Cole Supermarket Major Issues. 4
Application of Strategic management concept 6
Summary of Recommendation Strategies. 7
Proposal for Implementing Strategies. 7
A strategic consultant is tasked with analyzing a business’s practice, its objectives, and make appropriate suggestions that are aimed at improving business or the direction of the company. Strategistdevises mechanisms of cutting costs, raising the business’s income, and making important decisions for the company (Hiriyappa, 2018). They are tasked with helping the company define the market and identify the trends within a specific market. A strategic business consultant also analyzes the competitors in the market to assist in the development of objectives and goals. This document provides a strategic business report for the Coles group in Australia. The Coles Company delivers its retail operations on more than 2400 locations across Australia. However, the retail market in Australia is highly competitive with the entry of a new player from overseas. The consumers in the country are ready to embrace the latest technology with the number of selling points, reducing operational costs for Coles Company, and improving the levels of customer relations. This, however, is not the case, since the demerger, Coles Supermarket has been struggling to stay competitive in the market and make adequate profits. It has been challenging for the company to shift into online marketing as the company is not familiar with the market and the entry of major players in e-commerce such as Amazon pause as a threat to the business. However, with the development of appropriate strategies, Cole could resume its original position in Australia’s retail market. This document analyzes the current situation at Coles Supermarket, its failures, and provides the recommendation necessary to empower the company.
George James Cole was the eldest son to George Coles Snr who was a retailer himself. After he went for a trip overseas, he visited some of the most significant retailers in the USA. In 1914, the first Cole store was opened in Collingwood, Victoria. The store had a variety of goods, and it was selling generic products which included fabrics and clothing and general homewares. In 1927, G.J Coles and Coy were floated in the stock exchange due to the format the stores used in the market which had proven to be a success. His brothers also took part in the running of the business as their family was too close (Company History, 2019). The philosophy for running the retail stores was simple. The staff was instructed not to force any customer to buy. If a particular article was not sold at the required quantities for it to justify its spaces on the shelves, it was to be dropped. A buyer was to take responsibility or blame for purchasing a product on a line that it does not sell, as it is considered that if the public does not buy when they are shown, it was not their duty for them to force the product on the people because as a store they have made a wrong purchase. However, when an item is selling well, all the respective managers are advised to increase the display of the issue and order more of the question. As the selling of a particular piece keeps falling, its show on the shelves should also reduce. It is the customers that decide what goods are to be stocked on the stores as no product is added on the store’s stock list unless the public begins buying it.
Cole Supermarket Major Issues
Some challenges are present in the market today that have made it difficult for the company to continue from where it was as an independent entity a decade ago. The company is split into three major divisions, which include Coles Supermarkets, Coles Liquor, and convenience. The liquor division operates under the brand Spirit Hotels. This is because, in some states, it is a must for one to have a hotel license for them to open a liquor store. The profits margin made by the three of these entities is not enough as one would expect. Although the company has been able to diversify its business, into other areas such as financial services, Cole will always be a retailer (Company case study, 2018). This, however, is not a bad idea, and it has proven to yield results, and until February this year, it has proven to generate returns that are higher than the other sectors. Woolworths Ltd is the most significant competitor for Cole Company. However, what is worrying the most is the economy of Australia as it has a low growth rate in household incomes, which is concurrent with the high household debt along with the falling prices in houses. This is evidenced by the figures from the Reserve Bank of Australia. The rising levels of hose hold debts contribute to high levels of rates in properties and as result prices for commodities are dropping in the countrywide. This makes it impossible for the company to earn profits.
Some of Cole’s group strengths include, the group commands the large share of the market in Australia in liquor stores and domestic foods due to its long history in Australia. The companies use branding and advertisement that is unmatched by using slogans that convince buyers to get goods from the stores. For instance, in its publications, the company uses slogans that are patriotic like proudly Australian since 1914 as well as slogans that framed explicitly for buyers who are price conscious. The group also has pricing strategies that are attractive such as various promotional offers and cuts in prices from time to time. The group also has different levels of brands that are generic, which cater to a specific type of buyers. Another major strength is that the company has more than 800 stores employing approximately 100,000 employees.
Some of the Coles group weaknesses include the fact that the company is operating on margins that are lower compared to its competition. Additionally, the group has a lot of publicity that is negative that is surrounding it with the hardline negotiations with suppliers from Australia, which has marginally hurt the sentiments of the public towards the Coles group.
