The paper “ Implications of Retail Grocery Market in Australia, Concept of Workable Competition” is a forceful variant of the assignment on business. A perfectly competitive market refers to a situation in which the market is characterized by three conditions. First is that number of buyers and sellers in the market is so large that no single decision-maker can affect the price of any given product by changing the quantity it sells or buys. Second is that the market must have a standardized product offered by sellers; that is, buyers do not perceive differences between the products of one seller and another.
The third is that the market is characterized by easy entry into and exit from the market. For instance, it would be assumed that new sellers would incur no costs in beginning their operations and also in attracting new buyers through means such as advertising (Hall & Marc Lieberman, 2007, pp. 220-221). Rarely are marketing perfectly competitive, and this is the case with the retail grocery market in Australia as will be explained next. The retail grocery market in Australia is dominated by two major players: Coles that accounts for about 70 percent of packaged grocery sales and Woolworths that accounts for about 50 percent of fresh sales in Australia.
This means that other retailers account for only a small portion of the market – the rest being taken by the aforementioned companies. In addition, retail grocery Australia is likely not to have standardized products as there are already well-known companies that have flooded the market with their goods. When buyers notice significant differences in outputs of different sellers, the market is not perfectly competitive.
Although this may not necessarily be the case in Australia, it is true that the two major players have dominated the market, which gives them an unfair competitive advantage (other competitors such as Franklins and ALDI are restricted to the region in their coverage). The retail grocery market has a number of distinctive characteristics including geographic isolation, a relatively low and concentrated population, and a regulatory environment (ACCC, July 2008).
ACCC 2008, ‘Report of the ACCC inquiry into the competitiveness of retail prices for standard groceries,’ Available from
http://www.accc.gov.au/content/index.phtml?itemId=838251 (8th October 2010)
Department of Agriculture, Fisheries and Forestry (DAFF) 2007, Section 5, available from http://www.daff.gov.au/__data/assets/pdf_file/0004/182443/section5.pdf (30 September 2010).
Hall, R.E. & Lieberman, M. 2007, Microeconomics: Principles and Applications (4th edition), Cengage Learning, New York.
Henrick, K. 2010, “Current Issues in Australian Competition Policy – Creeping Acquisitions,” National Association of Retail Grocers of Australia (NARGA), 2010, Available from http://www.narga.net.au/?p=141 (30 September 2010).
Hill, C. & Jones, G. 2009, Strategic Management Theory: An Integrated Approach (9th edition), Cengage Learning, New York.
Motta, M. 2004, Competition Policy: Theory and Practice, Cambridge University Press, Oxford.
Scitovsky, T. 2003, Welfare and Competition, Routledge, New York.