Woolworths Group

Woolworths' duopoly with Coles—together controlling 65% of Australian grocery market—demonstrates exploitative competition reaching Nash equilibrium. With 1,000+ supermarkets serving 22 million weekly customers and $64B FY24 revenue, the two chains compete through store density, private label expansion, and loyalty programs while maintaining parallel pricing that maximizes joint extraction from consumer surplus. This mimics interference competition where dominant competitors establish territories and defend against newcomers rather than destroying each other.

The supermarket format creates network effects through supplier dependence: with grocery manufacturers needing Woolworths' shelf space to reach consumers at scale, the retailer captures margin through listing fees, promotional funding, and private label manufacturing. When a brand loses Woolworths distribution, it loses 35-40% of potential market. This keystone position enables rent extraction that drives 2024 ACCC investigations into supermarket pricing power. Like fig trees that dozens of species depend on, Woolworths' position as distribution gateway creates asymmetric power.

Woolworths' vertical integration into liquor (BWS, Dan Murphy's with $11.2B revenue), hotels (324 venues), and wholesale (PFD Food Services) shows resource allocation beyond core grocery. The liquor business exploits regulatory moats: Australian licensing restrictions limit new entrants, and existing footprint adjacent to supermarkets creates cross-shopping convenience. Hotel ownership provides venue captive demand for liquor supply. This diversification mirrors organisms using primary food source to subsidize secondary niche occupation.

The company's fresh food positioning—"The Fresh Food People" tagline—represents costly signaling to differentiate from Coles and Aldi. Investment in supply chain cold storage, produce quality standards, and bakery departments signals commitment to perishable quality that discount competitors can't match at their cost structure. Yet 2024 Senate inquiries revealed instances where expired products remained on shelves and farmers received below-cost prices, suggesting signaling exceeds underlying reality.

Woolworths faces exploitative competition from Aldi (11% market share) and accelerating growth from Costco, IGA revitalization, and delivery platforms. The 2024-2025 cost-of-living crisis increased political and regulatory pressure on supermarket margins, with proposed ACCC mandatory code of conduct threatening profit extraction capacity. When keystone species face environmental constraint, cascading effects ripple through dependent suppliers and service providers. Woolworths' FY24 net profit of $1.7B (down 0.5% YoY) suggests the equilibrium may be shifting.