Some of the opportunities that the Coles group has include marking and sponsorship exercise, which can help in boosting the business. Expanding the business geographically would help the group reach out to new regions and get new buyers globally. The group also has an opportunity of seizing greater control over the chain of supply so as it can be able to funnel the product and gain more profits at several points.
The major threats to Cole’s group include a competition that is intense in the supermarket space, which has caused plummeting to dangerous margins that are low. The other major threat is that consumers are being confused due to unclear communication of the difference between generic brands. Finally, the food and beverage market in Australia is continually changing as the new competitors enter the market with business models and ideas that are game-changing.
Application of Strategic management concept
Additionally, of all the retail stores, there are only a few stores that have a profile that is above the supermarkets. These are the retail stores providing most of the customers daily and weekly needs. The moment customers begin thinking about what their income is and the pressures of the cost of living, the prices that they have to pay when they check out at a supermarket, this are usually the first places where they surface their complaints. It is the supermarket industry of Australia that most the consumers unleash their claims due to their structure that is highly concentrated (Company case study, 2018). Two significant chains dominate this industry, and they are Woolworths and Cole. This, however, is shifting due to the entrance of new smaller players from overseas. Some of the challenges include, costs of running the company are high and are rising faster than the sales, and the profit margins from transactions made online are smaller compared to the traditional bricks and mortar sales (Company case study, 2018). The company’s management system is just not up to date, especially the supply chain. Increased competition in the market is another challenging factor for the company to make enough profits and poor economic status in the country are some of the significant challenges that affect the company making it impossible for it to realize substantial profit margins.
Summary of Recommendation Strategies
- Reduction of operational costs
- Survival through the competition
- Increasing of Online sales
- Improvement of Supply chain management system
Proposal for Implementing the Strategies
There is a need to rethink and restructure the way the company is run. First, what makes the company not to be able to realize profits is the increase in costs for running of its divisions. The reduction of the expenses is the process a company uses to reduce their expenditure and increase its profits. Several strategies can be used by Cole to ensure that this achieved. Firstly, they need to cut their spending on supplies and save money on goods that are not much demanded by the customers (Jie, & Gengatharen, 2019). It is essential for Cole to look for other suppliers that are outside the traditional suppliers the company is used to. Some suppliers would give huge discounts depending on the commodities taken by the retailer. Additionally, the company should continue applying its previous philosophies of goods on the shelves are dictated by the consumers, and if the products are not selling, they are reduced and later on abolished.
Another way of reducing costs is by cutting the costs of production. It is an essential business for one to reduce material costs and optimize the use of the available resources. This can be done by Cole developing recycling centers for recycling bags that the consumers use for packing after their shopping. Additionally, the company needs not to hire any new employees instead lay off some of its employees as it has reduced in size of its operations since the merger is no more (Jie, & Gengatharen, 2019). If some of its branches will be closed any part of the country the building should be leased to other business or individuals to earn the Company some revenue. Additionally, it is essential for the management to ensure that its operations are efficient so that the company can adjust and optimally utilize the available resources.
The other step that the company could take to reduce its costs is lowering its financial expenditure. This requires that the Company relooks at its insurance policies and its financial accounts for places where they could save money. This could be done by the company saving money from insurance by systems by comparing the insurances policies from different companies and choosing the one they are most comfortable with. The bank accounts or insurance policies should be consolidated if possible (Chang, 2016). The insurance policies should also be evaluated to ensure that the company is not being over insured or having double coverage. Additionally, the company should not take any debt that is not necessary.
The company should also find a way of surviving through the increased competition in the market. As seen earlier, the primary competitor for Coles Company is Woolworths and some few other retailers from overs exploiting the Australian market. It is essential as a Company for them to find their niche (Jie, & Gengatharen, 2019). A mistake that is made by several companies is wanting more than they can handle. It is essential for the company to come up with the provision of specific service or product upon which they could build their reputation on. That is focused on satisfying a particular need of the customer in the market. For instance, they could decide they are supplying quality and affordable home appliances. This would go a long way, and the company would be able to outshine the competition.
Another strategy that could be used to deal with the competition is that the company could get involved more with the local communities. Activities in the cities, groups, and initiatives are essential things that could help in the understanding of the consumer more and provide goods or services that meet their needs (Chang, 2016). Additionally, it is a way of developing a relationship that is genuine in the locality of the stores and getting the consumer to liking the store. This would go a long way in persuading the consumers to purchase goods from Cole stores and not the other competitors.
