Australia’s grocery retail sector is evolving rapidly. Over the next three years major trends such as retail convergence, the influence of digital and social media, shifting consumer demographics and ethnicities and media fragmentation will collide to create an Australian retail landscape in 2017 which is vastly different to the current environment.
Nowhere are these trends more evident than the online retail space. With internet penetration in Australia quickly approaching saturation point, connected device ownership growing significantly, and consumers’ attitudes toward online purchasing evolving, traditional ‘bricks and mortar’ retailers are making a play to secure their digital footprint and make the challenging transition from offline to online to omni-channel. And while the digital transition for many other industries has been relatively straight-forward, the complexities of the grocery retailing sector has delivered an altogether different experience for grocery retailers.
Customer loyalty is one of the biggest challenges facing retailers. With online grocery retailing still a nascent channel, retailers are discovering that consumers’ offline preferences do not automatically translate to online loyalty – Research from Nielsen’s Homescan Shopper Panel shows that 64 percent of shoppers visit more than one of the four major retail chains’ within a given week. So it is even more prevalent with online grocery shopping due in large part to the choice afforded to consumers as well as the different environment experienced online. A trend we are seeing in Europe. And not all consumers are using online channels to make purchases. Many visitors to online retail websites do so solely to research their offline purchases in advance or seek out the latest deals, and as many as six in 10 Australians use a combination of both online and traditional retail stores to fulfill their grocery needs.
Australian retailers are also juggling what retail giant Coles’ Head of Consumer Insights, Dale Preston, terms the “push and pull of Australian consumers”. While more than nine in 10 Australians (91%) want to support Australian farmers, nearly three quarters (73%) believe they are paying more in supermarkets than they should for essential household items; 80 percent believe price reductions make a big difference, but 52 percent believe price reductions disadvantage Australian farmers; and 41 percent of Coles customers think grocery spend has reduced in the past four years, while 64 percent think retailers are the biggest benefactors of price reductions and promotions.
Preston emphasises the need for retailers to employ a holistic approach to their customer engagement strategies, looking to develop campaigns which leverage in-depth understanding of customer needs to drive personalised outreach. Such programs are essential, says Preston, to driving growth and ongoing success in the increasingly complex Australian marketplace.
These insights were presented live on stage at Nielsen’s Consumer 360 conference (July 31 – Aug 1, Fairmont Resort, Blue Mountains). In this session, two experts discussed their forecasts for the years ahead. Industry veteran Shane Scacco, Director of Retail at Nielsen, used fresh unseen industry research to provide consumer watch-outs and opportunities. Director of Insights at Coles, Dale Preston, tackled this from the retailer’s perspective. Having worked across multiple marketers, Dale provided both a local and international perspective on the implications for the retail response over the next three years.