Coles relaunching BI-LO?


In August 2016, The Age published an article outlining yet another twist in Coles’ strategy.  The intention, this time, is to reduce the supermarket’s product range by 15%, to “drive the efficiency of the business to fund grocery price cuts and safeguard its market share.[1]

The notion of reducing the merchandise offer to protect market share sounds strange. But, the strategy problem at Coles runs deeper than that.  Let me take you on a short trip down memory lane.

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Independent supermarkets: Another nail in the coffin

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On 31 May 2016, The Australian Financial Review wrote about Aldi’s rapid expansion in Australia. Aldi is now the most profitable supermarket retailer in Australia, with EBIT at 6% against 4.6% reported by Coles, and 5.4 reported by Woolworths.

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Independent supermarkets face extinction


Independent supermarkets in Australia live on borrowed time.

But, at first glance, it’s easy to think otherwise. IGA currently operate approximately 1,300 stores. Woolworths have a mere 861 stores and Coles 746. That said, Coles and Woolworths stores occupy much more space than the average IGA outlet. Still, IGA handle a large share of the grocery market.

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