Increasing of the companies online sales is another important strategy that needs to be improved. E-commerce is the next big thing in business, as most people prefer purchasing their products just by a click of a button. The consumers expect that they would get the goods without incurring any transportation costs, the goods should be delivered on time, and they should spend less (Laudon, & Traver, 2016). This has been a challenge for Cole Company as it is faced with incurring delivery costs; some of the consumers may end up not getting the exact product they wanted. The delivery might not be on time, and some consumers are having a hard time when it comes to using online websites. However, it is not enough to meet consumer expectations when dealing with the selling of online products. It is essential for the company to look for other ways that would improve or reduce the costs of delivering products to consumers. This can be achieved by the company dedicating a team that would be responsible for making the deliveries. Instead of laying off some employees, they could be given this task, and they should be provided with bicycles, vehicles, and motorbikes.
Additionally, to improve online sales, the Company should do advertisements, advertisements, clicks, and extensions. This is a feature that is familiar with most of those who sell their products online. This allows one to make their advertisements bigger with having to click more places. The good thing about this feature is that it makes the products visible and it does not cost any extra. By clicking the ad extension online, the consumer can get precisely what they want as the process is more comfortable and faster (Laudon, & Traver, 2016).
Additionally, it is essential for the company to show off testimonies from consumers that indeed they can deliver so that they can gain the consumers’ trust. It is also necessary for the company to offer a guarantee to the consumer that in case they receive a wrong product which does meet their specificities they will be paid back or refunded — the online market in Australia dominated by Amazon which worries most of the retailers in the market. The e-commerce market, however, is shared among the retailers in the market, and it is yet to be fully exploited in the market too. This, therefore, should be an opportunity for the Cole Company to specialize and improve their online sales.
The final strategy is the improvement of the supply chain management system. Poor relationships with the suppliers were mostly attributed to the longtime mergers where each partner has their preference, and the reputation of Coles Company with their original suppliers was destroyed. It is essential for this relationship to be reinstated for the good of the company. Additionally, weak flow of goods, finances, products, and other services from their point of origin to the other stores has played an enormous role in bringing down business for the company (Ayers, & Odegaard, 2017). It is essential, for the supply chain management system to be re-looked and restored fully. The supply chain management system should be standardized as it increases efficiency and also improves on time and money. Additionally, the employees share a standardized system tool, and it increases accuracy, encourages teamwork, and it reduces the risks of miscommunication. Transparency should be improved as mistakes, wastage, or even fraud are problems of a supply chain that can be fixed through the use of software such as enterprise resource planning.
In conclusion, with cooperation and support from all the employees and implementation of the above-suggested strategies, Coles Company will go back to the top dominating the Australian retail market. However, this is not a onetime thing it requires step by step planning, and the company should be willing to incur additional costs, especially for the improvement of the online market sales.
Company History, (2019). Retrieved from https://www.wesfarmers.com.au/docs/default-source/asx-announcements/demerger-of-coles—briefing-presentation.pdf?sfvrsn=0
Company case study (2018).Retrieved from https://www.brassrazoo.com.au/casestudy/Brass_Razoo_Fujitsu_Case_Study_Coles.pdf
Hiriyappa, B., (2018). Strategic Management and Business Policy: For Managers and Consultant. PublishDrive.
Jie, F., & Gengatharen, D., (2019). Australian food retail supply chain analysis. Business Process Management Journal, 25(2), 271-287.
Chang, J. F., (2016). Business process management systems: strategy and implementation. Auerbach Publications.
Laudon, K. C., & Traver, C. G. (2016). E-commerce: business, technology, society.
Ayers, J. B., & Odegaard, M. A. (2017). Retail supply chain management. CRC Press.
E-Commerce in Australia
It would have seemed insane twenty years ago having an idea of logging into a computer, accessing the internet finding an item that one needs or requires and giving of credit detail for the product to turn up at their doorstep. Today one can order for a product from any part of the globe just by a click of a button. This includes buying of groceries, food, clothes, or any other services that one might require while in one position without them moving. They only get to drive while collecting them at their doorstep. This is the main idea behind online business or e-commerce, as it mostly referred to today. This document looks at the status of e-commerce, especially for retail goods in the Australian market.
