Melbourne, Australia (PRWEB) August 17, 2013
Supermarket shelves have changed significantly over the past five years. The growing popularity of private-label merchandise has led to price wars and competition across the industry. As the global economy rides out turbulent times, constraints on discretionary income have resulted in consumers remaining conscious of spending, thus exacerbating the aggressive price competition. IBISWorld industry analyst Emily Witham states, “there has been a battle of the brands between the two supermarket giants – Coles and Woolworths – with both retailers fighting for a greater share of the consumer dollar.” Trading conditions across the Supermarkets and Grocery Stores industry have also been influenced by volatile food costs and changing consumer preferences. In the five years through 2013-14, industry revenue is expected to increase by an annualised 2.4% to $87.2 billion.
The challenging retail environment has caused industry heavyweights to implement price cuts across a range of everyday household items. According to Witham, “despite the competition, sales growth has been aided by consumer demand for private-label goods, weekly specials and other marketing initiatives to retain consumer interest.” The competitive tactics have resulted in heavy ACCC involvement in the industry and several cases investigating the use of false or misleading product advertising. The dual competitive environment, which goes against the trend for international supermarkets who use product differentiation to increase profit margins, has resulted in lower profit margins. The result of this is better prices for consumers. Industry competition is expected to remain intense, with Costco and ALDI stores changing consumer shopping trends. IBISWorld anticipates that ALDI will gain a larger market share and play a significant role in shaping the trading terms for supermarkets and grocery stores.
The Supermarkets and Grocery Stores industry has been subject to increasing market share concentration since the mid-1970s. The steady rise has stemmed from the acquisition activity undertaken by Woolworths and Coles. As a result of this consolidation activity, industry concentration levels continue to be high in 2013-14. Industry concentration has also been affected by the entry of German-based ALDI into the Australian market. ALDI operates as a low-cost player that stocks a limited number of popular grocery items. The majority of ALDI's products are marketed as house brands and heavily discounted. Over the past decade, ALDI has grown and increased market share. The introduction of Costco into the industry is likely to further concentrate the market as it competes with ALDI providing mass discounted items. Major players in the industry are Woolworths, Wesfarmers (Coles) and ALDI. For more information, visit IBISWorld’s Supermarkets and Grocery Stores report in Australia industry page.
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IBISWorld industry Report Key Topics
Supermarkets and grocery stores retail a range of groceries and food lines, including fruit and vegetables, bread, cigarettes, canned goods, toiletries, dairy goods, delicatessen items and cleaning goods. Specialist retailers, niche retailers and convenience stores are excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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