Woolworth Analysis Report

 1. Background of Woolworth

Woolworth has been operating in Australian supermarket and grocery industry for years, along with its sole competitor Coles, showing that this sector follows duopoly market structure. However, recently Amazon has entered into the industry and begin to capture significant number of online food and grocery revenue. Based on the entrance of Amazon, Woolworth has started to worry about its competence, profitability, reputation as well as loyalty of its customers (Merrett, 2019). Therefore, the underlying report has focused on conducting the strategic analysis for Woolworth, such that any feasible and effective solution can be given to Woolworth for dealing with competition posed by Amazon.

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2. Situational Analysis of Woolworth

The situation analysis helps to identify the issues being faced by Woolworth. The reliance is maintained on assessment of both external as well as internal issues.

2.1 External Analysis

The external factors mainly lie outside of organization, and while interacting with outside world, the effect of these forces cannot be ignored (Vorobyov et al., 2019). The industry is at mature lifecycle stage and volatility of revenue is low. However, when competition is offered by new entrants, then revenue stream of Woolworth is most likely to undergo modification. The regulation level in industry is medium, yet Woolworth can expect that any changes in policies of Government and any legal changes can affect the operations of business (IBIS, 2018). The economy is stable, yet the value of Australian dollar has fluctuated significantly over past few months and it is likely to affect revenue of Woolworth. The technology change is medium and company can cope up with that based on its resource base (IBIS, 2018). The entry barriers are high, capital intensity is medium (IBIS, 2018) and thus new players might not enter into the market with ease.

On the other hand, in terms of competition, Woolworth is likely to witnessed strong competition from Amazon in online selling. It has been witnessed recently that society has undergone huge change as part of pandemic and online shopping is aggressively replacing the traditional in-store shopping. This is not expected to be temporary and long run change is much likely in buying patterns of consumers. Therefore, competition from Amazon is one of the main challenge which lies in external environment of Woolworth.

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2.2. Internal Analysis

The internal environment of Woolworth comprises resources, capabilities and competencies of the organization, which could enable it to deal with pressures of external environment. In terms of resources, Woolworth has good financial resources, reputation and customers’ base (Biddle, 2016). However, while analyzing the factors necessary to meet demand of tech-based consumers through online selling and communication, it is found that company lags in many aspects. For instance, the e-commerce does not seem to work well for Woolworth, as online selling and online engagement is not viewed as satisfactory by consumers (Merrett, 2019). The social media, which is most used tool for engaging with customers, is not up to the requirements of customers and engagement seems missing in social media interactions. The other issues are related with training of staff, expected decline in share price of company and diminishing loyalty of customers. The key issues chosen for this report are; lack of preferable e-commerce platform and ineptitude of social media interactions.

2.3 SWOT Analysis

SWOT analysis is aimed to assess strengths, weaknesses, opportunities and threats. The analysis for Woolworth is mentioned in table 1.

Strengths ·         Financial resources ·         Historical reputation in Australian market (Keith, 2012) ·         Effective distribution channels	Weaknesses ·         User unfriendly website ·         Poor online services for customers ·         Ineptitude of social media ·         Insufficiently trained staff ·         Poor loyalty of customers
Opportunities ·         Reliance on e-commerce ·         Enhancement of social media marketing ·         Launch of loyalty programs for customers ·         Contractual relationships with suppliers	Threats ·         Competition on pricing ·         Competition from Amazon ·         Changing environmental forces

 

3. Objectives

• To focus on e-commerce activities of Woolworth with improvement of online customer services, such that 40% in online selling can be achieved by the end of financial year.
• To promote interaction with customers through social media marketing such that 100% of customers’ queries are addressed by the end of financial year.

4. Plan of Action

E-commerce Strategy: The first strategy will focus on resolving the issue of website and online customers’ experience. The e-commerce strategy will focus on updating the website of Woolworth, such that it can be made user friendly and issues in online ordering and selling can be catered well. This strategy is highly relevant to Woolworth as it can help in countering the issues of online purchasing experience of customers (Johnson and Iyamu, 2019). The competition faced by Woolworth from Amazon will also be addressed well through e-commerce strategy, as shares of Amazon are increasing based on its effective online selling mechanism. Through e-commerce strategy, Woolworth will also improve its online selling and ordering (Hood et al., 2020), which will in turn improve the online sales of Woolworth (Güsken, Janssen and Hees, 2019).

