The polarisation of ‘value’ for shoppers

aldiLow-price private label, or premium, indulgent, wellbeing-focused? The meaning of ‘value’ now encompasses both high and low, as shoppers seek lifestyle benefits and quality, while monitoring household finances more closely than ever.

By Johnny Gorman, IRI, with Lee McClymont, GM POPAI

Now that Aldi are an established player in the Australian grocery landscape, how have shoppers adapted their behaviour, in line with increased focus on private label by grocery retailers?

IRI recently presented at the POPAI Professional Development Series insight from IRI ‘Market Moves’ a bi-annual publication which provides a a unique view of the Grocery market performance in 2015 and highlights relevant trending topics that may impact retailers and suppliers in 2016.

With the Australian economic performance lacklustre and affecting consumer confidence, IRI reported that shoppers are changing the way they behave in order to manage their personal finances more closely. The strong growth of Aldi and their low-price proposition and the increasing low-price initiatives from the major supermarkets have proven beneficial for shoppers and contributed to the price deflation that is resulting in the Australian Grocery market place.

Whilst Private Label share of the market certainly increased in 2015, IRI also saw some successful NPD launches. By tapping into the macro consumer drivers of indulgence, convenience and health can deliver incremental growth when successfully targeting consumer and shopper need states.

With shoppers becoming increasingly cautious about their own financial outlook, IRI believes that many consumer and shopper choices will continue to be shaped by ‘value’. However, we are also seeing growth driven by the macro trends of health, premiumisation and convenience and IRI expects that this will continue.

With Private Label a continued focus for Coles and Woolworths, IRI expects to see continued pressure on shelf space and promotional availability for brands. Whilst Private Label is continuing to grow share there are many examples where brands have also grown and demonstrated that they can coexist with Private Label to offer more shopper choice and satisfy shopper needs.

The challenge for branded manufacturers has many factors: changing consumer needs, evolving shopper touchpoints, an increasingly competitive landscape and greater pressure on brand space both in terms of physical selling space and mental availability in the minds of shoppers are all presenting challenges and opportunities to brands today.

So how can brands maximise the opportunities that exist? By acting as true category-centric partners brands can develop strategies that identify the differing shopper needs and can tailor their brand activities and positioning to satisfy these needs- delivering the triple win that provides a successful outcome for shopper, retailer and brand.

Johnny Gorman joined IRI in 2015 and is responsible for delivering superior shopper, category and consumer insights to deliver growth to IRI’s clients in Australia. 

 Lee McClymont is GM for the ANZ arm of POPAI, the global association for marketing at retail, represented in 45 countries worldwide.

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