Coles and Woolworths Case Study

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1.The key to Woolworths’ faster growth than Coles Myers may be attributed to several reasons, one of them being its emphasis on diversification which saw it enter markets such as petrol. Woolworths offered everyday low price (EDLP) on established brands, a strategy akin to Wal-Mart in the United States which presents a competitive advantage against Coles Myers’ Kmart and Target divisions which maintained a ‘high-low’ pricing strategy. Woolworths CEO Roger Corbett who had prior experience with the management of Wal-Mart chain in the US, implemented ‘Project Refresh’ in 1999 to restructure the company’s supply chain, and to introduce new technology and the EDLP structure to its supermarkets. Furthermore, Woolworths’ success in entering the petrol-retailing sector resulted in its ability to capture valuable market share six years before Coles Myers responsive entry into the segment. Woolworths’ managed to present itself as The Fresh Food People which typified an esprit de corps, providing marketing triumph over Coles which were already behind as reflected by its ‘second mover’ status. Woolworths’ ability to retaliate to competitive actions consistently positions the company in direct competition. In order to maintain market commonality, under high likeliness of attack, Woolworths acquired Dan Murphy’s chain of liquor stalls in response to Coles Myers acquisition of Theo’s liquor chain in 2003. In addition, Woolworths is able to maintain a competitive edge as its implementation of the EDLP strategy forced Coles Myer to cut its prices as a competitive necessity. However, Woolworth’s ability to minimise its supply chain costs as a result of ‘Project Refresh’ enabled the company to maintain greater margins in the price war. Woolworths’ ability to retaliate to competition by Coles Myers move into the petrol market is further elaborated in the equity joint venture with Caltex. Woolworths’ constant bid at differentiation from Coles Myers as observed from Corbett’s...
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