Social Media Marketing strategy: Social media marketing strategy will be adopted to enhance and maintain interactive relationship with customers. Woolworth’s customers are not offered prospects of engagement through social networking platforms and the social media platforms will be updated to provide extensive information to customers about the available products (Charoensukmongkol and Sasatanun, 2017). The reach of promotional content on social media is vast, as any information can be shared and circulated among social networks in immediate manner. The customers can be engaged with the company and thus they can be reinforced to develop positive connection with specific organization. Based on the theoretical view of loyalty loop of customers, when customers are engaged in interactive association, then they are most likely into loyal association with organization (Evans, 2010).

5. Implementation of Plan

5.1 E-commerce Strategy

This strategy will be implemented in following steps;

• By seeking aid of web designers, updating the website
• Assessing user friendly nature of the website
• Updating products on website to assure that each product is available online
• Hiring sales staff and training them to handle online selling operations
• Managing e-commerce platform of Woolworth in the manner that queries of customers are addressed

5.2 Social Media Marketing Strategy

Social media marketing strategy will be implemented in different steps, which are as follow;

• Updating social networking platforms of Woolworth, including; Facebook, Instagram and Pinterest
• Hiring content creators and bloggers for updating social networking platforms
• Hiring social media manager and team who will be responsible for continually addressing the queries and concerns of customers through different social networking platforms (Zarrella, 2009)
• Assuring that content is updated on daily basis

6. Justification of Strategies

E-commerce Strategy: Justification of e-commerce selling is identifiable by the fact that from 2015 to 2020, e-commerce selling has increased by 56% and sales through e-commerce platforms are expected to increase to $2 trillion in coming years. Along with relevance with industry trends, this strategy will help Woolworth to deal with issues in online selling operations of the company. The complaints of customers about unengaging behavior aspects of online ordering system of Woolworth will be dealt through this strategy. In similar way, relevance with theory is also needed to be considered, as e-commerce purchasing options help the customers to carry out extensive evaluation of the available options for specific products (Johnson, 2018). The buying process of customers will be supported through e-commerce business strategy, and positive purchasing decision will most likely be encouraged (Tongiani and Luca, 2018). Additionally, theory of planned behavior explains that online buying complies with subjective norms of customers and promotes their positive attitudes to develop their buying intentions (Steinmetz et al., 2016).

Social Media Marketing Strategy: The adoption of social media marketing is important for Woolworth, as without engaging the customers, brand cannot become able to promote positive purchasing decision of consumers. The two way communication is required by consumers, such that their queries and concerns are addressed and they are being kept engage with Woolworth. The promotion of two way communication, customers’ engagement and satisfaction of consumers can all be attained through social media marketing (Antoniadis and Patoulidis, 2017). According to the researchers, social media marketing adds positively in creating brand equity and loyalty (Soegoto and Karamoy, 2020). With respect to the process of consumers’ loyalty, when social media marketing enables positive consumers’ experience, then results could be witnessed in the form of better consumer engagement (Wang and Kim, 2017). According to consumers decision making process, the engaging interaction of consumers with brand through social media marketing and two communication is likely to add positively in fostering positive purchasing decisions of consumers (Ahmed, 2020).

7. Control measures

E-commerce Strategy: The control and evaluation of e-commerce strategy will be carried out by assessing the traffic on the website and then comparing it with the online sales percentage. Increase in website traffic and sales will indicate the effectiveness of e-commerce strategy. In addition to this, the short online survey from customers will also be conducted by sending them link of survey through email. The customers will be asked about their satisfaction with existing e-commerce services and any suggestions for improvement will also be taken.

Social Media Marketing Strategy: Success of social media marketing strategy will be ensured by measuring the number of followers on different social networking sites of Woolworth. The increase in followers will indicate that social media marketing is handled successfully. Likewise, it is notable that customers are likely to offer their views more openly on social networking sites and thus assessment of their comments and messages can also serve as the way to check the level of their satisfaction.

8. Role Requirements for new Plan

In order to implement two plans for Woolworth, different roles will be created, which will either be fulfilled by existing staff members or new hiring will be needed. The following roles are created combined for two strategic plans;

• Web designer

The new hire will be needed for fulfilling this role.

• Technical Staff

New staff will be hired to assure that smooth operations of e-commerce platform are maintained.

• Sales staff

Training of existing staff to support online sales operations.

• Content creators

Individuals with experience of content creation will be hired.

• Social media manager

The manager for handling the social media operations will be hired.

