IRI reveals reasons for slowing grocery growth

Australians are shopping more frequently (3 per cent increase) but spending less in store when they do so.

This has resulted in a slowing grocery market, evidenced by a long running decline in the average spend per shopping visit (7 per cent decline).

According to Information Resources Inc. (IRI) the impact of the disruptive forces of discounters [with increased price activity and a growing footprint] is particularly apparent in grocery.

Australian shoppers are becoming more ‘mission focused’ and lighter in their spend per shopping trip due to the increased penetration of discounters, and almost half claim they are also making cutbacks to control spend the IRI data shows with 45 per cent of Australians stating they have made numerous cut backs to save money

Shoppers are increasingly shopping around for the best offers (a behaviour encouraged by the growth of discounters) and increasingly splitting their spend between grocery retailers.

Grocery retailers themselves are also fuelling this behaviour though the increased use of pricing promotion, Every Day Low Price (EDLP) strategies, and the rise of Private Label alternatives.

Shoppers themselves are becoming increasingly savvy: 45 per cent claim to research on line prior to their shopping trip.

The IRI data shows shoppers are feeling cautious and looking to save with 29 per cent claiming to be giving up their favourite brands to save. This changing dynamic is seeing 45 per cent of major brands losing shopper loyalty.

IRI senior consultant Johnny Gorman said even though many shoppers will keep a close eye on their spending, there are still opportunities for retailers and manufacturers to drive value.

“Finding these opportunities is all about investing to know their customers and understanding the dynamics underpinning their category” Mr Gorman said.

Not all shoppers are cutting back their spending however: IRI reveals that shoppers have a polarised attitude to brand loyalty with 49 per cent are not giving up their favourite brands to save.

Brands that offer a premium positioning are more likely to improve brand loyalty. However, brand loyalty still persists and presents an opportunity for growth. IRI surveyed shoppers and found the previous usage and brand trust was the number one driver of purchase choice (83 per cent), closely followed by price (76 per cent).

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