As high inflation and interest rates continue to impact Australian households, supermarket shopping behaviour is being driven by cost of living constraints more than ever. Shoppers are constantly adopting resourceful strategies to stretch their household budgets, transforming what were once considered short-term tactical behaviours into the new normal.
Economic challenges
We are currently seeing a relatively stable trading environment dominated by concerns around price inflation and the cost of a weekly shop, where major retailers continue to drive consistent messaging about value and how they are keeping a lid on prices.
The eternal search for value
Results from the soon-to-be-released 2024 Grocery Shopper Report by Focus Insights reinforce some key shopper behaviours and preferences that developed over the last couple of years, with more than 46 per cent of consumers indicating price rises are having a major impact on their shopping. In response to the rising cost of living pressures, 60 per cent of shoppers are looking for promotions and deals, with 42 per cent of shoppers now buying cheaper cuts of meat. We are now also seeing an increasing number of shoppers; almost 38 per cent also limiting discretionary / treat purchases and a higher level of shopping more with discounters with one in three shoppers now using this channel to help make ends meet.
Figure 1: In which ways have you adjusted your shopping due to the rising cost of living pressures?
The rise of discounters and health
The discounter trend is not limited to those on lower incomes, with middle- and higher-income households increasing their discounter store usage this year. We also see households indicating they are buying more private-label products, too. Alongside this increased savvy behaviour, more shoppers are also looking to eat better and healthier. In particular, higher-income households say it’s very important to have a good balance between eating healthy and being able to treat themselves sometimes, highlighting opportunities that exist to help shoppers meet their health and indulgence needs in an affordable way through the grocery channel.
Shopping the supermarket aisles
While meat & seafood prices are now starting to come down, other areas of the supermarket, such as dairy, bread & cereals, and fruit & vegetables, have been further impacted by price inflation. Fresh continues to be an important battleground for supermarkets where we see the gains made coming out of covid largely consolidated and further increasing as shoppers continue to focus on value.
Figure 2: How often do you buy these fresh products from a supermarket?
Price promotions
Straight price discount promotions and EDLP have become even more important as shoppers seek further ways to stretch their budget. In particular, Gen X consumers are buying more on promotion versus the average shopper. Rewards points remain the third-most preferred promotion type with Woolworths Rewards again topping the list of most used reward program at 70 per cent followed by Coles Fly Buys at 65 per cent, with both up year on year.
Shrinkflation
Meanwhile, against the backdrop of rising costs, some manufacturers across branded and supermarket branded (private-label products) have resorted to shrinkflation. The practice of reducing the size of the pack and keeping pricing the same is not new. However, we have been seeing further examples coming through. It is often the case that shoppers are calling out the practice as lacking transparency and indicating they will buy less of the product or switch to a better value option.
The new normal
With the inflationary situation remaining in limbo and higher interest rates likely to remain in place for some time yet, the hunt for value is now the new normal and the need for retailers and suppliers to continue to address shoppers’ value needs won’t be going anywhere soon. Therefore, understanding which promotions resonate most with your shoppers, what prices are acceptable for your products, and how the right branded offers and private labels across different categories best support shoppers’ value needs, will continue to be a major priority.
2024 Shopper Grocery Report presentations
If you would like to learn more about the latest grocery shopper trends and behaviours, please register to attend our upcoming presentation and networking events in Melbourne on Tuesday, September 17, or Sydney on Wednesday, September 25.
