Introduction

Australian grocery industry has two modes, supermarkets and grocery stores.
They supply customers various groceries and services. From the micro-economic way, Australian grocery industry earned high profit ($3.9 billion) in 2014-2015 (IBISWorld 2015, p.3). It has high competition level, concentration level, high barriers to entry, medium revenue volatility, medium capital intensity, medium regulation level, medium technology change, low industry assistance, low industry globalization (IBISWorld 2015, p.3). On a macro-economic scale, grocery industry has impacted on employment growth (wages $8.2 billion) since more job opportunities. While it is expected that grocery industry’s annual growth will decrease from 2.9% to 2.6% in 2010- 2020. That means grocery industry has reached the maturity stage in its life cycle.

Market Structure

Grocery industry supply customers various groceries and services, including beverages, bakery products, Cigarettes, other general merchandise, dry and packaged food, fresh fruit and vegetables, meat products, milk and other dairy products, toiletries and health products (IBISWorld 2015, p.2). According to IBISWorld (2015. P.3), four major corporations constitute the industry. Woolworths Ltd had the largest market share, which made up 40.4% in whole Australia grocery industry. Wesfarmers Limited (30.3%) got the second largest market share. While Metcash Limited and ALDI Stores Supermarkets Pty Ltd constituted 8.6% and 7.4% respectively. The type of products in the grocery industry has no obvious different. They are all price takers. Therefore, for the sake of to gain more market share, they are engaged in a non-price competition. One of example is Woolworths and Coles is planning to expand online sales market, convenient delivery service further attracts customers (IBISWorld 2015, p.4). They have their own strategies and services offering to clients to compete with ALDI. Also, according to IBISWorld (2014, p.6) government regulations act as artificial barriers since they are supervised by the administration. If they did things against the laws, they would be fined. Consequently, entry to grocery industry is tough, as new entrants have to face lots of barriers. Two large corporations, Woolworth Ltd and Westfamers Ltd, own 70.7% of the market, non-price competition among players and high entry barriers. Thus, the market structure of grocery industry is duopoly.