Coles supermarket has a plan to expand its business in UK.

Coles currently has the second largest market share in Australia. Coles has approximately 35% of the Australian grocery and liquor market (Coles Supermarkets, 7 April 2011). I am going to make 5-year strategic plan of this company so that they can easily expand its business in UK. Cole is one of the successful supermarkets in Australia in terms of customer satisfaction, innovation in product strategy, marketing strategy, financial capability and a strong work culture with leadership values. All this makes Cole a key player in supermarket industry. Mission statement: Coles has a mission to be the best retailer in every market in which it operates. It wants to produce benefits to its stakeholders. It also wants to be known for honesty and leadership. For this purpose, it considers communication as a very important aspect. It needs to have an open and responsive communication with every aspect of the environment to achieve its goals (Assignmentmakers.com, no-date). Coles was founded by George James. Coles has a rich history in Australia, with the first Coles variety store opening in Melbourne in 1914. Coles has 742 supermarkets in Australia. Today, Coles aims to give the people a shop they trust, delivering quality, value and service (Westfarmers-Coles, 15 April 2011). Coles has five levels of private label brands: Coles $mart Buy- Budget label covering basic needs Coles- Mid price line Coles Finest- Premium brand Coles Green Choice- Environment Responsible Range

 Coles Organic- Products grown and processed without the use of synthetic chemicals

PESTLE Analysis- Marketing Plans

PESTLE analysis is a useful tool for understanding the industry situation as a whole to assess the situation of an individual business (PESTLE Analysis, 2007).

1) Political factors: A government policy allowed the supermarkets to pass on responsibility to customers. According to the new policy, its ban or charge for singleuse plastic bags because of the environmental issues (Plastic bag policy, 17 May 2008). Every new development for a supermarket needs planning permission and the developer must submit a planning application to the local authority (Corporate Watch, 1996). A new policy on tinned tuna, committing to stop sourcing fish caught via destructive fishing methods. It means now all major UK supermarkets have now changed their policy towards being more sustainable (Change in tuna policy, 12 April 2011). 2) Economic factors: Coles records 7% rise in third quarter sales. Coles cut the price of its home brand milk to $1 a litre which played a significant part in lifting quarterly food and liquor sales at Coles supermarkets. Shares in Wesfarmers gained 47 cents, the highest in six weeks. Coles is performing ahead of expectations in five year turnaround strategy (thebull.com.au, 20 April 2011). The state of the nations economy is a macro factor which can strongly influence retail sector and is hard to control. Impact of GST: The goods and services tax was implemented on the July last year and has created a confusion amongst the general public which resulted in a decrease in consumer confidence by 7% (7 Eleven Pest Analysis, 17 November 2010 ).

3) Social factors: Current trends indicate that British customers have moved towards onestop and bulk shopping, which is due to a variety of social changes. Coles have therefore, increased the amount of non-food items available for sale (IVORY RESEARCH, 2005-2011). People dont have much time for the preparation of meals at home. Everyone prefers to buy meals from the supermarkets and other food shops. Coles is also focusing on added-value products and services. Consumers are becoming more and more aware of health issues and their attitudes towards food are constantly changing. Coles also offers a wide variety of organic food due to increased demand in the market place. 4) Technological factors: Technology is a major macro-environmental variable which has influenced the development of many of the Coles products. The new technologies benefit both customers and the company. Customer satisfaction rises because goods are readily available, services can become more personalised and shopping more convenient (Data-monitor Report, 2003). Coles stores utilise the following technologies: Wireless devices Intelligent scale Electronic shelf labelling Self-check-out machines Radio Frequency Identification (RFID) The adoption of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved the efficiency of distribution and stocking activities (Finch, 2004).

