Woolworths - Competitive Advantage

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MKTG 803
Operations & Supply

Roy Marcellus – 40828360


← Executive Summary

← Market Outlook

o Australian Economy
o FMCG Outlook
o Woolworths & their competitor

← Woolworths competitive advantage

o Product
o Customer Intimacy and Retention
o Online Presence
o Bigger Network

← Appendix

← Reference List


If we compare it with other countries across the globe, Australia has become one of the toughest and most competitive markets in terms of FMCG industry. Aggressive competitions, strict ruling of ACCC, more and more aggressive business model are being adopted, economy is falling apart, price increases experienced by customers in many areas and radical changes in our customer buying behaviour. These economic situation and customer trends will put a huge pressure on FMCG retailers to find a way how to protect their current share and more importantly how to increase their profit in this tough market. That’s why a successful Supply Chain Management and having the most efficient operation management is crucial to survive.

Woolworths is currently the biggest FMCG retailers with 2008’s revenue of $47b and 5.4% EBIT%. Woolworths has reported 6.5% growth on profit for quarter 1 this year, surpassing many analysts’ prediction. Those flying figures are not achieved overnight, in fact Woolworths’ dedication on high standard operation management is probably one of the strongest contributor of those result.

Through out this report we will learn
Woolworths’ 4 key operation excellences,
namely Product, Customer Intimacy
& Retention, Strong Online Presence,
Bigger overall network. Among so
many other operation excellences
which Woolworths has, these 4
key points are probably the ones
that contributes heavily towards
their successes.


Australian Economy
Up until mid 2007…
Australia’s economy was riding a seemingly never-ending wave, buoyed by favorable world economic conditions. Annual GDP growth had come around full circle in the second quarter of 2007, primarily boosted by consumer consumption, construction and resurgence in business investment.

Australia was enjoying the most favourable economic conditions in 30 years. Strong growth in retail consumption signals consumer confidence; strong growth in business investment highlights an optimistic future for businesses; the Australian labour market was also the strongest its ever been; the resource boom has seen the Australian share market go from strength to strength resulting in strong returns in company profits, superannuation, investments and income/earnings; and petrol having stabilised over the past few months.


The recent international market crash and the rising of living costs such as petrol, grocery and interest rate will definitely change this great economic situation. There is a growing speculation by both consumers and businesses about what impact this will have on what seems to be an unstoppable Australian economy.

Whilst price rises coming from all directions, petrol, groceries and mortgage rates are the top 3 price rises experienced by everyone. This will undoubtedly mean that while consumer and business confidence will continue to ride high - niggling concerns will have an impact on discretionary spend and debt recovery.

FMCG Outlook
Overall Retail Outlook
According to Australian Bureau of Statistic (data to Q1 2008) retail sales growth falls back in the first quarter 2008.


Nielsen’s Grocery Report also confirmed that Australian FMCG industry has reached it’s lowest point in years! Dry Grocery and Dairy Case departments are driving the slowing growth in the latest year. Chilled Food prices are on average 17% higher than same time last year!

Australia is becoming on...
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