SWOT Analysis of Coles Supermarkets

Student name: Yuan Gao

Student Number:282549

Master of Professional Accounting

 Table of Contents
Organizational Profile...........................................................................................................................1
Organization Structure..........................................................................................................................2
SWOT Analysis of Coles Supermarket...................................................................................................2
Strengths...........................................................................................................................................3
Weaknesses.......................................................................................................................................4
Opportunities....................................................................................................................................4
Threats..............................................................................................................................................5
Recommendations................................................................................................................................6
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7
 Organizational Profile

Coles Group Limited, traditionally known as Coles Myer Limited is one of the most

renowned retailers in Australia. The company owns and operates 738 stores in Australia

including supermarkets, liquor, and convenience stores (Coles Group, 2019h). Wesfarmers

acquired the company in 2007 and ever since the business has experienced tremendous

growth employing to over 100,000 people in over 2,200 outlets (Coles Group, 2019h). Coles

is driven by the mission to establish the supermarkets as a leading retail outlet in Australia at

reasonable rates while still sustaining its development ability. The company is also “,

committed to a purpose and role of leadership in environment and sustainability of resources

in all the aspects of the business” (Coles Group, 2019 c). Today, Coles Supermarkets is

represented in all states and territories in Australia.

To fulfill its mission, Coles follows the following objectives. First off, the company

seeks to safeguard enhanced customer response. It also envisions to have an operative

internal communication system (Coles Group, 2019a). The company also intends to be a

unique outlet delivering high-quality products. Still, the company aims to improve the

customer experience by providing the best quality goods and services. Another objective

guiding the operations of the business is renewing customer support service through

innovation and effective interaction (Coles Group, 2019a). Coles Group Limited remains

environmentally conscious and tries to moderate the waste produced in the supermarket

chains for a sustainable environment. Similarly, Coles has a robust online platform that

provides customers with an unprecedented shopping experience at any location (Coles Group,

2019a). Coles Online offers home delivery services to the customers including same-day,

overnight-drop, and go-services (Coles Group, 2019a). It also offers to pick-up from over

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1000 click-and-collect stations. The platform is controlled with competent, dedicated, and

customer friendly team of workers.

Organization Structure

The figure below illustrates the management structure of Coles (Coles Group, 2019f).

CEO
Steven Cain

COO CE
CFO COO Chief Property
Chief Legal Express, Online
Stores Officer & Store
& Corporate Commercial
Affairs Officer

Chief
Chief Supply Chief People
Company Information &
Chain Officer Officer
Secretary Digital Officer

SWOT Analysis of Coles Supermarket

Globally, most successful companies rely mostly on their strategic management

strategies. Strategic management involves constant creation, implementation, and evaluating

decisions that enable an organization to achieve its objectives (Wilkinson and Kannan, 2013).

Strategic management helps enterprises to be more proactive than reactive in formulating its

objectives and goals. Again, it allows organizations to take full control of their destiny in

their respective industries (Wilkinson and Kannan, 2013). One of the common aspects of

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strategic management involves the analysis of the internal and external environment of a

business.

SWOT analysis covers four distinct factors of an organization namely strengths,

weaknesses, opportunities, and threats (Speth and Probert, 2015). Strengths and weaknesses

are internal factors influencing the competitive advantage of a company and improving areas

of the business. In contrast, opportunities and threats are externalities which the organization

cannot control. Specifically, strengths describe the competitive advantages of a company

(Speth and Probert, 2015). Weaknesses discuss what hinders the organization from achieving

its objectives. Opportunities cover the favorable conditions that an organization can utilize to

gain a competitive edge. Finally, threats give an insight into external factors that can

potentially inhibit organizational performance.

Strengths

Strong brand portfolio. The Company enjoys unique promotion and branding in the

Australian retail space. Coles employs patriotic slogan such as “Proudly Australian since

1914”, and other slogans to entice the locals (Coles Group, 2019e).

High-level customer satisfaction. Coles maintains a strong relationship with

customers through a dedicated customer relationship management department (Coles Group,

2019e). The department ensures total customer satisfaction among existing customers and

promotes a noble brand image among potential customers.

Pricing. Coles has an attractive pricing policy and system with numerous discounted

prices and promotional offers from time to time. Coles Supermarkets also use private

branding to offer high-quality goods at relatively lower prices.

Reliable dealer community. The Company enjoys a culture among its distributors and

dealers who promote the products of the company. The company invests in training and

development of the workforce to explain to the customers on ways to gain maximum benefits

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from the products (Coles Group, 2019b). For example, in conjunction with Apple and other

significant suppliers to promote its products among young people in a campaign named

“Apples for Students” (Coles Group, 2019b).

