Friday, April 19, 2024

Ethnic shoppers’ untapped growth opportunity

Ethnic Australians are an untapped opportunity for the Australian grocery sector. Embracing their differences, truly understanding their needs and motivations, as well as where they shop and what they are looking for is the key to unlocking new growth for both brands and retailers.

Nielsen Homescan research shows that this group represents 29 per cent of the Australian population, and that they are under-valued as a group, especially when looking at the products offered to them in traditional grocery. That means that products from the top manufacturers in Australia’s traditional grocers are less likely to make it into ethnic-Australian households.

Ethnic households seek international range of products

The opportunity is big, particularly with respect to Asian-born Australians (which make up 43 per cent of ethnic households), as three-in-four say they would shop more at mainstream supermarkets if stores increased their international range of products.

Data from the Australian Bureau of Statistics (ABS) shows that three-in-10 Australians were born overseas, and this number is expected to keep growing.

Much of that growth will come from Chinese-born and Indian-born consumers, and it is anticipated that these two groups will grow the most between now and 2027, at which point they will respectively account for 12 per cent and 10 per cent of the total ethnic population.

Consequently, understanding the unique motivations and behaviours of these and other ethnic Australian shoppers is one of the keys to overturning the low growth environment of Australia’s traditional grocers.

Importance of ethnic shopper resonance

There is a gap for grocery manufacturers between the products they offer and the resonance they have with ethnic shoppers.

Secondly, the motivations and shopping behaviours of ethnic-Australians shoppers are clearly distinctive from the overall Australia population in two major ways:

Ethnic Australians are highly price sensitive. They allocate 47 per cent of their grocery spend for promoted products, compared with 40 per cent among the total population. To address this, brands need to ensure that the shelf and promoted pricing for their products are competitive when compared to the wider product repertoire of ethnic Australians shoppers.

They carefully examine their products. This spans a range of behaviours including tendencies toward organic foods and vegetarian diets, avoiding overly processed foods, and checking product labels. For food manufacturers, this means creating products with ethnic shoppers in mind.

Reach shoppers where they are

Product distribution is another aspect of the equation, and one that has a direct impact on whether products land in shoppers’ pantries. For manufacturers, this may mean forging new relationships with non-traditional grocers or working with existing retail partners to ensure that ethnic products are featured in the right stores.

From a distribution perspective, Chinese-born and Indian-born consumers are most likely to live very different locales. Chinese communities are more likely to live in suburbs like the central business district of Central Melbourne, Hurstville, Rhodes, Eastwood and Carlton, while the Indian community is more likely to live in suburbs like Westmead, Parramatta, Wentworthville, Rosehill and Pendle Hill.

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