Australian online grocery retailing: trend predictions for 2017

Posted by AFN Staff Writers on 24th September 2014
Australian online grocery retailing: trend predictions for 2017
Australian online grocery retailing: trend predictions for 2017

Australia’s grocery retail sector is evolving rapidly, according to an analyst from market research organisation Nielsen.

Shane Scacco, Head of Client Service, Retail Industry Group, Nielsen, said that 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 would “collide to create an Australian retail landscape in 2017 which is vastly different to the current environment”.

Mr Scacco presented these insights live on stage at Nielsen’s Consumer 360 conference, held earlier in 2014 at the Fairmont Resort, Blue Mountains. Mr Scacco and Dale Preston, Director of Insights at supermarket group Coles, discussed their forecasts for the years ahead.

‘Connected device’ ownership increasing

Mr Scacco said that these trends were most evident in 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,” Mr Scacco said.

Transition to digital ‘complex’ for grocery retailing

Mr Scacco said that while the digital transition for many other industries had 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,” Mr Scacco said. “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,” he said.

“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,” Mr Scacco said.

Australian retailers are also juggling what retail giant Coles’ Head of Consumer Insights, Dale Preston, terms the “push and pull of Australian consumers”.

Mr Scacco and Mr Preston said that while more than nine in 10 Australians (91 per cent) want to support Australian farmers, nearly three quarters (73 per cent) 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.

Mr Preston emphasised 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”.

Online groceries in Australia

In Australia, both major supermarket groups Coles and Woolworths offer an online grocery service where consumers can order food online and have it delivered to their door.

There are other smaller players in the online groceries sector, including the independently-owned Aussie Farmers Direct, which has more than 200 franchisees servicing regional and metropolitan areas in Victoria, New South Wales, ACT, Queensland, South Australia and Western Australia.

Online shopping on the rise in Australia

Meanwhile, at around the same time, findings from market research organisation Roy Morgan Research showed that Food and Beverages were among the top 5 categories by expenditure in online shopping in Australia.

The findings showed a clear trend towards internet shopping, with Australians who do not buy something online in an average three month period becoming a minority for the first time in 2013.

Australians aged 14 and over spent $24.3 billion online in the 12 months to March 2013, an increase of 11.9 per cent on the previous year, according to the latest consumer data from Roy Morgan Research. Total retail sales, however, rose only 3.4 per cent in the same period.

According to Roy Morgan Research, the average internet shopper spent $285 online per four week period, with Travel, Entertainment and Leisure, Electronics, Fashion and Food and Beverages the Top 5 categories by expenditure.

Online grocery set for shake up with international player joining?

Australian Food News reported earlier in September 2014 that Global retail giant Amazon could be preparing to enter the Australian grocery market, with Amazon advertising for a software development engineer in Brisbane for its AmazonFresh grocery delivery business.