The Big Shopping Trip Stopped
Phil Bonanno has discovered that Australians have changed their shopping habits over the past 10 years, he has seen that "Routine pantry stocking trips to the supermarket have plummeted from as high as 55% in surveys conducted between 1998 and 2000 to a mere 32% of visitations in 2008." "On the flipside, top up shopping trips where consumers shop for general items between these big shops have almost doubled in the past 10 years." The decline in the one major shop has been debated over the past few years, but never has a the decline ben evident in figures. The consequences for Australian retailers are going to be huge, it will show who can understand the market and can react to this new trend postitively.
Bonanno believes, "a trip with fewer items in the shopping basket will result in different economics for the retailers." The new research shows that most shoppers are more likely to avoid pantry load trips in favour of more frequent top-up trips and that retailers and manufacturers need to adapt in order to stay on top.
"Shoppers' time is now severely fragmented and trips to the supermarket are reflecting this," said Bonanno. "Big routine shops are still important however as they still represent nearly 1/3 of all shopping trips. For retailers now catering to more top up trips, this doesn't mean they're losing the big routine trip entirely. Rather, what appears to be happening is that certain key items are leaking into other trips, to other outlets. In this way, fragmentation has benefited retailers positioned as experts in categories such as 'fresh meats', 'fruit and veg' and certain 'health and beauty' lines."
Retails need not to stress as Bonanno suggests the way forward is not as grim as it sounds, but does require retailers to clearly identify which trip types it aims to own, which shoppers it can connect to, and what positioning it can support in order to satisfy the shopper and the trip. Businesses need to optimise these postitions and execut strategies in order to survive.
The Rudd Government will now allow foreign super market chains from setting up shop in Australia in a bid to drive down grocery prices, this means foreign stores will be given more time to develop vacant commercial land, challenging the might of Woolworths and Coles. "More entrants into the market will mean better offers at better prices, across the board, for Australian consumers," commented Phil Bonanno.
"For retailers who run different formats and business models, easing restrictions might make a significant difference. Aldi, as an example, has managed to open 167 stores without eased restrictions. Retailers such as Costco and IKEA don't need hundreds of stores to achieve high sales, market share and profits. They run different businesses than traditional supermarket operators." "Australian retailers should start investing seriously in their core assets and be working tirelessly to know their core shoppers better. They need to be engaging customers at their desired positioning and be very strategic as to when they do it. I would also recommend against being a generalist, instead focus on being the best and clearest in very specific areas. They'll also need to differentiate beyond price."
"Innovation that actually changes a customer's purchasing behaviour should also be implemented on a few key opportunities. Extreme clarity of offer, at the shelf, wins the day. Operators and suppliers should also avoid death by incremental, such as line extensions and price-off promotions that are too shallow and frequent," Bonanno concluded. For further information: www.tlefutureretail.com