioning the stores within the accessibility range. This landscape is quite clear and evident which states that convenience stores are for money rich purchasers and those with busy schedules. However, the concept is tempered by a fact that supermarket brands offer discounted offers that in some way affects the footfall in convenience stores (Paul, Sankaranarayanan & Mekoth, 2016). Amazon is set to enter in Australia which is expected to storm the Australian retail market. This is an existing substitute for shopping platforms at the global level. Now, this will also be a part of the Australian retail and grocery market (Paul, Sankaranarayanan & Mekoth, 2016). Hence, customers will have an easier platform for shopping in the form of Amazon. This may potentially impact the daily footfall in any format of supermarket stores. Customers in specific the young population will find this much time-saving and cost-effective than the physical stores.
Socio-cultural Forces
Inustry rivalry (High): it is very intense. The competition was much narrower when the duopoly of Woolworths and Coles had existed. It is now getting bigger due to a fact that competition laws have been modified by the Federal Government and that the modified laws are much favorable to smaller businesses as well. Additionally, Aldi is emerging out as a tough competitor to Woolworths and Coles. This has also impacted the duopoly of Woolworths and Coles. Amazon is set to enter the Australian retail market and that will also take the competition to a next level (Herhausen et al., 2015). These very limited numbers of facts just suggest that industry rivalry in Australian supermarket industry is getting bigger.
Smaller stores such as Supabarn are known for attracting customers for its cost-effective offers. Despite the limited range of products in smaller stores, the concept is favorable to many due to cheaper products in stores. However, the discounted offers by supermarket giants in specific Woolworths and Coles have provided a much-organized option to customers. Customers have the option to select from a range of products in such stores and that to on a much competitive price. Hence, a tremendous inclination to the concept was its consequence. The behavior was revolutionized again in the last five years with a cost-effective business model of Aldi. Customers had the option to get fresh grocery items at a much competitive price. The upcoming entrance of Amazon in Australia is expected to redefine the experience of shopping. Online shopping is favorable to customers in particular to Millennials who are the strong users of the internet. Hence, in a likewise manner, the concept of online purchasing is appealing for a selected range of customers in Australia (Gorodnichenko & Talavera, 2017). Such disruptions in the form of an ever-changing style of shopping have kept on piling issues to smaller stores in terms of its capability to attract a large population of customers. This is indeed necessary for Supabarn that it attempts to make the strategic changes in its stores to make it much appealing for the target customers. Additionally, such changes need to be promoted with the effective facilitation of innovative promotional strategies.
- Supabarn is able to work with local producers and the farmers. The fact which is very rare for giant supermarket brands like Coles and Woolworths
- The mentioned facts enhance the possibility to get the fresh vegetables and fruits
- Fruits and vegetables may not look very attractive and can appear ugly as well; however, these are much cheaper and tastier
- It als reduces the time span which is consumed in the transportation of goods from farmers to the retailers
- As Supabarn offers fresh and quality fruits and vegetables, customers have very positive views for the company
- Customers find the difference between shopping in Supabarn which is also the unique selling point for the company
- The difference is not in the infrastructural or technological advancement, it is rather in the customer service standard and the quality of products
- It has been a long time since the company had come into the existence; however, it has not performed fairly in regards to market expansion
- It is only limited to just a few stores in Canberra and New South Wales
- The stated concern can be understood from the success of Aldi which it is having in Australia. Aldi had entered the Australian market quite later than Supabarn despite which Aldi was able to expand to a much wider market. Aldi is still expanding. The scale of operation for Aldi is also much larger than Supabarn (Theaustralian.com.au, 2018)
- It may be that Supabarn had some different strategy and that had only encouraged the company to remain confined to just the two centers; however, there are ample of scopes in the Australian supermarket industry and is booming as well (Ibisworld.com.au, 2018
- As already stated, Supabarn has ample of opportunities in the Australian supermarket industry due to a fact that the industry is booming and is also expected to touch new heights (Ibisworld.com.au, 2018)
