Australian grocery shoppers reluctant to make wholesale changes

Posted by Daniel Palmer on 28th May 2009

The grocery purchase behaviour of Australians has not been confined to the pursuit of lower prices despite a general belief that the country is in the midst of a recession.

Australians are reluctant to initiate wholesale changes to their grocery product consumption preferences but minor alterations – including greater demand for private label goods – are being made, according to a study by market research firm Datamonitor.

Low prices help, but high quality a must
With 70% of Australians believing the country is in recession, and 37% experiencing a deteriorating financial situation between October 2008 and April 2009, it is not surprising that ‘lower prices in general’ heavily influence where Australians do most of their grocery shopping. However, more Australians cite the ‘overall quality of products sold’ as the primary influence on where they shop, according to the Datamonitor research. Comparatively few felt that habit had a significant influence on where they did the bulk of their shopping, with the quality and quantity of private label ranges considered more important.

Consumers happy to shop around
At a time when Woolworths and Coles are continually expanding their private label brand lines to help enhance store loyalty (and margins) and also flagging modifications to loyalty programs, nearly a third of Australians are changing where they shop for food and drink products to save money.

Woman Supermarket Shopping

More than one-third also reported trying to be more disciplined by buying from a shopping list without adding things not on the list. This is symptomatic of the prudent shopping trend as consumers seek savings wherever possible. More than two-thirds of Australian respondents (68%) agreed that, in light of the downturn, they now wonder more if they are getting value-for-money as a consumer.

“This provides opportunities for those industry players who can successfully find the ‘value sweet spot’, whereby the product or service meets or exceeds quality expectations, but at a price that is slightly less than expected,” Katrina Diamonon, Datamonitor analyst and report author, advised.

Private labels appeal to the value-conscious Australian
More stringent spending habits have ensured the creation of the perfect environment for private label products to flourish.

Acceptance of private label is gaining momentum, according to the study, with almost one-third of Australian shoppers routinely buying private label products in an effort to save money.

“As shoppers tighten their belts amid declining confidence and an uncertain economic environment, they are now looking carefully at more expensive branded products and questioning why they should pay more for a particular product,” Ms Diamonon noted.

The at-home trend
45% of Australians are making more of an effort to “cook from scratch or with fewer convenience foods,” consistent with a Heinz-commissioned study released in April that found a shift away from restaurants and a boost to grocery spend.

“The most notable consumer response to the downturn, at least in terms of grocery products, was the desire to cook more often at home,” Ms Diamonon said.

Australian drinkers have become slightly more value conscious in their at-home alcoholic beverage choices, but have refused to make major cutbacks in the amount or quality of alcohol they consume, reflecting the relatively resilient nature of the alcohol industry. This has been supported in the beer industry, in particular, with Lion Nathan recently reporting a strong rise in volumes – led by premium beer growth.