The Growth of Supermarket Franchise in Australia

In Australia, since last 2 years, franchise sector is not even predicting but delivering a double-digit growth in percentage. This growth is viewed as a reward of the sound strategy in the sector. The franchisors must ensure to have a sound and robust strategy in place with a clearly laid down growth path. The strategies once defined must be reviewed at regular intervals to incorporate the environmental changes.

Similar holds true for all types of the franchise including Super markets. There would be a number of supermarkets bobbling up the market but the one that is dynamic, adaptable, accessible & fulfills diverse needs of the customer, will only survive and be successful. This industry is highly dependent on customer’s sentiments & is always in need of more and more loyal consumers. Consumer now-a-days has lesser time and is looking for convenience in everything. This sentiment is driving these supermarkets or convenience stores toward success. This industry is projected to grow at 2.9% annually for five years starting FY 2014-15 to reach USD 94 billion. As per Supermarket & Grocery Stores Market Research Report of March 2015, forecasted growth for FY 14-15 was 5.2%.

The growth and high degree of competition are assumed to be introduced by the significant growth of German-based ALDI. ALDI sells exclusive private label products at good discounts to attract consumers. Products offered by supermarkets have seen a sea change in last few years. Various factors have influenced or for that matter brought in this change. A few are as follow:

1. Introduction of private label goods
2. Increasing demand for organic & healthy foods
3. Change in consumer eating & shopping habits
4. Growing focus on packaging and origin of products

The biggest supermarkets of Australia and a leader in grocery store chains is ‘Woolworths Limited’. Woolworths occupies around 80% of the Australian market and is challenged only the new market leader ALDI that is expanding its presence across Australia. Woolworths is a complete supermarket store in itself. Although it specializes in selling food items like vegetables, fruit, meat etc. but also products like magazines, electronics, kitchenware, and stationery are available in these stores. Woolworths has its roots established in the year 1924 in Sydney.

The next big name is of Coles Supermarket, commonly known as Coles. Coles was founded in 1914 by G.J Coles in Melbourne. Catering to food retailing and expanding year on year, Coals acquired 54 John Connel Dickins grocery stores in 1958. They opened their first supermarket in the year 1960 in Melbourne. From 1973 to 2008 Coles rebranded itself thrice. It has launched various promotions to attract customer’s attention in these years.

7- Eleven is the biggest player of the convenience store market in Australia. This store continues to follow the model of operating from the oil service stations. With more than 600 stores in Australia, it rules with a 35 percent market share. As per Sue Owen, National retail manager at 7- Eleven to be successful a convenience store franchise must follow the system laid down by the franchisor. Following the system gives the franchisee time & resources to focus on training of staff, store ambiance and standards to enhance customer experience.

The next big name in supermarket industry of Australia is if SPAR. It is a leader in grocery products but also deals in supplying marketing and retail service support to around 300 independent retail supermarkets. SPAR distribution centers are highly technologically enabled centers.

Another school of thought says that despite growth in income, reasons like price savvy consumer, reduced spending & increased savings will create a challenging environment for the new & upcoming players in this segment.