As of the year 2017, the percentage of Australians that had connected to the internet is 85%, and approximately 12 million of them are on social media. This is a clear indication that the future of retailing in Australia is e-commerce(Patel, Goyal,& Agarwal, 2018). This majorly driven by the convenience it gives to a shopper, and it reduces the number of overheads. Additionally, purchasing a product online reduces the costs of delivering and logistics has seen e-commerce experience an upward trend in the market. Several major players in the retailing industry such as Woolworths, Coles, Kmart, and Target have launched and opened websites to utilize this chance of the increasing margins on raising online retail and also so that they can be able to serve their customers on around the clock basis.
It was approximated that the e-commerce market in Australia is to be worth $ 13 billion in the year 2016. These numbers are expected to increase and by the year 2020. The e-commerce market in Australia will be at $ 19 billion, a growth rate projection of 10% every year (Madden, G., & Ahmad, 2015). The penetration of digital shoppers in the country is currently at 63%, and it is expected to be at 70% by the time it is 2020. The average revenue of the online business is $ 1,050. The segmentation of the consumers according to their gender and age aligns the market in Australia with what one would consider the typical targets for the e-commerce retailers. The younger users that are from the ages of 16- 44 are more likely to purchase their products using the online platform; this significantly bypasses the older generation. Females aged from 21-35 years old have the highest share in the Australian online market at $ 2.1 million (Yang, 2018). However, it is surprising because men aged between the ages of 35-45-year-old more men utilize the online platform in purchasing their products than their female counterparts the most significant expenditure is on clothes and shoes as it takes the largest market share with adding up to $ 4.0 billion in the year 2018. What follows this figure strictly is sales for personal electronics. These figures are expected to grow considerably by the year 2020.
There are several benefits to both the business and the consumer using e-commerce to do their shopping, the tools required is only a smartphone or a computer and access to an active or influential connection to the internet. One of the benefits of e-commerce is a fast selling or buying procedure for a product. Also, the product can easily be found compared to going to the store and having to walk through several ails to see an individual specific product. Buying or selling of products online is around the clock, and it is 24 hours (Patel, Goyal, & Agarwal, 2018). One can purchase at any time of the day without being worried that the store will be closed. For consumers, there is no geographical limitation as the product can be ordered from anywhere, and it will be delivered at the appropriate consumers’doorstep. The operational costs of running an online business are low compared to a real colossal department store. The number of employees is small; the bills are small and also the quality of service is high. Management and start of an online business are secure. This is because there is no need for one to have a physical premise.
There are, however, some limitations when it comes to the running of an online business. Recently, s survey was conducted, and most of the major retail stores such as Coles Company are having a lot of frustrations. Firstly, the costs of delivery which are expected to be incurred by the store and not the consumer. This has made certain stores to incur charges instead of profits while selling certain products. At times the store might deliver the exact product the consumer ordered, and they may end up refunding the consumer or looking for the correct product. This is challenging as the company wastes resources such as time and the costs on logistics.
Additionally, some of the products ordered online might not reach the consumer as fresh as they were as they left the store (Fernie, & Sparks, 2018). A good example is food or groceries at times they might be damaged or end up spoiling to the dynamic movements. While buying an online product, one is likely to spend more compared to them visiting a store. It is due to this that most consumers might shun away from purchasing goods online and instead prefer going to the store physically themselves. However, for the company to realize most profits in this sector, it should invest and be ready to incur some losses before gaining benefits.
There are, however, solutions to some of these disadvantages. The sellers need to work out a mechanism that will see the cost of delivery shared between the consumer and the seller. This is important as the business needs to make profits and also have friendly prices for the consumer (Patel, Goyal,& Agarwal, 2018).Another tactic that might be employed is the increasing number of their online customers so that their logistics costs can be easily covered. In conclusion, due to the increased use of the internet and social media, e-commerce is the new trend in doing business. Therefore it is about time that industry adapts to the new change and develop strategies that would see their e-commerce business grow.
Madden, G., & Ahmad, H. (2015). 14. The Australian digital market: opportunities and challenges. The Smart Revolution Towards the Sustainable Digital Society: Beyond the Era of Convergence, 285.
Yang, D., (2018). Has the arrival of Amazon altered the market structure for consumer electronic goods in Australia?.
Patel, D., Goyal, S., & Agarwal, R., (2018). E-Commerce Business Model. In Improving E-Commerce Web Applications Through Business Intelligence Techniques (pp. 110-129). IGI Global.
Fernie, J., & Sparks, L. (Eds.). (2018). Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
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