The Australian supermarket industry has gone through a number of significant structural changes over the past forty years. Most of these changes have been driven by a series of radical innovations, which have dramatically changed the competitive positions of the retailers. At each phase there has usually been one major supermarket chain that has taken the initiative and used innovation as the key driver to secure a competitive advantage. It has been the interplay between innovation and strategy that has shaped the supermarket industry. This interplay explains the past, but equally provides knowledge and insight for those retailers who wish to dominate the future.