- Customers have variety of demands like they do not just want to shop but, in fact, want to experience it. This means that there is a necessity for infrastructural improvement, the area where Supabarn had not made significant investment
- Expansion will be a good idea for the company provided that, it considers the infrastructural development to attract more customers
- The supermarket giant will always remain the threats for Supabarn. This is expected to grow bigger, if Supabarn plans to expand to other cities of Australia as well
- Consumer behaviour is always a threat
- A booming online shopping and a future entry of Amazon in the country are just an indication of changing buying behaviour of customers (BBC News, 2018)
- Supply chain management will also be the challenge, if Supabarn considers expanding to other Australian cities. The challenge will be to maintain the same USP which is working closely to farmers and thereby reducing the transportation duration
Mission Statement: “To work closely with local producers & farmers to offer customers the fresh products and also to support the surrounding community by means of charity works”
- To expand to more cities in Australia
- To make sufficient infrastructural spending on stores and related operations
- To promote and facilitate the effective marketing strategies
To use effective marketing and promotion strategies to produce a lasting impact on the target audience
To take the benefits from already established reputation of Supabarn in Canberra and New South Wales
To commene marketing strategies targeted on one location at one time and observing the responses
To use the feasible marketing & promotion strategies such as point sales, online advertisement and TV advertisement
To ensure that the marketing plans are effectively commenced within the agreed time-period with different marketing channel
Target market for Supabarn will be the kind of customers who are already a part of this group. The list of target customers will include few modifications also as it is being advised to enter the other cities in Australia. The focus will be on youth population in specific. They are expectedly the future customers (Díaz, Gómez & Molina, 2017). Hence, they must be targeted with the expansion. This is necessary as well because of a fact that Amazon is set to enter Australia and it is very difficult to compete with the concept. Therefore, it is advisable that the store layout and the infrastructure are equipped with technologies, so that, youth customers feel valued to visit the stores. The wait time at the cash counters need to be reduced with effective replacement such as the suitable technologies. It is advisable also to integrate a few of stores with online shopping format, so that, customers can shop from home and also by being in stores. They can either call for a home delivery or pick their orders personally by visiting to stores. The concept can be a good response to Amazon for a fact that transportation cost on return or undelivered items will be saved. Customers can return goods by visiting to stores only. Moreover, customers will be able to observe the goods and make the purchase once they are satisfied only.
Technological Forces
“To the lovers and aspirants of fresh foods and vegetables, Supabarn is the one destination, come and experience the difference”
Marketing mix strategy
There will be no such change product wise. However, it is advisable to include the private label brands also (Kelting, Duhachek & Whitler, 2017). This is now in huge demands. The reason for the demands is a fact that customers have a variety of options for a single category of product and that in a different price range. Therefore, customers can pick up the one of their choices only. Some customers may go with the cheaper one while others with the branded products of Supabarn. The real benefit of this strategy will be the availability of a wider option which customers would have in the new stores of Supabarn. This will also allow few reasons for customers to give preferences to Supabarn over Woolworths and Coles and other supermarket giants.
The products which Supabarn was offering initially in Canberra and New South Wales should be continued with its existing strategy for pricing. The recommended private label brands must be priced in a way that it is as per the standard of supermarket giants such as Woolworths, Coles and Aldi.
The place as already suggested will be the new stores in other cities of Australia. There will be a few changes in the format of stores. Few modifications will be required while opening new stores in other cities. Modifications will include like stocking a very limited range of products, so that, comparatively smaller stores are needed to be introduced. The range of products will be vegetables, fruits and the private label brands. However, the stocking format will not be in the line of Woolworths and Coles as both of the brands have bigger stores than the others like Aldi. A reduced size of the store will help to cut down on the entire cost of production. Additionally, less number of workers will be required which is another point of saving.