9. Timeline

	Months
Actions	1st	2nd	3rd	4th	5th	6th	7th	8th	9th	11th	12th
Updating the website
Training sales staff
Uploading all products
Assessing user-friendly nature of website
Social networking platform update
Hiring of content creators and social media managing staff
Assessment of social media marketing

 

10. Budget

Actions	Cost AUD
Website update	2000
Ongoing technical support	8000
Hiring of staff	15000
Cost of training staff	5000
Distribution of online order (monthly)	10000
Handling of any technical issues	5000
Purchasing of new equipment	10000
Post purchase support to customers (monthly)	5000
Total	60,000

Conclusion

The entry of amazon in super market and grocery industry of Australia has posed competition for Woolworth such that decline in sales of the company is expected.  It is found through situational analysis that issues are evident in online selling platform and inaptitude of social media to engage with customers. Based on identification of these issues two strategies are being devised including; ecommerce strategy and social media marketing strategy. Both of these strategies will help the company to improve online customer experience by engaging in interactive relationship with them. Additionally, online sales will also improve thus adding positively in enhancement of overall market    shares of Woolworth. These strategies will be measured on ongoing bases and any deviance will be managed to improve the overall effectiveness of the strategic actions of Woolworth.

References

Ahmed, K.M., 2020. Effect of Design Elements for Social Media Ads on Consumer’s Purchasing Decision. Global Media Journal, 18(34), pp.1-12.

Antoniadis, I. and Patoulidis, V., 2017, September. Managing Consumers’ Negative Comments in Period of Crisis. The Case of the Greek Super Markets. In International Conference on Strategic Innovative Marketing (pp. 3-8). Springer, Cham.

Biddle, I., 2016. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters battle. Busidate, 24(3), p.3.

Charoensukmongkol, P. and Sasatanun, P., 2017. Social media use for CRM and business performance satisfaction: The moderating roles of social skills and social media sales intensity. Asia Pacific Management Review, 22(1), pp.25-34.

Evans, D., 2010. Social media marketing: An hour a day. John Wiley & Sons.

Güsken, S.R., Janssen, D. and Hees, F., 2019. Online Grocery Platforms–Understanding Consumer Acceptance. In ISPIM Conference Proceedings (pp. 1-17). The International Society for Professional Innovation Management (ISPIM).

Hood, N., Urquhart, R., Newing, A. and Heppenstall, A., 2020. Sociodemographic and spatial disaggregation of e-commerce channel use in the grocery market in Great Britain. Journal of Retailing and Consumer Services, 55, p.102076.

IBIS, 2018. Supermarkets and grocery stores in Australia. [Online], Available at; https://www.ibisworld.com/au/industry/supermarkets-grocery-stores/1834/. [Accessed; 17^th  May, 2020]

Johnson, O. and Iyamu, T., 2019. Framework for the adoption of e‐commerce: A case of South African retail grocery sector. The Electronic Journal of Information Systems in Developing Countries, 85(5), p.e12095.

Johnson, O.J., 2018. Adoption and use of E-commerce in the mainstream retail grocery sector in the Western Cape, South Africa (Doctoral dissertation, Cape Peninsula University of Technology).

Keith, S., 2012. Coles, Woolworths and the local. Locale: The Australasian-Pacific Journal of Regional Food Studies, 2, pp.47-81.

Merrett, D.T., 2019. The Making of Australia’s Supermarket Duopoly, 1958–2000. Australian Economic History Review.

Soegoto, A.S. and Karamoy, H., 2020. Competitive Strategy Analysis to Increase Consumer Purchasing Decisions on Minimarket Business. ETIKONOMI, 19(1), pp.119-130.

Steinmetz, H., Knappstein, M., Ajzen, I., Schmidt, P. and Kabst, R., 2016. How effective are behavior change interventions based on the theory of planned behavior?. Zeitschrift für Psychologie.

Tongiani, M.G. and Luca, F., 2018. Digitalisation as a Strategic Opportunity and Co-Creation Value With Users: Evidence From Italian Grocery Smaller Retailing Firms. In User Innovation and the Entrepreneurship Phenomenon in the Digital Economy (pp. 50-71). IGI Global.

Vorobyov, A.D., Pozdeev, P.V., Kruglova, N.V., Nogovitsyna, O.S. and Tokareva, P.V., 2019. A Unified Methodology of Strategic Management and a Knowledge Management Model. TEM Journal, 8(2), p.554.

Wang, Z. and Kim, H.G., 2017. Can social media marketing improve customer relationship capabilities and firm performance? Dynamic capability perspective. Journal of Interactive Marketing, 39, pp.15-26.

Zarrella, D., 2009. The social media marketing book. ” O’Reilly Media, Inc.”.