2017-10

3 things to know about the top Aussie supermarkets

by The Salmat Team
 | 
19 September 2017
3 things top Aussie supermarkets do
What challenges are facing the supermarket space in Australia? We delve into the latest data from IBISWorld to find out what the top Aussie retailers do to stay on top.

While expected annual growth in Australia's notoriously tough supermarket and grocery store industry is 2.7%, competition will remain fierce over the next five years. So says the IBISWorld Industry Report 2017 – Supermarkets and Grocery Stores in Australia.
 
However, what exactly does the current landscape look like? How do the big market leaders plan to stay ahead? Here are the headline insights from the latest IBISWorld research.

1. Australia’s supermarket industry is still dominated by four main players

Accounting for 60% of the total industry market share between them, Woolworths and Wesfarmers (Coles) remain the supermarket big guns. ALDI takes third place with 8.9% of the market, Metcash (IGA) is fourth at 7.1%, with other companies making up the remaining 21%. The barriers to entry are extremely high, but new players such as AmazonFresh and Lidl from Germany are expected to enter the fray over the next five years.

2. Price competition is expected to intensify over the next five years

ALDI’s heavily discounted model has still had a massive impact on the industry. The German company's growing presence and an increasing number of US-owned Costco stores should intensify price wars further, which in turn is likely to constrain industry revenue growth and put further pressure on profit margins. Retailers are already turning to private-label products to preserve profitability and cutting costs in other areas, such as staff and advertising, to balance their losses.

3. Personalised consumer marketing may offer a competitive advantage

Instead of competing on price alone, supermarkets that tap into consumer preferences and shopping habits using data will likely fare well. For example, there is an increasing demand for healthy, organic, and green products, as well as for the convenience of shopping locally, using self-serve systems and ordering online. Woolworths is already using analytics to become more customer centric.
 
ALDI and other competitive entries have elevated the supermarket industry price war in recent years – a trend that is expected to continue, forcing existing players to consider other ways to remain competitive. 

Using big data to tap into consumer preferences and shopping habits to create highly targeted and personalised marketing campaigns, such as integrated letterbox campaigns, will be essential for industry operators to hold or increase their share of the Australian supermarket wallet.
 
If you’d like to learn more about Salmat's letterbox marketing services, read more here or call us on 1300 725 628.

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About the author
The Salmat Team

Salmat is a marketing services business that helps clients with the constant pressure of acquiring customers, week-in, week-out. With media, digital and customer service capabilities, we manage the fundamentals to ensure this happens like clockwork.

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