SWOT analysis of Woolworths

A supermarket chain headquartered in Australia, Woolworths is owned by the Woolworths Limited. The supermarket chain which has an extensive network in Australia is the market leader there in grocery and food retail controlling more than 80 % of the market share.

The retailer has a  very broad product portfolio that includes grocery, vegetables, non-vegetarian products, toiletries, bakery products, confectionery, home furnishing, kitchenware, clothes , footwear, and other miscellaneous items. The primary objective of the supermarket chain is to ensure that they have everything for the customer so that the customer does not have to shop elsewhere.

The supermarkets are well stocked with all popular brands as well as private labels from Woolworths which are well recognised and they aim at serving customers by offering them the lowest cost products across all seasons. The company operates around 1000 stores across Australia out of which 17 are convenience stores and 976 are supermarkets.

Strengths in the SWOT analysis of Woolworths

Strengths are defined as what each business does best in its gamut of operations which can give it an upper hand over its competitors. The following are the strengths of Woolworths:

• Market leadership: The Australian retail market is governed entirely by two key players Coles and Wool Worths both of who are market leaders. In this context, Woolworths almost holds 80 % of the market share and this has drastically reduced the threat of competition.
• Segment penetration: Woolworths started by targeting the wealthy class and for that, they ensured that they were well stocked in upscale brands. Then the supermarket chain started moving into the lower value segments by ensuring that their private labels were value brands. Thus today they have the strong presence in both ends of the spectrum.
• Managing perceptions: The primary factor which has led to the success of Wool worths is the ease at which they have been able to manage perceptions and balance segments across income strata. This has been made possible by a pricing as well as promotion policy which not a completely low end but also not entirely premium. This has also helped to increase their business in the middle-class segment by almost 55 %.
• Employee policies: Woolworths is considered to be a very people savvy employer. Apart from employing a highly diverse group of people, Woolworths has always been conscious of ensuring that the employees are well trained and courteous. To ensure satisfaction, in addition to the salary the company also offers bonuses and perks regularly to employees.
• Good Customer tracking: Woolworths is continuously tracking their customers through business analytics tools specially developed for the purpose and social media analytics. They also keep track of customer shopping bills and ensure that their shelves are always stocked with fast-moving products.
• Promotions: Woolworths follows an aggressive strategy for promotions where every week customers are informed on offers that run. The company also highlights the value proposition and tries to keep the entry-level prices the lowest in the market.

Weaknesses in the SWOT analysis of Woolworths

Weaknesses are used to refer to areas where the business or the brand needs improvement.   Some of the key weaknesses of  Woolworths  are:

• Confused positioning: Woolworths target multiple income segments using the same products. The result is that it sends confused signals to the customer who is not sure whether the supermarket really offers value prices.
• Partial behavior to certain markets: Woolworths targets both value and premium segment selling both affordable and aspirational products. However, the company is known to be partial to the higher income segment giving them more attention, better products, and services.
• Price wars: Woolworths is always in a price war with its nearest and strongest competitor Coles. In a bid to undercut the competition the supermarket chain has ended up making some major pricing blunders resulting in major losses.

Opportunities in the SWOT analysis of Woolworths

Some of the opportunities include:

• Focus on experience: Every retail chain has the same to offer especially to the value segment. The opportunity lies in being able to create a difference in the in-store experience. These can include self-checkout, personalized services, personalized loyalty schemes or artificial intelligence based shopping assistants. These experiences will help to differentiate and the supermarket can charge additionally for people who wish to avail such services.

Threats in the SWOT analysis of Woolworths

Threats are those factors in the environment which can be detrimental to the growth of the business. Some of the threats include:

• Competition: The biggest competitors of Woolworths are Coles. In addition to this now that online retailers like Amazon have forayed into food retail they offer serious threats as well.
• Focus on health: The increased awareness and concern on health is making the customer extremely conscious of what and how they shop. Organic and chemical free products are in great demand today and supermarkets would need to change their product portfolio in order to accommodate the changing trends which will be the threat for the future.

Liked this post? Check out the complete series on SWOT