In Australia, the major chains are seeking ways to expand their scope of activities, and staying within the Trade Practices Act is increasingly difficult given the dominance of the “big two”, and now the “rest” have further consolidated with the take-over of Franklins by Metcash.
Logistics costs in Australia are very high, given the centralisation of manufacturing, and the long distances, so the initiative of Wal-Mart in the US, and Wal-mart owned ASDA in the UK is significant to the planning of Australian manufacturers.
It is only a matter of time before Australian supermarket executives start looking harder for competitive advantage by going back through the logistic chain in an effort to reduce their costs, and enhance their competitive position. Woolworths have been very successful so far, and the further success of Wal-mart in going back down the supply chain will only prompt them again.
