Australia in focus: format and range differentiation

Date : 27 March 2013

Last week we examined how retailers in Australia are creating formats that are strengthening multi-channel competition. However, moving from the macro environment and drilling down further, retailers and suppliers are progressively starting to evolve their strategies to become shopper and insight led, with differentiation a word that we are increasingly hearing. An area we are likely to see increased development in the near future is format segmentation. Not only by affluence but also shopping mission, and this will open up opportunities for retailers and suppliers to drive product and merchandising innovation.

Greater focus on meal solutions and shopping missions

The first area we are likely to see this develop is through day part and occasion-based solutions. Woolworths for example has recently opened a small supermarket at Melbourne's second largest train station. The store is unique as the front of store is dedicated to serving the shopping missions expected from such a location. Single pick fruit, a strong confectionery offer, a self serve Coca-Cola machine, pre-packed sandwiches, ready meals, single pack cereals and a third party yoghurt bar, are just some of the ideas implemented to deliver food-for-now and food-for-later solutions. In fact across Coles and Woolworths formats meal solutions are staring to evolve further, with ready meals, pre-prepared vegetables, pizza and kitchen counters featuring more prominently in-store.

Specialist and international brands creating uniqueness

An area where some of the independent IGA retailers, but also Costco and Aldi are creating differentiation, is through the growth of international and gourmet ranges. Costco and Aldi continue to leverage their global supply chains, introducing new brands and flavours to the Australian market. As well as imported products, which are proving popular, both have a firm eye on the shopper's demand for high quality. Costco for example sells premium cuts of Wagyu beef and Aldi is introducing more premium private label ranges to its offer. With mission-based retailing and gourmet ranges in mind, an area where this could develop further is initially in inner urban stores. A great example of this is one of two IGA Marketplace stores in Australia, located on Oxford Street in Sydney. The store has a strong range of international and specialist ingredients, which is well tailored and extremely popular with the local demographic.  

Private label innovation expanding customer appeal

The final area where range is playing a growing role is in private label. Retailers are increasingly turning to private label solutions to attract new shoppers. In the last year we have seen Coles and Woolworths expand private label ranges, especially in their standard tier brands. However, retailers are also starting to develop wider brands that drive innovation. Woolworths Gold, the retailer's new premium tier private label, was introduced at Christmas and is now extended into Easter eggs, providing a more premium option for customers who wish to trade up. Coles' new Simply Less healthy eating private label is looking to tap into the success Woolworths has seen with its Macro Wholefoods brand and Metcash has brought back Franklin's old No Frills brand, providing a new everyday low price range of everyday products.

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