Coles and Woolworths

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CASE
Dallas Hanson
University of Tasmania
Coles and Woolworths dominate the Australian grocery supermarket industry Austraiia has one of the most concentrated grocery indusuies in the world; Coles and Woolworths account for almost 80 per cent of supermarker sales, as well as 60 per cent of alcohol sales and around 50 per cent of petrol sales.I When Woolworrhs opened in D24 it established the basic idea that has remained: the opening advertisement read ‘every city needs a Woolworths …’.2 Coles andWoolworths have been competing for decades but are now in a period of fierce competition with some other players. The battleground is the grocery industry via supermarkets, but the corporate structure of the two provides useful background for understanding how each operates.
The Cotes and Wootworths groups In 2011 the Woolworths group achieved .{$54.1 billion in sales and a 5.1 per cent increase in earnings, with a net profit of AS2f2,+ mrllion. This came from a variety of enrerprises. There nere 840 supermarkets in Australia, with 21 new supermarkets added during the year. In New Zea\and there were 207 stores and sales of NZ$54 billion. Woolworths Liquor sales were also up, from Dan Murphy’s, Cellarmasters and BWS, pius the Woolworths supermarkets in jurisdictions where sale
of alcohol is allowed. Woolworths’ 581 petrol srarions also increased sales, while Big Vr{ the general merchandise retailers (modelled on Walmart) had a small sales decrease from its 165 stores (11 new ones in 2011). Its consumer electronics business increased sales by 2.1 per cent from394 srores, using the Dick Smith and Thndy brands (it was in the process of getting out of the Dick Smith chain in 201i). The joint venture with Thta in India serviced 64 stores and increased sales by A$252 million in 201-1. It also ran a hotels business with 282 holdings. Woolworths is the leader in the Australian gambling industry with more poker machines than any other group. Woolworths has also entered the home improvement business with the Masters brand.3 Woolworths’ major competitor in many caregories is Coles, which is owned by Wesfarmers, the Western Australian congiomerate whose annual reporr talks of ‘suength through diversity … a combinadon of successful businesses’.a k is a thriving corporation that has grown from a WA farmers cooperative and now employs over 200000 peopie. Revenue forWesfarmers in 2011 was $52.9 billion with earnings of A$3.2 billion. It owns Coles in supermarkets, Bunnings in hardware (home improvement), Kmart in general merchandise (in
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A Woolworths supermarket.
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A Coles supermarket.

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