The paper "Competition in the Australian Market for Groceries - Coles Supermarket and Woolworths" is a perfect example of a micro and macroeconomic case study. Two major players dominate the Australian grocery retail, which is Coles Supermarket and Woolworths. These two stores determine and control the demand and supply and hence influence the market. A factor that comes with influencing the market is preventing new competitors from entering the market through maximizing in bargaining power (Australian Economic Review Policy Forum, 2004). Bargaining power is commonly utilised by major competitors to influence the price in which they purchase products and services from the suppliers (Hall & Lieberman, 2009).
The aim of this paper is to highlight and discuss the implications in which Coles Supermarket and Woolworths have on primary producers, consumers and competitors. This can be achieved through utilisation of microeconomic principles into identifying how these two retailers control the market and the consequences of the control. A perfect competition usually takes place in a market whereby there is no single business that has superiority compared to competitors (Mankiw & Taylor, 2006).
A perfectly competitive market is dominated by many buyers and sellers and there is no barrier for entry (Hall & Lieberman, 2009). It means that entry is simple and voluminous information is available regarding the market and such information can be utilised by any organisation to formulate and implement appropriate strategies. According to information presented by Australian Competitions and Consumer Council (ACCC) (2008), the major players in the grocery retail industry. The report indicates that Coles and Woolworths stores control around 80% of groceries in the industry. Even though numerous retailers and wholesalers exist such as the independent grocery associations and Aldi, Coles Supermarkets and Coles supermarket still controls the market even though they sell preserved groceries (Australian Economic Review Policy Forum, 2004).
Woolworths and Coles can influence and control the process of the products and services and at the long run can make the other smaller organisations to either merge their organisations or close their shops because they cannot compete (Hall & Lieberman, 2009).
ACCC. (2008). Report of the ACCC inquiry into the competitiveness of retail prices for standard groceries. Available on the web at www.accc.gov.au
Australian Economic Review Policy Forum. (2004). Competition Issues in the Australian Grocery Industry, vol. 37, no. 3 Sept 2004.
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