1. Introduction The intended purpose of this report is to outline the nature of the Australian retail market, specifically the retail food sector. This report will then discuss the role of market segmentation and how it has resulted in the emergence of new retail channels available to consumers. The emergence of ALDI as a new retail channel will be the focal point of the report along with a brief overview of other new-coming organizations such as Costco. Through the use of current journal articles, books, internet sites and government publications, this report will outline the benefits of the new retail channels available to consumers, especially in regards to saving on common expenses. This report will also discuss the possible room for development and expansion for other retailers within Australia, and the ensuing implications these would have on the supermarket sector. 1.1 Background: Australian Retail Market The Australian retail market is currently categorized into certain sectors. The sector that will be discussed in this report will be the Australian retail food sector, and more specifically the supermarket subsector. Woolworths and Coles dominate this sector with 78 percent share of the market and their dominance within the sector is evident as they are contributing to 50 to 70 percent of grocery and food sales (AFGC 2011). Furthermore, the Australian Food and Grocery Council (2011 p. 13) outlines the fact that the majority shares of the two major retailers of Woolworths and Coles have also resulted in Australia’s food retail market to be “one of the most concentrated in the world”. 2. Nature of Australian consumer market The Australian consumer market is also segmented into categories. These three categories include premium, convenience and discount buyers (Armstrong et al. 2012 p. 190). Different retailers depending on their targeted market will attempt to adequately service one these categories. 2.1 Target marketing and Market segmentation These market segments are categorized depending on a few variables, the main variables include, Geographic, demographic, psychographic and behavioral (Armstrong et al. 2012 p. 188). The aims of market segmentation, to put broadly, are to identify certain groups of consumers and then allocate them into segments depending on their similarities and common buying trends (Dibb & Lyndon 1996). The concept of market segmentation is essential for organizations to understand in order to maintain a “competitive advantage that will enable them to fend off potential new entrants” (Armstrong et al. 2012 p. 191). 2.2 Examples of Market Segmentation Dibb and Lyndon (1996, p. 7) illustrate the key benefits of the effective use of market segmentation, these include: “full utilization of competitive edges, development of more appropriate marketing programmes and to become more market-focused”. One example of this would be Woolworths as in recent times; Woolworths have portrayed themselves as “Australia’s Fresh Food People” (Woolworths 2013). It is evident that Woolworths have developed more
appropriate marketing campaigns in order to appeal to their consumers and have a clear sense of direction. Another example of effective market segmentation is through Bi-Lo, which is owned by Coles but targets a different market segment. Due to the fact that Bi-Lo targets discount consumers they have employed their ‘Why Pay More?’ marketing campaigns (Bonn 2006, p. 7). 3. ALDI and their emergence into the market One of the main retailers within the retail market is ALDI and their goals are simple and concise; their philosophy is that “all people, wherever they live, should have the opportunity to buy everyday groceries of the highest quality at the lowest possible price” (ALDI 2013). ALDI was able to transition into the Australian retail market relatively smoothly as they understood their position in regards to their consumers, and also had the ability to service their respective markets’ (discount...
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