Coles Group Limited SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Private label strategy to drive growth: Apart from the grocery sales the company is trying to make direct dollars from its consumers by selling private label goods to its customers. According to IBIS World Report, goods which are private label will contribute 28% of all sales in the supermarkets by 2021-22. Private label products were a key driver of Coles’ sales in FY15 and even drew in customers from its rival, Aldi. Coles has indicated that it will cut its product range over the next two years and replace them with its own-brand versions.

2. Insurance and finance sector opportunities to pull upon: With the presence of a huge database readily available through the retail and convenience stores Coles along with its competitors are trying to leverage the data and come up with customized insurance policies for the customers based on their standard of living which is again being estimated from the pattern of their purchase history. With the advance of data analytics this can be a huge opportunity for Coles to cater to its huge customer base with tailor-made insurance products that can be modified or customized or up/downscaled as per their needs. Coles Financial Services works in collaboration with Citigroup to offer credit cards and personal loans to around 330,000 customer accounts. A partnership with Insurance Australia Group (IAG) has led to around 350,000 people being granted home, car and landlord insurance options. Coles has also launched pet insurance in partnership with Guild Insurance in 2020.

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Threat

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Political

1. Government regulations against the duopolistic nature of the market: Coles and Woolworths being the retail giants in Australia control the lion’s share and thus making the market duopolistic in nature. Federal government recently has taken steps to control this duopoly and Australian Competition & Consumer Commission has recently taken numerous steps to decrease the entry barrier and to lower the competition so that the new players can also operate and enter with ease. This can help in increasing the bargaining power of the customers as it would help the customers compare the prices before taking the purchase decisions.

Economic

1. Low spending Australian customers: Due to the economic downturn the Australian customers have become very price sensitive and that too they are also spending less on their shopping habits. In its constant endeavour to become customer friendly Coles has introduced a wide range of products and is trying to decrease the price of the products with the lowest margins possible. Through the use of the combination of various products available at Coles the customers can minimize their shopping cost and can buy products at a price even cheaper than 2009 prices. However this strategy of Coles is being adopted by many of its competitors and what has started is a “Price War” where only the deep pockets players stand a chance to survive and revive.

2. Bargaining Power of Suppliers have reduced drastically: As Coles & Woolworths control majority of the retail chain stores in Australia the suppliers are not being able to find any more intermediaries and thus the duopolistic nature of the market forces them to reduce their bargaining power and thus many of the suppliers getting wiped out financially. But with steps from ACCC the bargaining power of the suppliers are set to increase in the near future with the availability of new intermediaries.

Social

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Technological

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Legal

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Environmental

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