Strategic Plan for Woolworths/Macro Wholefoods

comparatively lower than non-organic products and the high price premium which fails to attract price conscious customers. However, the organic industry dynamics are changing by line expansion of organic products and movements of retailers into the organic market.

In the past, the organic market was dominated by niche players (100% organic grocery chains) which served high end customers. The entry of retailers (Woolworths, Coles, IGA and others) into the organic market has increased competition for small organic food grocery stores. The strategic group map suggests that the biggest advantage of Woolworths is its high geographic coverage and price competitiveness compared to other competitors.

Customer preference for organic food over conventional food has increased as part of consumers’ daily lives. The major reason for organic market being a niche market is its emotional positioning among customers. The target market for organic foods consists of health conscious and socially aware individuals who can afford and can justify the significant price premium of organic food.

4 Internal environment analysis

4.1 Present strategy

Broadly speaking, as a corporate group Woolworths has determined that significant organic growth will be difficult given the growing market saturation evident in its core industries. As such, it has engaged in a strategy of both organic growth and acquisition-fueled growth, to complement its core activities. Within its organic food and products business (which we are concerned with), its strategy has been more linear and simpler. It has sought to deliver fresh food (using Just-In-Time and other methodologies) at market prices. As the supply of organic produce continues to increase, it is our view that Woolworths will continue to operate using this strategy, primarily by building relationships with suppliers to allow for end-to-end supply chain improvements, in line with Project Refresh, which Woolworths started in 2000 (Invest Smart, 2011).

Strategic Plan for Woolworths/Macro Wholefoods

4.2 Core competencies

Woolworths has a number of significant core competencies, which are typical of highly efficient large retailers globally:

1.They have a strong brand and are trusted by customers. By acquiring Macro Wholefoods, they have consolidated this position in the organic market as well (Woolworths Limited, 2011)

2.They have very strong supply chain management, with vertical integration through the value chain and highly efficient supply centres (Greenhalgh, 2007).

3.They have a strong innovation program and have been successful in implementing various programs such as rewards programs and branded products (Woolworths, 2009). They have also had great success in executing M&A transactions for non-organic growth.

4.They have an excellent distribution network and, given the number of stores they have nationally, they have an excellent distribution footprint.

These competencies, particularly on the supply chain management front (namely relationships with upstream growers), the brand and the distribution network provide an extremely solid platform for Woolworths to push into organic produce.

4.3 Organization Structure

Woolworth’s supermarket chain is a part of mother company Woolworths Limited. Woolworths Limited has passion for retail in food & Grocery, liquor, petrol, general merchandise and consumer electronics in Australia and New Zealand (Woolworths Limited, 2007). Woolworth’s Limited has very complex organisation structure due to its wide range of business and operation across the whole of Australia and New Zealand. Woolworths Limited major Brands are shown below (Figure 2).