Australians spent $94.6 billion in supermarkets in the year to March 2020, with Woolworths Group and Coles Group taking 67.5% of that total.
Data from Roy Morgan’s latest Fresh Food & Grocery Report shows that Woolworths has the larger share of overall spend, but Coles isn’t too far behind. However, when it comes to online grocery shopping, which has shaped up as the next major battleground, the difference is marked.
“The competition to retain online grocery shoppers post-pandemic opens up an interesting new front in Australia’s fiercely fought supermarket rivalry,” says CEO of Roy Morgan, Michele Levine.
“Our data shows that almost one quarter of grocery-buyers who shopped at Coles, Woolworths or ALDI in a four-week period actually spent money at all three supermarkets. That is a high rate of customer leakage between the brands. It might even be said that rival brands attracting customers away from what they regard as their main supermarket have succeeded in larceny. However, online shopping changes the dynamic significantly.”
The pandemic turbocharged the move to online grocery-buying to such a degree demand could not be met and services were temporarily restricted.
With lockdown no longer in place except in specific Melbourne locations, shoppers have increasingly returned to physical locations throughout Australia, but it is likely that many of those who recently made the move to online groceries will continue to use that option, at least some of the time.
Ms Levine explains: “ALDI and IGA account for 22.2% or more than one-fifth of the overall grocery spend (leaving just over 10% for other supermarkets such as Foodland, Foodworks, local independents and convenience stores). But ALDI doesn’t offer online shopping at all, and IGA has it only on a discretionary store-by-store basis.”
“Second,” continues Ms Levine, “the inconvenience involved suggests it is less likely that grocery-buyers who are making an order online with one major brand will ‘virtually pop in’ to the competition and go through the online ordering process there too in the same way they might have done if shopping in person.
“So there is no doubt about the significance of the burgeoning online grocery market. Roy Morgan will continue to monitor it closely – watch this space to find out how the various players rise to the challenge.”