Australian supermarkets “backward”?
The Marketing Director of Coles sees the refurbishment of stores across the country and the entry of new competitors to the Australian landscape as an opportunity to rid the country of a “backward” approach to supermarket retail.
Joe Blundell, who joined the supermarket chain last year from UK retailer Asda, said the industry still had a way to go in order to improve the damaged perception of supermarkets.
The new management team at Coles has readily admitted that there was chronic underinvestment in the chain but Mr Blundell suggested Coles wasn’t the only chain to lack initiative when it came to supermarket development. He believes, however, that with greater funds being directed toward brand and store improvements at both Coles and Woolworths and new entrants to the arena heightening competitive tension, there is the potential to turn the negative perceptions around.
“It’s staggering that supermarket retailing in a country like Australia that is so into food should be so backwards – it’s not right,” Mr Blundell told The Australian. “If you get different players all competing with each other it definitely raises the game.”
Mr Blundell said that the chain’s marketing philosophy had changed since the Wesfarmers takeover, with the hiring of chef George Calombaris and a group of mothers to test products a sign that they were prepared to embrace different strategies to get results. And there are more initiatives in the pipeline, according to their head of marketing.
The supermarket chain is also more intent on moving with the economy, Mr Blundell advised, with their focus on home cooking – via the successful “Feed Your Family for Under $10” campaign – dependent on changes in consumer behaviour.
“You never know whether you’re at the beginning of a really long trend or whether you’re seeing just a little blip,” he said. “We’ve no idea whether we are going to get back to wholesale people cooking at home where people are going to embrace that for a long long time.”
The financial crisis was the catalyst for the home cooking trend, but Coles believes it has the potential to kick on as shows like MasterChef encourage the whole family back to the kitchen.
“I guess the economic thing will disappear … but that bringing family together (element) won’t go away,” Mr Blundell concluded.
While I can see what Joe means by comparison to the UK (I spent 9 years there), there is a lot to applaud the supermarkets and suppliers for while gearing up to make rapid change.
World class supplier innovation is well and trully alive, just go in to any aisle and you will be able to find something that is cutting edge.
While the stores reflect a different consumer and country, they aren’t third world. Yes, there is evidence of under investment but then again you only have to look at the enormous market shares to realise that there is no urgency (until Aldi and Coles turn-around that is)
Another clear comparison is the cost of goods, Australia is a cash cow and a market that most multi-nationals should and are harvesting, for example a Mars bar in the UK is circa 45p yet a Mars bar here is +$2.50 – that’s a 270% premium! (and the list goes on)
Further to some of these issues raised is the fact that this is a totally different retail landscape to the UK. Just the co-operative alone has 2,800 stores and when added to Tesco, Sainsbury’s, Morrisons, Asda, Spar etc etc you begin to realise that a country 32 times smaller is really a very tough place to trade.
With the UK being the bench-mark for advanced retailing (in terms of life-cycle) things that suppliers here will need to be well aware of is the fact that things will change and doing what has always been done is a thing of the past.
Pencils will need to be sharpened on both price and levels of promotional discount… the next 6 to 12 months will be proof enough!
The UK has 62 million people and in ten years is expected to have 70 million people in about ten years. Australia has a population of 22 million. It is a far more competitive place. With US, German and UK supermarkets all competing for a share of a market much larger then the Australian market. It is a constant battle for survival. Outside of the US the UK is the most competitive marke in the world. Supermarkets have to offer online retailing, loyalty cards or they disapper. The co-op used to be one the biggest Supermarkets in the UK but now because of its unwillingness to modernise it. It is a minor player compared to Sainsburys and Tesco’s.
PS If a Mars bar is $2.50 that that is about 1.50. You are being ripped off! Half your wages are going to the shops to pay for your food.
In 2009 the uk Gocery market excluding manufacturing was 146 billion pound or 223.893 billion AUD. It is bound to be more competitive as it if far larger. This figures is just grocery and not food manfacturing.