Should Giant TMC Berhad Enter Australian Market?

Is the Supermarkets and Grocery Stores Industry in Australia a growing and huge market?
Yes
Should Giant TMC Berhad enter Australian Market?
No.
The Australian Supermarket and Grocery stores Industry is an $88.1 billion per annum industry, with a steady annual growth it seems very lucrative to foreign investors and other companies of the same industry but the harsh reality is the industry is not very welcoming. Giant TMC Berhad which has a huge market share in various countries but in this competitive Australian segment it will be very difficult for them to enter and sustain. The Industry is a Red Ocean Market, entailing that it’s a fiercely competitive market. The top 4 companies in this industry cover over 90% of the market share (IBIS 2016)

and thus to diminish their share is what is the most difficult step for Giant TMC Berhad (will be called Giant in the rest of the document).
Giant’s current state is by no means bad and just the simple agenda of achieving more, is pushing Giant to go to the level which will expand the company’s operations, presence and endeavors. This new level is the desired level for Giant this includes it coming to Australia and participating in this war zone of an industry. The three most important macro-environmental factors that Giant has to contemplate about are, firstly, the Economic Factors affecting the industry as a whole and Giant specifically. Secondly, the socio-cultural aspects involved in entering a developed, highly spirited, developed western market. Thirdly, the technological challenges and dynamics involved with competing against the 2 industry leaders Woolworths and Coles (IBIS 2016) who focus and invest a lot in technology and data analytics (IBIS 2016).
A complete PESTLE analysis is required on Giant and the whole context of the Australian supermarket industry. The PESTLE analysis is a framework that helps to enlist and evaluate the various macro-environmental factors pertaining to the organization, in this instance we will look at Giants Economic, Socio-cultural and Technological factors.
Giant has to consider various aspects in its Macro-economic environment, be it the cut throat and harsh competition, Inflation or something internal like pricing ad product line.

The main aspect that they have to focus on is how to penetrate the market and gain a considerable share. There are various forced and unforced barriers to entry into this sector, especially for a foreign force or entity. The hurdles that Giant will face in the Australian market can range from expensive franchise licensing, lack of big and prime retail spaces and the worst of all the dominance of existing players because of the wide product lines and competitive price variations (IBIS 2016); pose a significant threat to Giant even starting out in Australia. After overcoming and sustaining these barriers Giant has to face the wrath of the industry competition both internally and externally. The internal competition comes from the major players of the Industry like Woolworths and Coles with regards to the prices of each product, the price band for each product line and organizing oneself to suit and match the consumer’s trends and dynamics. The buying trends in Australia are changing and the consumers are leaning towards healthy and organic food, private labels and fresh produce that’s conveniently available and thus Giant have to focus on these trends and demands. As we are looking and dissecting in a macro-environmental fashion we have to consider the external competition as well, the biggest

external competition for Giant would be the specialist food retailers which focus on customer service and are becoming increasingly competitive over the past 5 years (IBIS 2016).
The second factor substantially affecting Giant’s decision of entering Australia would be Socio-cultural settings and avenues in Australia. Giant has been operating in Malaysia, Singapore, Brunei Darussalam, Indonesia, and UAE all these nations are very different from Australia with respect to almost any social or cultural parameter. Most of the private labels of Giant will have to innovate and restructure themselves to suit the demands of the new market. The real household disposable income also has major implications on this industry, when the disposable income drops the consumers are more likely to focus on the household necessities and the luxury items are dropped out of the shopping list; on the other hand when this climbs up the demand for gourmet food and other niche luxury items increases(IBIS 2016). Lifestyle trends, demographic characteristics and differences also play a major role in getting together the socio-cultural dimension of the PESTLE analysis.
The third important factor for Giant’s decision would be to consider the current state and future state of technology in this segment.

The Australian supermarkets and grocery stores industry is very keen on inculcating technology in their day to day operations and also for their back end support. A good example to illustrate the gap in technology between the Malaysian and Australian supermarkets is the Self-Checkout Counters, they have been in Australia for quite some time and are now evolving but for Malaysia this is a new concept altogether. The Australian Companies are investing more and more in technology to make the shopping experience easy, refreshing and fun for its customers. Currently Coles, one of the leaders of the industry in Australia is working along with IBM to install radio tags on each item and this will drastically reduce the checkout time (http://www.heraldsun.com.au/technology/news/smart-phone-to-avoid-queues-in-supermarkets/story-fn7celvh-1226410624726). This integration of technology to attract more customers and make their shopping experiences better will be very crucial for them to gain more market share (IBIS 2016), thus Giant have to focus on this from the very

beginning.
After critically thinking and evaluating the important factors that might affect Giant’s move to enter the Australian supermarket industry, we should consider the 8 elements of thinking critically and conclude by evaluating how justified is this move. The main purpose of thinking about entering a new market would be to increase their profits and revenue streams but this motivates us to look at the situation from their point of view and gauging how the consumers, the competition and Giant’s own values and methodology affect its operations in this new market. Giant with its past and successful experience will set out to assume and presuppose certain notions about the consumer behavior and what kind of implications and consequences will this have on their judgment to enter Australia. Their experience and there research to the Australian market would result in some sort of data or information and how they plan to interpret it to their advantage by formulating theories and concepts will result in answering the question whether this opportunity is worthwhile or not. In my opinion and from my critical analysis of the whole macro environment I would root for them to not come to Australia as the barriers to entry in the industry are very strong and even if one gets past them taking market share from the current leaders would be close to impossible and instead Giant can focus on a different and emerging economy like China or India, because they can have the first movers advantage and can considerably use their strengths to excel in those markets.