FreshIncite April 2016

What We’re Seeing

Retail fresh food promotional activity surprises Top

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The intense level of competition in the food retail channel is being reflected by increased resources aiming at attracting and retaining shoppers. The amount of retailers adverts have long been a barometer of this intensity and an analysis of these patterns reveals the retailers have some marked changes.

Adwatch reveals that when March 2016 is compared to the March 2015, the number of advertised promotions increased by 8%. There were also changes in the type of products involved in the activity and the level of change is different for each retailer. Fresh food exposure reduced by 2%, but within that meat promotions were down 22%, while vegetables increased 42%. The average price of vegetables advertised increased on the previous year from $6.60 to $9.83 per kg, reflecting the higher proportion of smaller convenient vegetable products being promoted in mutiple buy promotions. This impact is highly likely to have added value to the vegetable category.  

Retailer activity level changes in the number of adverts shows increases for Coles (31%) and IGA (26%), and reductions by Woolworths by (16%) and Aldi (35%).

Despite the intense competitive conditions the vegetable promotional activity may well have encouraged more consumers to trade up to higher value products and therefore increased the category value. 

Retail

Fresh food independent retailers lose share Top

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Sales at greengrocers, butchers and fishmongers are under pressure as the latest results from the Mealpulse panel show supermarkets capturing higher proportions of household food expenditure.

The reasons Australian consumers shop at these fresh food specialists remain anchored on better quality, range, competitive pricing and suppor for local retailers. While this is a defendable set of advantages, the crossfire from the supermarket retailers has now eaten into the sales of these specialist fresh food retailers. In the last quarter of 2015 the household expenditure reduced by 5% on the same quarter in the previous year.

Higher prevailing market prices for beef, lamb and most seafood has brought price into focus and played to the advantage of the value offers of the supermarkets.

Retail competition has flowed through to slow the sales of specialist fresh food retailers. If history repeats itself the weaker operators will exit and the better operators will find more effective ways to compete.

Technology Frontier

New Amazon devices to improve online ordering Top

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Amazon continues their focus on global grocery markets by introducing two new devices, the Amazon Tap and Echo Dot. The devices are designed to incorporate a voice-controlled assistant Alexa into people’s homes and daily activities.

These new devices take the voice recognition capacities to new levels and as well as enabling the control of a suite of household functions, they now make online ordering simpler and faster.  

Amazon is estimated to hold a 22% share of the US online grocery market, which is a modest 4% of the $795m US grocery market. However, these online food customers are highly valued as they are spending an average of $157USD per purchase, which is 3 times the average retail basket.

Amazon continues to build their capacity to capture grocery market share and their business model appears anchored on leading with home based ordering and home delivery. 

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Freshincite is a publication prepared by Freshlogic

Freshlogic is a specialised provider of food market insights and analysis, with deep expertise in the dynamics of fresh foods. We deliver a range of services to industry and corporate clients, which aim to interpret market and supply chain conditions, or address challenges faced in food supply chains associated with changes in the preferences of consumers, supply dynamics, and economic settings.

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