Our view of Australia’s Supermarket Crisis

Grocery prices were said to have fallen by 40% in the UK, so what is in store for Australian shoppers? Gone are the days when you simply shopped at your nearest supermarket, now shoppers have to decide which supermarket can give them the best bang for their buck!

Coles and Woolworths still have a majority share in the marketplace but newcomers over the past decade have more than made an impact in the Aussie food sector.  The success of German supermarket chain Aldi is encouraging other international competitors to come down under, with German supermarket Lidl set to open their first Australian store in 2015

Over the past 10 years Aldi has managed to grab a whopping 10.3% share of the grocery market, becoming the 3rd largest supermarket chain in Oz.  This significant market share is continuing to grow and has forced the big supermarkets to change their business models focusing on cheaper products and less brands to compete.

So what effect does this all have on the shopper?

Well it’s all good news for the consumer, as the permanent aggressive price cuts look here to stay. Surveying by national consumer organisation, CHOICE, has shown that a comparable basket of goods at Aldi is around 25% cheaper than that of the major supermarket chains. According to news.com.au the average Australian household saved $445 in groceries last year by shopping at Aldi – this is the equivalent to two weeks free shopping!!

Consumers may see more Home and Value brands appearing in the aisles of their supermarkets allowing the larger supermarkets to adapt to the change in consumer behaviour and be able to compete on price.  So, brand differentiation becomes even more important, with more ‘premium’ brands having to prove their worth to shoppers.

For existing well known FMCG brands it means they are already fighting harder to keep their brands on the shelves and to retain brand loyalty.  We’ve already seen a huge rationalisation of second and third-tier brands (McCormick spices, anyone?). More in-store promotions and experiential marketing are already being seen in this space to prove worth and overcome price differentials.  Displays 2 Go has a wide range of products to help companies with their in-store sampling, ranging from simple demonstration tables to custom-built retail displays.  These display tools are becoming even more important today to cut through the supermarket clutter and make an impact.

What does the future look like?

Well, we would love to be able to look into our crystal ball and share a vision of the future but we don’t even think the supermarkets are really sure which way its going to go!

What we can tell you is that things are changing, and both Woolworths and Coles are adapting to this change and beginning to ride a new wave of store growth.  This growth is set to move into the convenience sector, taking on smaller corner stores in capital cities around the country. According to Fairfax Media, this is due to the increase in city-based population and the lack of space for traditional supermarkets.  This would put these smaller compact stores in direct competition with 7-Eleven and City Convenience.

With this in mind, Displays 2 Go we have developed the Click-Stand, a new mobile sampling unit that can be walked around the grocery store and easily made to suit your specific campaign.  We also understand the confines that you work in so have designed tables to suit even the smallest floor space.  We are continuously reviewing our product range to ensure we have the right products for this changing landscape.

So, future trends seem to indicate that the consumer will be getting a better deal whether in it’s in the form of cheaper food prices, greater choice of stores or better promotions.  Whereas the more ‘premium’ well-known brands in Australia will certainly have to react to keep front of mind and inside consumers’ baskets.

If you need help or advice regarding promotional material for your next in-store campaign don’t hesitate to contact Displays 2 Go.