Published on: June 21, 2010...sponsored by TCC, “changing shopper behavior”
G’day, mates. To use what here is called strine, they had a corker of a NACS Global Forum here, and there’s better than a fair go that attendees got a high level of good oil.
Notes and comment...
One of the things that makes any sort of global forum interesting is when people from one industry operating all over the world come together to figure out what makes them the same and what makes them different. The similarities are how the industry defines itself; the differences are what give the attendees strength.
Here in Sydney, people have come from down the road and from relatively nearby places as New Zealand and China; they’ve also come here from the US, Canada, Mexico and even Angola, hoping to see their own challenges and opportunities reflected through a different prism, and thereby see new approaches and solutions.
The problems facing convenience retailers here in Australia include those that face food retailers in many other places - rampant competition from every sector, as everyone goes after the same consumer dollar with a variety of approaches. Brett Barclay, founding CEO of him! Australia and New Zealand, the research consultancy, noted that while supermarkets - especially market leaders Woolworths and Coles, which have been relentless - have been attacking the sector on price, the result has been a diminishing of confidence on the part of the Australian consumer in the integrity of everybody’s prices. The impact has especially been felt by the c-store sector; Barclay noted that more than a third of convenience shoppers today believe that pricing is worse than it was two years ago, and another 37 percent believes that it is no better. As supermarkets use price as a bludgeon and self-checkout as a wedge, c-stores also have to face competition from the likes of McDonald’s with its popular McCafe outlets, and small format “top-up” stores that seem to be cropping up with greater regularity.
Kosta Conomos, who runs The Nielsen Company’s retail services for Australia and New Zealand, noted that channel blurring is an enormous challenge here - despite the relative health of the Australian economy, 54 percent of consumers have changed their spending habits in recent years,m 57 percent have changed to cheaper formats, and 33 percent have said that they will continue to look for cheaper alternatives for the foreseeable future.
Add to the problems that c-stores face a fast changing population. (This is a challenge facing every food retailer, not just the convenience sector.) There is the age issue - Australia’s population is growing both older and younger; while aging baby boomers make up an increasing percentage of the population, there also is the reality that Generation Y - with its very different habits and mindsets - is 27 percent of the population. And there are more and more people everyday - Australia currently has about 22 million people (most of them in very specific population centers on the east coast), but it is expected that another four million people will move here by 2020. (This has to be kept in some sort of context. Australia may be the sixth largest country in the world, but it is only 224th in terms of population density.)
That’s a lot more people as potential customers, but it also is a different customer base. Many of these immigrants come from places like China, Indonesia, and India, and they have very different palates, views of brands, and definitions of what is convenient. By 2050, Conomos said, one-fifth of Australians will be either Asian born or of Asian descent....which create both challenge and opportunity in the food sector.
The opportunity, said Ted Zittell of Ted Zittell & Associates and McMillan/Doolittle, may be in taking a counter-intuitive approach. If the major supermarket chains are focusing more and more on private label as a price/value tactic, then perhaps it makes sense for convenience stores to look for innovative ways in which to collaborate with CPG companies on new offerings that can “wow” the customer. (Retailers, Zittell said, need to act as “marketers, advocates and editors,” not just passive landlords, and manufacturers need to serve in a consultative role, not just supply stuff for the shelves.) They’ll have to be careful, he said, since there is a balance to be struck between “brand stretch” and “brand snap,” but at the very least retailers need to show a greater degree of specificity about what they are and who they are serving.
Part of the challenge, Peter Struck, the general manager of merchandise and offer development for Cole Express, the c-store division of Coles, is that “the most convenient retailers in Australia are supermarkets,” not convenience stores. Supermarkets, he said, tended to be easier to park at, increasingly offer express lanes and self-checkout, and lower prices. Why would the shopper looking for convenient shopping go there?
One of the problems that Australian food retailers in various venues may be facing was illustrated by Ramnik Narsey, general manager for petrol at Woolworths Australia, who commented that “loyalty is something you have to buy.” What this statement does not acknowledge is that such an approach can create a kind of discounting death spiral that nobody wins if everybody takes the same approach.
What’s interesting about these problems and solutions is that they seem so universal in nature. Most mass retailers - ranging from Walmart to the single unit, independently owned c-store - are dealing with the nation of a diversifying and fragmenting population, and should know that it is only through more specific knowledge of who one’s customers are and what they want that one can be successful.
It is all about the differential advantage. It is all about having a product or a service - or even a mindset - that the other guy does not have. The Australian retail experience, facing as it does so many changes in coming years, offers an interesting laboratory for thought leadership.
Warren Wilmot, the CEO of 7-Eleven Stores in Australia - which has undergone a highly successful transformation with the development of urban units offering what he called the “ant’s pants of foodservice” (it can be judged from his enthusiasm that this is a good thing) - urged the attendees to confront their issues with a passion for innovation. “The more research you do, the more you can convince yourself that you can’t do some of these things,” he said. In the end, to succeed, retailers need to be marketers, they need to be merchants...and they need to sell.
BTW...I’ll continue to post pictures from my Sydney trip on our MNB Facebook page.
And we’ll have more from the NACS Global Forum here in Sydney tomorrow...
Thanks, as always, to TCC ... which is sponsoring “The Content Guy On The Road.”
TCC offers customized retail marketing programs that change shopper behavior - attracting new customers and building customer loyalty...generating 4-5 percent sales increases and expanding basket sizes...generating in-store excitement and creating real and tangible differential advantages for your stores.
For more information, Click here.
- KC's View: