While consumers are making fewer trips to the retail store to buy fresh produce, there is an increased spend in the dollar amount each time they visit, according to global measurement and data analytics company NielsenIQ.
The company's Senior Manager, Fresh Analytics, Lewis Muscat admits that the most recent data has been impacted by COVID-19 and the lockdowns experienced in Australia, which have led to changes in consumer trends. But there are some good grocery sales growth numbers that should provide hope for producers and retailers.
"The Pacific region has performed a little differently to some of the global markets and we have seen a bounceback that is quite strong, compared to some," he said. "However, it doesn't take the elephant out of the room that we are now comparing this year to back when COVID first hit and we were seeing some significant growth. If you look at the latest year to the previous one, we are down 5.3 per cent; yes, this is a scary number but it is not something we are feeling alone. Everyone in the fast-moving consumer goods (FMCG) space is seeing this trend. We need to acknowledge that now is a tricky situation, but we need to back the COVID impact out of the data, not necessarily ignore it completely, but put it into context that it may not be an accurate reflection of our performance. If we look at total grocery performance compared to two years ago, we are up 8.3 per cent - which is really strong growth. Looking at the bigger picture, it's not as bad as we may think."
Photo: Lewis Muscat presenting at Hort Connections
NielsenIQ collects data from 10,000 households across Australia, that are demographically and geographically representative of the Australian population, using technological devices or phones to scan and capture everything that they purchase. Mr Muscat says that currently, consumers are making three per cent fewer trips, but the spend per trip is up 11.9 per cent.
"Australians are spending more in their grocery store than they were previously," he said. "What has that meant for fresh produce? Consumers are making fewer trips to the grocery store and consolidating their trips into the larger supermarkets and some of the chains, so understanding what is driving the higher spending is important. A large part of this is price, which has been an ongoing trend within produce as we see prices increase, especially in the fruit category; whether that be a legacy impact from bushfires etc. or the much wider issue of labour shortages. Vegetables have performed a little differently, where there has been a slight impact through price, but a large part of value growth within vegetables was driven by increased purchase per occasion - so more kilograms in the basket with each shop."
He added that while the vast majority of fresh produce is still being purchased in the bricks and mortar stores as part of a big basket shop, more and more is being bought online, and the growth cannot be ignored.
"Online has been a developing space for Australian grocery, in particular produce, and it has grown 69 per cent this year," Mr Muscat said. "So, we talk about total grocery (sales) this year being down 5.3 per cent, with total online being up 69 per cent. But if you look at it as a longer-term trend, that has been quite consistent for online sales. There is the caveat that in the last six months, we are comparing it to pre-COVID performance, however, we are expecting that this online growth will be consistent and continue to grow strongly. There has been a massive amount of investment by key retailers and online distributors in this space - and they will be looking for a return on that investment. Overall, confidence is relatively stable although there are some really engaged consumers and now is a point in time where we can really work with them and bring them in-store to ensure we are capturing that spend and can grow with them, whether that be convenience or the odd indulgence. We know that consumers are going big and staying home, so the use of the large basket shop is back, whether that be through the use of online or not."
These trends may have uncovered some opportunities, according to Mr Muscat, for those who have the flexibility and ability to explore alternate chains to sell their fresh produce. He says while there is a sales shift, brought about by trading restrictions imposed on out of home consumption outlets, consumers still need their needs met to have a "premium or indulgent" meal.
"Obviously, as economies lockdown, a lot of money that was being spent out of the home is being spent on in-home consumption," he said. "In some industries, that was really good, but in the produce industry, it was not as fantastic because a lot of what is being grown is being delivered into foodservice and restaurants. One option could be the food box meal kits, which is a growing space in the Australian market. It is something that, with the move to online, is benefitting from that overall shift. Food box meal kits are coming from a small base, but are growing quite well, and an appealing to the unrestricted insulated consumer. So, as consumers continue to reduce their purchase to one shop per week or less, being able to supply high-quality produce in-home between the large purchases, may be a way to drive additional growth and get high-quality produce that was going to foodservice consumed by Aussies, as opposed to waste."