So where will we settle?

Damned if I know is my answer!

By ShopAbility Director Peter Huskins. 

Peter Huskins

We now have Victoria going into another extreme lock down after the resurgence of COVID in Melbourne. If this happens across other states then the second wave of COVID will have a dramatic and long lasting effect not just on short term shopper behaviour but also on long term shopper confidence.

The pundits are already forecasting that this second wave will be the death nell for many more cafés and restaurants right across the foodservice channel as shoppers re-bunker down again and cook from home.

Any retailer in the grocery channel should be rubbing their collective hands together. They have been delivered the perfect storm of growth by way of larger baskets with a higher $ spend with more shoppers shopping. Frequency may be a challenge as shoppers visit less frequently due to safety concerns but should be balanced by those large basket sizes and spend rates. Nice.

The value mix that are shoppers are now looking for includes price driven support due to (un)employment and household income challenges, but having plenty of stock on offer right across the categories and segments they want to buy from including an increasing mix of fresh and frozen products, is a prerequisite.

I wonder if we have learnt from the great toilet paper debacle of 2020 – but I digress.

Therefore, one key to growth is to try to keep the value/price equation at the forefront of promotional messaging and activation. With unemployment growing (and hasn’t hit the peak as yet) more people are keeping a closer eye on their grocery bills and may switch to lower-cost items such as private label products, more promotional products in their basket mix and/ or gravitate to hard discounters such as ALDI. A growing number of shoppers are choosing a store because it has the lowest prices or best deals, and we can expect this percentage to grow if the economy continues to worsen.

As our local economy continues to tighten, financial strain will prompt certain behaviours from shoppers. Not only will they become more frugal in their spending, they will also make greater use of their local fresh food retailers including a resurgence of the local butcher and fruit and veg shops as they broaden their ‘shop local’ approach to personal safety. As a result, Value will become an increasingly vital factor in store and product choice.

As shoppers of all ages continue their food adventures in the comfort of their own home rather than risk potential exposure though convenience dining at their local club, pub or restaurant, the focus for astute retailers needs to be on solutions, not products.

Coles is doing a great job by providing solutions to adventurous home chefs with their new weekly catalogue content and layout and is appearing to be attempting to out fresh the Fresh Food People. An interesting side play evolving and one to watch.

With the increase in meals made and eaten at home, and perhaps some repertoire fatigue setting in, find ways to offer easier meal solutions that provide relief for those who want to spend less time cooking but still want to enjoy flavoursome and healthy meals at home. This same approach can be extended across to other in store solutions – think health, household cleaning and personal care solutions, not just marketing single products.

And discretionary spend will continue to fall as shoppers again constrict their spending in an effort to stretch their dollars. And travel, well I think the answer to that is pretty obvious and Alan Joyce’s prediction may have been spot on.

Shopping centre visits had jumped back up to 80-90 per cent of pre-COVID levels but personal safety concerns will again put centre visit frequency and spend rates under pressure, and this is where food shopping for at-home consumption has a huge role to play in providing a steady stream of careful shoppers to the supermarket anchor tenants.

Challenge: look at my behaviours and those of my friends and family and really think about how we and they are now behaving in the face of a potential second round of COVID. Your network will most likely not be too far off what a majority of shoppers will be doing so look, learn and change the direction of your compass to suit.

 

About Peter Huskins 

Peter Huskins is a career retailer who is widely known and respected in the Australian FMCG industry. With extensive experience in department stores, DDS, liquor and supermarkets, he has been working with suppliers and retailers developing business, category, customer and channel strategy and competitive points of difference for more than 10 years.

Call Peter on 0412 574 793 or email peter@shop-ability.com.au.

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