Counting the cost: Profit margins have declined due to intense price competition

IBISWorld’s Supermarkets and Grocery Stores market research report is a comprehensive guide to market size and growth prospects. Our industry reports offer strategic industry analysis of the factors influencing companies, including new product developments, economic, lifestyle and demographic influences, distribution and supply chain factors and pricing issues. Full analysis accompanies our data forecasts to illustrate how the market responds to emerging industry trends.


Industry Analysis & Industry Trends

The Supermarkets and Grocery Stores industry is one of the most fiercely competitive industries in Australia. The rapid growth of ALDI over the past five years has significantly altered the industry. ALDI has grown in popularity, largely due to its discount private-label products. The rise of ALDI has forced the two established industry giants, Woolworths and Coles, to cut prices and expand their private-label product ranges. Smaller players, such as Foodworks, have struggled to compete in an increasingly price-intense industry. In addition, industry-wide profit margins have fallen over the past five years as players reduced prices and accepted lower margins to stay competitive. Industry revenue is projected to grow by an annualised 4.2%...

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Industry Report - Industry Analysis Chapter

The rapid growth of ALDI has significantly altered the Supermarkets and Grocery Stores industry over the past five years. Ongoing price wars among the industry’s two largest companies, Woolworths and Coles, have been exacerbated by the rise of ALDI, which has reduced product prices over the past five years. Despite lower prices, the staple nature of the industry’s products has supported revenue growth. Industry revenue is projected to grow by an annualised 4.2% over the five years through 2016-17, to reach $105.3 billion. This includes forecast industry revenue growth of 3.3% in 2016-17.

Woolworths and Coles have reduced prices as a competitive strategy, going against the trend of overseas supermarkets competing through product differentiation. Con..

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Industry Products

What is the Supermarkets and Grocery Stores Industry?

Industry players primarily retail groceries. Supermarkets and grocery stores retail a range of groceries and food products, including fruit and vegetables, bread, cigarettes, canned goods, toiletries, dairy goods, delicatessen items and cleaning goods. Specialist retailers, niche retailers and convenience stores are excluded from the industry.

Industry Products
Dry and packaged foods
Bread and bakery products
Meat products
Milk and other dairy products
Fresh fruit and vegetables
Cigarettes and other general merchandise
Toiletries and health products
Industry Activities
Operating supermarkets
Operating grocery stores

Table of Contents

About this Industry

Industry Definition
Main Activities
Similar Industries
Additional Resources

Industry at a Glance

Industry Performance

Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle

Products & Markets

Supply Chain
Products & Services
Demand Determinants
Major Markets
International Trade
Business Locations

Competitive Landscape

Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
industry Globalisation

Major Companies

Operating Conditions

Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance

Key Statistics

Industry Data
Annual Change
Key Ratios

Jargon & Glossary

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