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5 reasons Coles and Woolworths took over the Aussie supermarket sector

Uwear
|Oct 6|magazine11 min read

Supermarket giants Coles, Woolworths are both among Australia’s largest employers with more than a combined 400,000 workers, and both companies operate about 1000 supermarkets and other retail outlets.

But with Aussies spending about $100 a week at these stores, how were the two industry giants able to take over the nation’s retail sector?

Here are five reasons Coles and Woolworths have taken over the Australian grocery store market and have become a large part of Aussies’ daily lives.

RELATED TOPIC: How Woolworths is fighting off rivals Coles and Aldi

1. Both started out as small businesses

Both Coles and Woolworths were founded as small, family-owned general merchandise stores.

The Coles family started out as general storekeepers who sold supplies to gold prospectors during the Victorian gold rushes. After researching the idea of ‘one-stop shopping’, the first Coles stores were opened in 1914 on Smith Street in the Melbourne suburb of Collingwood. Within a decade, there were nine Coles stores in Melbourne.

RELATED TOPIC: Is it time for Coles and Woolworths to get rid of self checkouts?

Woolworths was born in Sydney as Woolworths Stupendous Bargain Basement, which was located in an arcade between Pitt and George streets in the CBD. The Woolworths name came from the US retailer F.W. Woolworths.

2. The two have grown into increasingly similar businesses

When one of the chains does something, the other isn’t far behind.

This was the case when Coles and Woolworths first began selling food — Woolworths was first in 1955, followed closely by Coles in 1956 — and more recently, the two companies have pursued similar marketing strategies revolving around low prices.

RELATED TOPIC: Woolworths, Coles feeling heat from new competition

3. Both will stop at nothing to pursue their interests

Woolworths and Coles have gone to great lengths to achieve their goals.

This is evident in just about every facet of business: with competitors, suppliers, employees and customers.

While some might think they’re supermarkets, they’re also the petrol stations, the convenience stores, the bottle shops and the hardware stores. Meanwhile, everybody else is going out of business.

4. Coles and Woolworths have followed the lead of their UK and U.S. counterparts

Several practices adopted by Coles and Woolworths in recent years — including some that have landed the companies in trouble — are the same things done by the leading U.S. and UK supermarkets.

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Asking grocery suppliers for rebates in exchange for access to shelf space was pioneered in the UK and the US grocery sectors, as was the cost strategy that underpinned the heavy discounting of the milk price wars that saw Coles and Woolworths both sell cartons of milk for just $1.

5. Both intend to win over future customers by using data

The most recent part of Coles and Woolworths’ history was about extracting as much value from suppliers as possible to generate growth.

But the supermarket giants are beginning to recognise they can only crunch the suppliers so far before they begin to damage themselves.

Source: Smart Company

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