Shoppers abandoning Coles and Woolies, but not because of savings

Aussie shoppers are abandoning the big two supermarkets – Coles and Woolworths – and it’s not necessarily for the savings.

Shoppers are streamlining their budgets and have become more discerning about what, where, when and how they purchase products and are increasingly favouring smaller stores such as local independent and specialty grocers.

This changing attitude has more to do with changing tastes than it does with savings.

According to NeilsenIQ research, nine in 10 Australians snack on packaged goods every week, with 60 per cent considered heavy snackers.

But the pandemic has made more Aussies focus on their health and wellbeing, meaning many are searching for snacks beyond salty chips, chocolate, and sugary soft drinks.

Read more: Supermarkets urged to stop promoting unhealthy foods

“Consumers are voting with their mouths and they are choosing healthier options,” consumer psychologist Professor Jana Bowden told The New Daily.

“The decline in snacking overall across the decade is rather minor – in 2020 the decline was minimal from 90.8 per cent to 88.5 per cent according to Roy Morgan’s data.

“The real story is in what the Aussie consumer is now snacking on.

“Share of mouth has shifted towards healthier snack options and the health food snack industry is forecast to grow over the next five years as disposable income recovers after the initial economic downturn caused by the pandemic.”

Australian supermarkets are still devoting too much shelf space to underperforming, often unhealthy, products, says the NeilsenIQ research, and they’re failing to meet the post-pandemic needs of their customers.

Coles and Woolworths typically favour snack foods from major brands and changing consumer tastes leave them with shelves of unwanted goods.

Sweet snacks, carbonated soft drinks and salted snacks were the top three food classes with the most underperforming products in the country.

Researchers say that 81 per cent of products in these classes contributed less than two per cent to overall category sales.

Read more: Friendly Grocer wins Australia’s best supermarkets awards

Carbonated soft drinks and salted snacks were the next biggest culprits, with 77 per cent of products and 68 per cent of products respectively contributing to less than two per cent of overall category sales.

Consumers’ attitudes, priorities and behaviours have shifted “significantly” during the pandemic, and supermarkets “need to reflect this consumer value shift through the balance of the range they stock,” said Prof. Bowden.

“COVID-19 has shown the consumer that good health doesn’t just come down to luck – we can take control, nurture our wellness and move from surviving to thriving,” she said.

“Consumer value sets have changed, and this is driving rising health consciousness and demand for healthier foods, particularly plant-based products.

“At a time of increased focus on health, wellbeing and vitality, consumers are psychologically more comfortable with choosing a nutritious alternative.”

Grocery buyers aged 60 and over comprise almost one-third of Australian grocery buyers, says the NeilsenIQ research.

“This group has more time to cook and prepare meals than other grocery buyers. They are also the most mindful about what they eat. They are less likely to see cooking as a hobby or interest and seek simple, basic favourites that are nutritious and cost-efficient,” stated the consumer analysts in a separate report Food For Thought: Examining Australians’ Changing Eating Habits And Shopping Lists.

“When compared with other grocery buyers, shoppers aged 60-plus are 13 per cent more likely to believe in using the best quality ingredients, they are also 12 per cent more likely to buy high fibre products; are more concerned with fattening food, preservatives and genetically modified ingredients; and avoid processed food whenever they can.

“As these shoppers are the most susceptible to the effects of COVID-19, they will be seeking greater assurance that the products they buy are free of risk and of the highest quality when it comes to safety standards. It will also be important for this group to understand where the food they are purchasing originates from, with complete transparency from farm to factory, to supply chain and distribution, and details of the measures being taken to assure their safety.”

Read more: Supermarkets set to change layout to accommodate new shopping habits?

While all supermarkets were the biggest retail winners of the pandemic, smaller, independent local stores are seeing continued uplift in patronage, and the big players are seeing big dips in profits as shoppers get more selective about what they were putting in their trolleys.

“While food customers are still shopping less frequently, the growth in the number of items customers put in their baskets is slowing,” said Woolies chief Brad Banducci.

The ‘shop local, buy local movement’ has turned smaller stores into community hubs and could prove a challenge for the major supermarkets, said Prof. Bowden.

“The pandemic has emotionally and socially bonded local communities – we have been as they say ‘in it together’ during the pandemic,” she said.

“Consumers now want to support their local stores, and consumers are feeling much more connected to their neighbourhoods than pre-pandemic.

“It has redefined the consumer mindset and the big supermarkets will need to think carefully about how they plan to cater to these seismic changes in consumer values.”

Read more: How supermarkets get you to spend more

Shoppers are also being more mindful of what they buy and, eventually, waste.

“Financially impacted consumers have less money to spend, and will therefore be more focused on essentials,” said NielsenIQ’s Marcos Senine.

“That doesn’t mean that they will not have the desire to indulge once in a while.

“The challenge for manufacturers and retailers is to ensure that the products and brands in their portfolio cater to consumers at all ends of the economic spectrum, while also remaining cost-efficient and eliminating wastage.”

How have your shopping habits or attitudes changed since the pandemic? Why not tell us in the comments section below?

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Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.