Stakeholder Analysis: Coles have to achieve long-term objectives, but they need to be clear about what these objectives are. One of the immediate complications that arise is that the expectations of different groups associated with the organisation do not always agree. For example, shareholders of a commercial organisation may be looking for quick returns on the money they have invested, directors may be trying to achieve market growth by reinvesting profits, and the workforce could be looking for long-term employment prospects; and at times these different expectations may be incompatible. The needs and expectations of the stakeholders relative to the mission and hence the outcomes organization needs to produce (Stakeholder Analysis, 19 Feb 2011).
Stakeholder Needs and Expectations to Indicators of Stakeholder Measurement Target be satisfied Satisfaction Method (Business outcomes) (KPIs)
A financial return that meets target Profitability Market share Growth Sales Staff grievances Profit & Loss Analysis Competitive analysis Increase in revenue Staff moral survey Time off work Net staff availability Blind audit Complaints Survey Accident levels Survey Market survey Blind audit Blind audit Stability of supply base Creditor days Third party audit Community survey Community survey Data analysis Data analysis 5% profit 15% 20% <10 <20hrs 95% 20 min Zero 70% high Zero 95% 95 98 97 73 53 79 545 51 75% 67%

Shareholders

Employees

Competitive pay and conditions

Accident levels Absenteeism Entry to exit time Food poisoning incidents Food taste and texture Hazard free public areas Appearance and practices in all areas Competitiveness Waiting time Staff courtesy Business continuity Payment on or before due date Compliance Track record Number of complaints Staff ratios Source ratios

Fast, safe and nutritious food

Customers

Safe, clean & hygienic environment Value for money Efficient counter service Mutually beneficial relationship

Suppliers
Prompt Payment Compliance with statutory regulations and instruments Corporate responsibility A local environmental responsibility Jobs for those who live in the community Support for other traders in the community

Society

SWOT ANALYSIS Strengths and weaknesses are assessed at the internal level while opportunities and threats are reviewed at the external level.

Strengths: Market leadership: Coles opened 31new superstores, including 5 Kmart stores, 11 Target stores and 9 Officeworks stores. It also opened 17 Liquor Superstores during 2006 and 35 hotels in Australia (Coles Group Limited, August 2007). It is possible that Coles can make a strong market leadership even in UK. Strong brand image: Coles is recognized as a strong brand in the Australian retailing business. The company operates through a chain of supermarkets and stores under popular brand names such as Kmart,

Target and Officeworks. The company has been a leader in private brands for several years and has increased its range to 2000 items, including the expanded Organic label. Coles has launched trials of an online shopping scheme which will see customers able to order their goods online and then pick them up at its chain of petrol stations (COLES, 10 May 2011) Having well trained personnel offering better service, higher quality and a wide range of products. Coles is one of the successful supermarkets in Australia and has the largest market share in Australia. Weaknesses: Low operating margin: Coles has boosted sales in several of its stores by aggressive marketing through discounting programs. While these programs result in an impressive sales growth momentum, they erode the margins of the company as a result of lowered prices. The companys operating margin at 3.7% in 2006 was well below the industry average of 6.4% for the same period (Coles Group Limited, August 2007). Opportunities: New acquisitions: In March 2006, Coles acquired Sydney Drug Stores which operates a retail shop as well as a significant online, mail, fax and phone order pharmacy business. In June 2006, Coles acquired the Hedley Hotel Group (Coles Group Limited, August 2007). Coles is a new supermarket in the UK but within couple of years they will acquire other businesses in the UK which they did in Australia. Outlook for e-retail market: Online consumer spending worldwide is forecast to rise from $137 billion in 2004 to $228 billion in 2007. Significant growth in online sales is expected for all categories of

consumer goods. Food and grocery is expected to be the fastest growing online market between 2011 and 2015. Clothing and foot ware is expected to be the third largest growing online market between 2011 and 2015. Coles though its stores operates one of the largest online groceries and departmental stores in Australia. With a strong foothold in online services, Coles is well placed to benefit from growing online spending. Threats: Intense competition: Coles is the new retail market in UK. There are already well-established supermarkets in UK. The main competitors of Coles are Tesco, Sainsbury and Asda. Increasing competition is likely to threaten the market share, sales and profitability of the company. Currency fluctuations: Coles has started to directly source products from the Asian markets. A decline of the Pound would impact its profit margins. Wage growth: The main rate of the national minimum wage rises from 5.93 to 6.08 per hour in UK from October 2011 (Personnel Today). Increasing wage rates could adversely affect the profitability of the company. Applying Porters five forces on Coles supermarket Porters five forces is a framework for industry analysis and business strategy developed by Michael E. Porter in 1979. The five forces determine the competitive intensity and attractiveness of a market. Attractiveness refers to the overall industry profitability (Porter five forces analysis, 12 May 2011). Three of Porters five forces refer to competition from external sources and rest are the internal threats. Porters five forces consist of the forces close to a company that affect its ability to serve its customers and make a

profit. Porters five forces include- three forces from horizontal competition: threat of substitute products, threat of established rivals and the threat of new entrants whereas two forces from vertical competition includes the bargaining power of suppliers and the bargaining power of customers. Graphical representation

