Duopoly Coles vs Woolworths
Australian Business Environment
A Duopolistic Market Structure: Who Wins?
For most of us its just part of everyday life decisions. Where to shop for the week, Coles or Woolworths? Should I drink Pepsi or Coke today? Do I go to MYER or David Jones to buy new make up from? We take in consideration a few prices, how convenient it will be to get there, what would we rather do, and that’s it. But there’s something bigger behind this. What is the impact on such big rivals, for us and the economy? It’s not just about personal choices.
Living and studying in Australia for the past 11 months, going to do my grocery shopping at Coles or at Woolworths has become part of my routine. And because it is such an ordinary thing to do, we tend to forget that we make part of a much bigger picture, and are contributing to several factors regarding the Australian economy. However, this race for the best has its advantages and disadvantages, and of course, this is affecting us as well.
The Price War
One of the advantages of this never ending battle for us customers, are the low prices. Because there is such a big competition for prices, each of the supermarket brands will try to make it as affordable as possible to the consumer, as a reaction to get competitive advantage. One big example of this war is the milk price. Both supermarkets can sell milk for $1. It is very difficult to make any profit if you’re selling products at such a low price, as Rob Murray, the chief executive for the food and beverage group Lion stated. However this issue does not affect us consumers on a day-to-day basis, and the low prices keep us happy and of course, keep us shopping at these big supermarkets.
Everyone wins with the Rewards Programs
Another good thing for the shoppers at these two big chains is the rewards systems they have. And we win again. Despite the cheaper price war having been leaded by Coles the majority of times, Woolworths seems
A Duopolistic Market Structure: Who Wins?
For most of us its just part of everyday life decisions. Where to shop for the week, Coles or Woolworths? Should I drink Pepsi or Coke today? Do I go to MYER or David Jones to buy new make up from? We take in consideration a few prices, how convenient it will be to get there, what would we rather do, and that’s it. But there’s something bigger behind this. What is the impact on such big rivals, for us and the economy? It’s not just about personal choices.
Living and studying in Australia for the past 11 months, going to do my grocery shopping at Coles or at Woolworths has become part of my routine. And because it is such an ordinary thing to do, we tend to forget that we make part of a much bigger picture, and are contributing to several factors regarding the Australian economy. However, this race for the best has its advantages and disadvantages, and of course, this is affecting us as well.
The Price War
One of the advantages of this never ending battle for us customers, are the low prices. Because there is such a big competition for prices, each of the supermarket brands will try to make it as affordable as possible to the consumer, as a reaction to get competitive advantage. One big example of this war is the milk price. Both supermarkets can sell milk for $1. It is very difficult to make any profit if you’re selling products at such a low price, as Rob Murray, the chief executive for the food and beverage group Lion stated. However this issue does not affect us consumers on a day-to-day basis, and the low prices keep us happy and of course, keep us shopping at these big supermarkets.
Everyone wins with the Rewards Programs
Another good thing for the shoppers at these two big chains is the rewards systems they have. And we win again. Despite the cheaper price war having been leaded by Coles the majority of times, Woolworths seems