Priced out: Industry profitability has declined due to intense price competition

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 supermarket chains, 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 have reduced prices and accepted lower margins to stay competitive. Industry revenue is expected to grow at an annualised 3.0%...read more.

Industry Statistics & Market Size
Revenue
$102bn
Annual Growth 13-18
3.0%
Forecast Growth 18-23
Profit
Employment
362,102
Businesses
1,891

Industry Threats & Opportunities

  • Industry operators have reduced prices and accepted lower margins to stay competitive
  • Private-label product ranges have strongly grown as a share of industry revenue
  • Price deflation arising from fierce price competition is anticipated to constrain revenue
  • Industry Report - Industry Locations Chapter

    The distribution of industry establishments largely follows population trends. Consequently, the highly populous eastern seaboard states of New South Wales, Victoria and Queensland account for the highest proportions of stores. ALDI’s strong growth has increased concentration on the east coast. However, ALDI’s recent expansion into South Australia and Western Australia has also boosted participation in these states.The appearance of supermarkets in capital city CBDs is a relatively new occurrence. Traditionally, major supermarkets were located in suburban shopping centres or local shopping strips. The number of supermarkets in or close to CBDs has grown as the population has increased in these areas. For...purchase to read more.

    Additional Insights for the Supermarkets and Grocery Stores Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Supermarkets and Grocery Stores Industry are

  • Ability to control stock on hand
  • Attractive product presentation
  • Experienced work force
  • IBISWorld analysts also discuss how external factors such as Real household disposable income and Consumer sentiment index in the Supermarkets and Grocery Stores industry impact industry performance..

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    What's in this report

    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
  • Beverages
  • Tobacco products
  • Toiletries, health products and general merchandise
  • Industry Activities
  • Operating supermarkets
  • Operating grocery stores
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Real household disposable income
  • Consumer sentiment index
  • Population
  • Demand from cafes, restaurants and takeaway food services

  • Current Performance
  • Industry landscape
  • Private-label products
  • Store operations
  • Chart: Revenue Growth

  • Industry Outlook
  • Online focus
  • Competition
  • Investing in technology
  • Table: Supermarkets and Grocery Stores Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Supermarkets and Grocery Stores Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Consumers

  • Key Selling Industries
  • Cosmetics and Toiletry Wholesaling
  • Dairy Produce Wholesaling
  • Fruit and Vegetable Wholesaling
  • General Line Grocery Wholesaling
  • Meat Processing
  • Outdoor Vegetable Growing
  • Soft Drink and Pre-Packaged Food Wholesaling

  • Products & Services
  • Dry and packaged foods
  • Toiletries, health products and general merchandise
  • Fresh fruit and vegetables
  • Meat products
  • Milk and other dairy products
  • Bread and bakery products
  • Beverages
  • Tobacco products
  • Chart: Supermarkets and Grocery Stores Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Fifth income quintile
  • Fourth income quintile
  • Third income quintile
  • Second income quintile
  • First income quintile
  • Chart: Major Market Segmentation for the Supermarkets and Grocery Stores Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Supermarkets and Grocery Stores

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Supermarkets and Grocery Stores Industry

  • Industry Globalization
    Woolworths Group Limited, Wesfarmers Limited, ALDI Stores Supermarkets Pty Ltd, Metcash Limited,
  • Table: Woolworths Group Limited - financial performance
  • Table: Wesfarmers Limited - financial performance
  • Table: ALDI Stores Supermarkets Pty Ltd - financial performance
  • Table: Metcash Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Supermarkets and Grocery Stores Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Supermarkets and Grocery Stores Industry
    Includes:
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Wages (2009-2023)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    App
  • Smartphone or tablet application program.
  • Dark Store
  • A large retail facility that resembles a conventional supermarket that is not open to the public and is used for storing goods used to fulfil orders placed online.
  • Private-Label
  • Products that are branded under the store they are sold in. These products are produced for supermarkets under contract and earn higher profit margins.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Supermarkets and Grocery Stores market research report offers insightful industry analysis and research into the market at the national level. IBISWorld’s in-depth industry market research is presented in a logical and consistent format. The industry report contains key industry statistics, market size, industry trends, and growth and profit forecasts for a 5-year outlook period.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Supermarkets and Grocery Stores:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Supermarkets and Grocery Stores market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Supermarkets and Grocery Stores, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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