THE downside of having one of the most concentrated grocery sectors in the Western world looks set to bite Australian consumers yet again in 2017.
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Coles, Woolworths and Metcash, which supplies IGA stores, are all planning to considerably slash the number of brands available to consumers this year.
The process of thinning the product range on supermarket shelves – known in the retail industry as assortment reduction – has essentially been underway since 2014.
But Fairfax Media reports the trend is going to continue with more vigour in 2017.
Coles is set to cut its brands by 15 per cent, Woolworths by 8 to 12 per cent and Metcash by up to 12 per cent, or 3000 products, at its largest IGA stores.
The benefits for the grocery giants are obvious. Clearing their aisles of the less popular and less profitable products means it can continue – arguably to a greater extent than ever – to control consumers’ buying habits.
It also promises to be a significant boost to each of the supermarket giants’ own home brand lines by dramatically reducing competition from national brands.
A third and somewhat surprising benefit, given the widespread concerns over obesity rates in this country, is that buying habits are changing.
Retailers report consumers are turning their backs on canned and processed foods in favour of healthier, fresher foods.
The risk, of course, is that disappointed consumers will go elsewhere – be it another major rival, or an independent retailer – in search of the brands they know and love.
But with the Coles and Woolworths duopoly commanding somewhere in the order of 70 to 80 per cent of the market, there is a distinct lack of alternatives.
The IGA chain of stores, especially in regional areas, and rapidly growing discounter Aldi have succeeded in establishing themselves in the gaps Coles and Woolworths have left.
Then there is the rise of internet-based grocery shopping, with consumers able to scour sites such as Amazon for the niche items they just cannot live without.
But Australians long ago demonstrated that when it comes to groceries they value price and convenience above all else. There is nothing surer than we will adjust. How else would Coles and Woolworths have grown so dominant?
- Ross Tyson, deputy editor