Promotions must be appealing. This can be done through point sales, TV advertisement and online advertisement. A press release can also be used provided that, good contents are ensured.
Stores will need people such as floor support executives, sales executives, front office executives, clerks at the cash counters, operation manager, human resource and the admin executives.
Services will be delivered as per the format of brick & mortar which means customers will get the products by being personally in physical stores. Moreover, if the suggested online shopping service is considered, customers will also be able to make the choices and select the products by being in their homes. The purchased items will be delivered to customers at their homes or they can also visit stores to collect their items.
The physical evidence will include the receipts generated at the cash counters and also the confirmation message while booking through the recommended online platform.
The implementation stage will include the execution of different marketing activities like running ads, TV advertisement, making arrangements for point sales, recruiting or deploying dedicative team for marketing and also engaging with online channels to commence the online advertisement (French & Russell-Bennett, 2015).
Legal Forces
Evaluation stae is all about analyzing the responses after the implementation of the marketing plans both with respect to qualitative and quantitative metrics. Quantitative metrics will include such as analyzing the sales lead numbers, number of customers and the revenue. Qualitative metrics will be like customer satisfaction (French & Russell-Bennett, 2015).
Recommendations were for new stores in other cities of Australia. This should be considered in order to make a larger impact on the booming supermarket industry in Australia. The suggested marketing strategies are just an indication; Supabarn can edit the plans accordingly to make a much better impact on it.
References
Alley, C., Bentley, D., & James, S. (2014). Politics and tax reform: A comparative analysis of the implementation of a broad-based consumption tax in New Zealand, Australia and the United Kingdom. Revenue Law Journal, 24(1), 52-56.
Austrade.gov.au. (2018). Australian business and environment laws – Austrade. Retrieved from https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-a-business/Understanding-Australian-business-regulation/Australian-business-and-environment-laws
BBC News. (2018). Amazon enters Australia for first time. Retrieved from https://www.bbc.com/news/business-42233752
Díaz, A., Gómez, M., & Molina, A. (2017). A comparison of online and offline consumer behavior: An empirical study on a cinema shopping context. Journal of Retailing and Consumer Services, 38, 44-50.
French, J., & Russell-Bennett, R. (2015). A hierarchical model of social marketing. Journal of Social Marketing, 5(2), 139-159.
Glynn, M. S., & Widjaja, T. (2015). Private label personality: applying brand personality to private label brands. The International Review of Retail, Distribution and Consumer Research, 25(4), 362-378.
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Lal, R., Alvarez, J. B., & Greenberg, D. (2014). Retail Revolution: Will Your Brick & Mortar Store Survive. Self published, 90, 265-283.
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Paul, J., Sankaranarayanan, K. G., & Mekoth, N. (2016). Consumer satisfaction in retail stores: Theory and implications. International Journal of Consumer Studies, 40(6), 635-642.
Supabarn.com.au. (2018). Supabarn. Retrieved from https://www.supabarn.com.au/
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Theaustralian.com.au. (2018). Aldi, the rogue retailer. Retrieved from https://www.theaustralian.com.au/life/weekend-australian-magazine/how-aldi-supermarkets-created-converts-in-australia/news-story/c9a22fdae3419fba96471adc61ae374e
Vu, P. A., Phan, T. T. H., & Cao, T. K. (2015). An Exploratory Investigation into Customer Perceived Value of Food Products in Vietnam. International Business Research, 8(12), 1.
Wardle, J. L., & Chang, S. (2015). Cross?promotional alcohol discounting in Australia’s grocery sector: a barrier to initiatives to curb excessive alcohol consumption?. Australian and New Zealand journal of public health, 39(2), 124-128.
Zulqarnain, H., Zafar, A. U., & Shahzad, M. (2015). Factors that affect the choice of Consumers in selecting Retail Store, for Grocery Shopping. International Journal of Multidisciplinary and Current Research, 3(1), 1167-1172.
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