The threat of the entry of new competitors: The new entrants in the market will decrease profitability for all firms. If we talk about the supermarkets, the entry barriers are low so there is always a possibility of new competitors. In case of Coles, Cole is one of the successful supermarkets in Australia in terms of customer satisfaction, innovation in product strategy, marketing strategy, financial capability and a strong work culture with leadership values. All this makes Cole a key player in supermarket industry. Coles also have their own private label brands and offers low cost products to customers so they dont have much threat of the entry of new competitors. The threat of substitute products or services: Coles is a new supermarket in UK. There are already well-established supermarkets in UK which offers similar products. Coles have a threat of substitute products which are offered by

other supermarkets like Tesco, Asda and Sainsbury etc. But Coles offer products on low prices and lot of them are their own private branded products which are of good quality, so it will increase the tendency of customers to switch to Coles supermarket. The bargaining power of customers: Customers bargaining power is greatly increased because of the internet. Majority of customers prefer to evaluate products and compare prices with other supermarkets on the internet. Powerful buyers put pressure on industry profits (Bargaining power of customers, August 2007). The bargaining power of suppliers: There are number of grocery and liquor suppliers are available in UK. It means the bargaining power of suppliers is low and they have to offer good quality products and offer discounts because of the greater competition. So it is beneficial for the Coles supermarket (Powerful Suppliers, Sept 2007). Rivalry among existing competitors: Coles have a competition mainly with the Tesco, Sainsbury and Asda. So Coles strategy is to offer new products and at low prices. Coles will increase levels of customer service, advertising and better networks of wholesale distributors to survive (Rivalry among existing firms, 1998-2007).

Market Analysis Of Coles Group LTD:

Retailing Supermarkets Mail Order Specialty Stores Discount Restaurants Convenience Stores Beverages Soda/Juices Water Beer Wine Liquor Sports Beverages Specialty Products Tobacco Candy Gum Coffee Tea Nutrition Bars Food Products Packaged Food Frozen Food Processor Dairy Meat Agriculture Specialty Service Y Specialty Services Y Information Systems Y AgriBio Y E-Commerce Food Service Distribution Grocery Wholesale Restaurant Wholesale Other Import/Export

Types of Business: Grocery Stores, Retail Convenience Stores Hotels Liquor Stores Tire & Automotive Stores

Brands/Divisions/Affiliates: Coles Online Coles Express Bi-Lo Vintage Cellars Liquorland 1st Choice Liquor Superstores Mr Corks Liquor Group Target

Growth Plans: Coles Group is one of Australias largest retailers, operating 2,223 food, general merchandise and convenience stores throughout the country. The companys 742 Coles and BI-LO supermarkets serve customers throughout Australia. Through Coles online, an online supermarket, customers can order grocery items online. Coles group also operates 766 liquor stores and an online liquor distributor. Moreover, the company owns 96 hotels under the spirit Hotels name. Coles Group maintains a presence in the convenience store and fuel market through 619 Coles Express locations. In addition to Target, Coles Group operates 184 licensed Kmart stores. In 2010, the company opened three new food locations (COLES GROUP LTD, 2005-2011).

Sales and profits: Sales 2007 Sales: $29,543,500,000 2006 Sales: $28,122,000,000 Key Customers and Major Competitors: The key customers of Coles are the normal people who want to shop online and like to buy groceries, vegetables, meat etc. on offers and at low prices as compared to other supermarkets. The major competitors of Coles in UK are the Tesco, Sainsbury, Asda and Waitrose. Market Growth: Coles supermarkets will drive earnings growth and returns to shareholders for the next 20 years after the revival of the retail business helped boost first-half earnings by 33 per cent to $1.17 billion (Wesfarmers banks, 2011). Wesfarmers profit, up from $879 million, was in line with market expectations and built on revenue that jumped 6 per cent to $28.07bn. Profits 2007 Profits: Unavailable 2006 Profits: $683,800,000