6 ways to survive the 2018 supermarket sector
It’s been a challenging few years for the supermarket and grocery industry.
The rapid rise of ALDI over the last 5 years has seen both Woolworths and Coles lose market share as they grapple to compete with ALDI’s low prices and private label offering. The increase in store rent, wages and food prices in addition to the decrease in available prime real estate has added strain to the already volatile industry. Add the whispers of AmazonFresh coming to Australia and you’ll see more and more operators scratching their heads at how they can possibly increase profits, margins and market share.
By examining the current state of play and the changes in consumer behaviour, it’s clear there is potential for supermarkets to not only minimise these threats, but thrive in this new environment. To get you started, here’s our top 6 survival tips to supermarkets.
- Innovation in production facilities
The popularity of ALDI’s private label items has put pressure on other operators to follow suit, with one-quarter of all supermarket sales now attributed to private label products (according to IBISWorld). The benefit of investing in one’s private label offering is clear: lower prices for consumers, better margins for retailers, and greater quality control. That’s why smart operators are investing in, and partnering with, production facilities that focus on innovations and new technologies in food manufacturing to ensure quality is high and costs are kept low. Coles have started utilising robotics in some of their production facilities, which has automated their depalletising process and drastically reduced labour costs. Investing in new food production equipment and technologies like RATIONAL VarioCookingCenter® units means operators can produce bulk food faster, more efficiently with minimal staff intervention required during the cooking process, reducing labour costs whilst increasing food quality.
- Convenience is key
With consumers more time poor than ever, convenience is key in the battle for supermarket share. Woolworths Metro Stores are the perfect example of supermarkets converging with convenience and retail, offering customers not just a place to stop in for groceries but to enjoy a vast selection of grab-and-go meals, cheap lunch options to takeaway or eat in-house plus an in-store café for their caffeine and sugar fix. The driver for this is clear: why stop into three different stores when you can get your lunch, your morning coffee and tonight’s dinner all in the one place?
“There’s a real need from a customer perspective around coffee, food for now and food for later so we’ve been on a bit of a journey over the past few years really and transitioning our business to be more predominantly positioned in that space as opposed to just groceries,” said Woolworths Metro’s Michael Brown.
Image taken at Woolworths Metro Pitt Street Store Sydney.
- Invest in fresh
From freshly baked bread to a barbeque chook or marinated meat, supermarkets are producing more fresh food options in-house than ever. Having a competitive bakery and butchery section in your supermarket means greater convenience for consumers who no longer need to visit external stores for these goods. With bakery and butchery items now accounting for 21% of total supermarket sales in 2017-18, there’s huge potential for profit growth by investing in these areas. To increase variety and sales in these areas, operators need to invest in commercial catering equipment that ensure products are of the highest quality, consistently and at an affordable price. Utilising technology like RATIONAL’s SelfCookingCenter® not only ensures products are cooked to the highest quality, but allows for the production of cooked chickens, smoked meats and bakery products all in the one unit at the same time with no flavour transfer, saving operators space, time and labour. Investing in vacuum sealing technology like PureVac also means supermarkets can expand their marinated meats section whilst adding shelf life to vacuum sealed foods, saving thousands on wastage.
- Meet the millennials
With millennials and Gen Z accounting for more supermarket shoppers than ever, it’s essential that operators employ new tactics to better engage and earn loyalty from this market. Millennials have already driven huge changes in the industry, from the surge in popularity of organic produce and healthier ready-made options, to being the key drivers behind the move from single use plastic bags at checkouts. According to Supermarket News, 41 percent of millennials want coupons sent to their smartphones upon entering a store, whilst a whopping 20 percent of Generation Z does their shopping at convenience stores, double the number of people over the age of 26. This means finding better, more tech savvy ways to earn loyalty and drive these new supermarket shoppers into stores. Apps, online offers, social media advertising, better online shopping and a greater range of ready-made meals are just some areas to focus on.
- Smaller footprint
With retail space at an all-time high and a lack of prime real estate in all major cities, smart supermarket operators are shifting to a smaller footprint store which helps to reduce rent and labour expenditure. When annual rents in inner city Sydney come in at almost $14,000 per square metre (as reported by the ABC) reducing the footprint of stores and investing in intelligent multifunctional cooking appliances is crucial to a sustainable future for supermarkets. Multifunctional equipment like RATIONAL’s SelfCookingCenter® can help, offering operators the ability to prepare a huge range of products all in the one unit in under a metre squared footprint.
- Pick the right partner
Partnering with the right suppliers who can be relied on no matter how large the task may be is crucial for supermarket operators in the current environment. From supplying 3600 bays of commercial storeroom shelving in a seemingly impossible timeframe, to supplying the RATIONAL ovens that produce the entire grab-and-go, lunch and café meals at Woolworths Metro, Comcater is the partner to supermarkets in Australia. We’re here to bring innovation to your production facilities, to be called upon for advice in bringing a foodservice offering into your store, or offer free onsite training to you and your entire teams. With free consultation services offered nation-wide, contact us today and let us help you achieve growth!