Capex War Case Study

Coles experiencing average return of an industry, It has continually perform well but it has seen a slowing growth as it cycles to Woolworths that is stronger and more aggressive major competitor. According to UBS report their view with Australian Supermarket Competitors in the year 2017-2018 there is an increase risk of a ‘Capex war’ and not in a price war.
They believe that Coles will increased store refurbishment. Woolworths : There are 80 stores in FY17 that expects to refurbish.Their goal is to open 15 to 25 stores per year. Promoted products account 40% sales and company revenue forecast to grow at annualised rate of 4.1% over the five years through 2014-15.
Aldi : A German Supermarket retailer spent hundreds of million dollars improving its
• Store layouts for brand sale products offered in weekly specials and promotion up to 50%. .
• Coles proposition is to deliver quality, trust and value to customer and supplier.

1.2 Relationships • Coles Povide growth by strengthening deeper and long term relationships with key suppliers.
• Supplier and customer relationships are the elements of Coles that made the company testify in Australia’s supermarket retail ranking.
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Identified Issue : Coles Misused its Market Power - The court recognized Coles Supermarket Unconscionable conduct in dealing with its suppliers in year 2011. Coles put pressure to its suppliers for the demanded payments. This serious misconduct was against to the Australian consumer law. Coles pay a settlement agreement for $10 million as a penalty.

V. Strategic Options

Criteria Options Positioning Strategy
>Expansion of new stores and refurbishment.
>Increase Product ranges
>Offers Spend and saves Loyalty points value