Although the resurgence of Woolworths in 2017 was well documented, new survey data released by Roy Morgan has shown just how much impact it has had on Australia’s more than $100 billion grocery market in the last 18 months.
“The recent announcement by Wesfarmers to demerge Coles is likely to result in increased pressure in this highly competitive $100b plus grocery market. When Coles becomes listed on the ASX, it is likely to lead to increased analysis and pressure on their financial results and the obvious comparison with Woolworths,” Roy Morgan’s industry communications director Norman Morris said.
“Woolworths currently appears to have an edge over Coles but both are facing increasing competition from Aldi and the arrival of others including Kaufland and Lidl that will put even more pressure on this market. Lack of loyalty among supermarket shoppers that we have seen in this release presents both a major opportunity for current players to gain customers but also a good environment for new entrants to build a customer base like we have seen with Aldi.”
In the 12 months, Woolies increased its market share by .8 per cent, bringing its total to 32.2 per cent, while rival Coles’ market share only increased by 0.1 per cent to 28.8 per cent. Woolworths’ gains were neck and neck with international entrant Aldi, whose market share also increased by 0.8 per cent, bringing its total size of the pie to 12.1 per cent. Independents were the big losers, with IGA supermarkets shedding 1.1 per cent market share to 7.4 per cent in 2017.
Roy Morgan’s latest research showed as the supermarket giants invest heavily in fresh produce, independent non-supermarket retailers including butchers, fruit shops and markets also moved backwards, decreasing by a combined 0.8 per cent to 11.8 per cent. Non-supermarket groups still control the highest portion of the circa $40 billion fresh food market though at 30.2 per cent, with Woolworths next at 26.7 per cent and Coles in third at 24.5 per cent.
“The current aim of the major supermarkets to be positioned as being strong in ‘fresh food’ is a result of it being seen as an area of major growth potential. This market is very significant, with an estimated annual turnover of over $40b or nearly 40% of the total grocery market. The smaller specialist retailers or non-supermarkets mainly operate in the fresh food area and include fruit shops, butchers, bread shops etc. Together they currently hold a 30.2% of the fresh food market or 11.8% of the total grocery segment but appear to be losing market share to the majors,” said Morris.
Woolworths, Coles and Aldi are all investing heavily in fresh as a growth channel considered to hold superior returns to cold grocery in the medium term, although Morris Roy Morgan warns that pressure in the market will likely escalate with Wesfarmers’ decision to demerge Coles.
Roy Morgan’s survey of more than 50,000 shoppers, including more than 12,000 grocery buyers, also found that more than two-thirds of consumers are cross shopping across different supermarkets. 72.7 per cent of grocery buyers said they shop at Woolworths, but only 8 per cent only shop there; whereas 70 per cent of buyers shop at Coles but only 6.6 per cent shop it exclusively.