Online platform. Coles has an active online order and delivery or pickup service

(Wesfarmers, 2018). The online presence allows the organization to offer 24/7 services to the

customers and convenience shopping at any location.

Market share. Coles Supermarkets have approximately 800 stores. The company also

commands a significant percentage of the domestic food and liquor market thanks to its long

history of in Australia (Coles Group, 2019b).

Strong mergers. The Company integrates complementary firms, especially

technology companies to streamline their operations and develop a sustainable supply chain

(Coles Group, 2019g). Adequate technology helps the supermarket to innovate and improve

the customer experience.

Weaknesses

Inadequate feedback mechanism. Coles has a weak feedback mechanism from the

sales team making it difficult to overcome challenges of new entrants. As an outcome, the

company loses market share in the niche categories.

Lower margins. Compared to the competitors, Coles is operating at lower margins

(Australian Financial Review, 2019). The net contribution and profitability ratio are below

the industry level. Besides, the current asset and liquid asset ratios indicate inefficient use of

cash (Australian Financial Review, 2019).

Opportunities

Private label. Coles Supermarkets can use the private label strategy to come up with

effective price mechanisms to enhance profit margins (Smart Company, 2019).

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 Increase in purchasing power. Due to economic growth in Australia, there is an

increase in the purchasing power of the population (Tradingeconomics, 2019). Coles can

capture new customers and increase their market share. Lower inflation rate offer customers

with lower credit rates encouraging them to make more purchases. In turn, Coles creates a

stable market for the products of Coles.

Technology advancement. Technology provides Coles with new opportunities to

innovate and differentiate its products to gain a competitive advantage in the industry (Coles

Group, 2019d). Use of technology can allow Coles to expand market share by tapping into

new markets or fill existing market gaps. It can use the block chain technology to manage its

supply chain and big data to enhance customer satisfaction.

Taxation policy. Taxation policy in Australia gives established players like Coles an

opportunity to increase its profitability (Austrade, 2018).

Environmental policies. The new environmental policies present an excellent

opportunity for Coles to gain a competitive advantage due to its environmentally conscious

operations (Business, 2018). The system also creates a level playing which can allow Coles to

increase the market share.

Threats

Stiff competition. Coles Supermarkets face fierce competition from both international

and local retailers (Business Insider Australia, 2017). Coles compete primarily with

Woolworths in pricing and market share. New entrants in the market also threaten the

profitability of the company. Increased availability for alternative products puts significant

pressure for Coles Supermarkets.

Pricing competition. The increased embrace of private labeling among other retailers

counters the culture of Coles for low prices (World Magazine, 2019). Individual labeling

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increase competition in pricing strategies is putting pressure on the profitability of Coles.

These competitions have led plummeting of food prices hence affecting the margins of Coles.

Confusing brands. Often customers get confused between the different generic

brands due to insufficient distinctive communication for each brand.

Environmental regulations. Despite its adherence to environmentally friendly

practice. The new regulations may affect the production and sales of some of its products.

E-commerce. The ongoing development of online shopping platforms and the

emergence of e-commerce giants like Amazon can influence the shopping pattern in the

market (Inside Retail, 2018). Entrants of other online giants in the market will reduce the

sales volume of Coles.

Recommendations

There are a few recommendations that Coles can adopt, plan, and implement as the

management makes the strategic plan. The recommendations include:

• Coles should strengthen online sales along with active collaborations with suppliers to

gain competitive advantage and promote brand growth. Embracing technology

changes can help the company to develop a robust online presence and increase

market share and profitability.

• To overcome threats of competition, Coles should differentiate its brands to minimize

confusion among customers. The company can also use strategic shelving strategy to

utilize private labeling.

• The company should produce products which are environmentally friendly and

conscious of human health.

• Coles should also put an extra effort to develop an effective marketing strategy

through advertisement.

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 Conclusion

In summary, despite the challenges facing the company, Coles experiences a stable

growth of earnings and sales. Arguably, secure execution of customer-focused strategy is

valid and will continue to bring success for the organization. The growth is also due to the

relentless focus of the company on price, range of products, and quality services.

Additionally, an advanced online platform and increased click-and-pick locations also

facilitate the profitability of the company. With the current performance, Coles can

implement the recommended strategies to strengthen its performance and gain competitive

advantage.

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References

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2019].

Australian Financial Review (2019). Coles cops heat for its governance weaknesses. [Online]

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cops-heat-for-its-governance-weaknesses-20190116-h1a3zy [Accessed 30 Mar. 2019].

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