Location has always been a prime strategic advantage in the highly competitive grocery retailing industry.
Traditionally, major retailers worldwide have had to rely on local government data and interpreting planning policies to determine where to land bank for future developments and where to consider rebuilding, upgrading or expanding existing stores.
Australian consultancy ID (Informed Decisions) takes the guesswork out of corporate and developer planning. By analysing vast quantities of census data and deploying spatial analysis (decision-making at a geographic level), ID’s team advises retail groups like Coles, Bunnings, Woolworths, and FoodWorks on how and where to invest in properties or select developments to optimise store performance—even before they are built.
For the past 28 years, ID’s team of experts – including demographers, economists, and social researchers – have analysed population trends across Australia, from local suburbs to entire regions. They use this knowledge to run various research programs, such as:
- National Forecasting Program: Independent forecasts on population, housing, and development.
- Living in Australia: A yearly survey on residents’ values and their lived experiences across 16 key areas.
- State of the Regions: Regular updates on local economic and employment data at the Local Government Authority (LGA) level.
Their insights help communities and decision-makers plan for the future. For example, ID can predict how overseas and internal migration and suburb lifecycles impact the demographic makeup of suburbs and regions.
“We help decision makers working on high-value strategic decisions such as long-term network planning, site selection, timing and location strategy, and lease negotiations,” Johnny Barnard, head of population forecasting at ID, explains to Inside Retail.
“Our research shows how changes in population and housing will affect the overall demand for goods and services in different locations.”
Filling an information void
When ID was started, Barnard noted a lack of information available to developers and retailers. While state governments were good at producing overviews and forecasts by region, it was hard to extrapolate the impact of decisions at the local government level on how population and demographic trends would be impacted.
“A lot of decisions were being made by councils and in the private sector, as well as at a suburb-by-suburb level. The classic example is the skate park that gets put in a suburb full of retirees – they just don’t have enough information to make detailed decisions. So we started building online services for local government which repackaged census data at a meaningful geographic level and population forecasts for small area geographies.”
More recently, ID has expanded into economics and market research to refine predictions and develop national benchmarks so clients can see change over time and feed that back into decision-making.
Providing an independent view on how and where growth will occur plays a role in helping companies with development decisions they need to make at a suburb-by-suburb level, adds Rob Hall, chief economist at ID. What he describes as “small area data” empowers decision makers to make those calls.
“The unique thing we offer to retailers is a view of how much demand there will be within their catchment based on an independent and objective view of how the place will develop.”
The key here is accurately assessing the potential of developments. “Our population and housing forecasts and Precinct Feasibility Modelling, which accounts for value uplift and developable value, reveal which urban areas have genuine potential for sustainable growth versus those with inflated expectations,” says Hall.
“This would be of interest to retail planners who are considering their network mix in greenfield versus established locations.”
Science-based planning
In order to protect their competitive advantage in the future, retailers like Woolworths or Bunnings – and the developers of centres likely to become their landlords – are making planning decisions as much as 25 years out on where stores will be needed to serve residents of areas that may be farmland or industrial estates right now.
ID’s data breaks the country up into nearly 62,000 small areas. “We are forecasting how many dwellings will happen on each site yearly,” explains Barnard. ID’s clients have slightly different needs: Where Coles and Woolworths are interested in how households are comprised, Bunnings is interested in how many dwellings will be in each geography over time.
Changing local demographics
In a shorter outlook time frame, supermarket operators constantly review product ranges at a store-by-store level to optimise sales and minimise slow-moving inventory.
Age, ethnicity, occupation, and household size can all impact demand for products and ID has some surprising data on the composition of various Australian suburbs right now – as well as forward projections.
Take Wyndham in Melbourne’s outer west, for example. The number of residents employed in managerial and professional occupations in Wyndham has risen from 13,220 in 2006 to a projected 44,269 next year, an increase of 235 per cent, and significantly higher than the 153 per cent rise in overall employment in the suburb over the same period.
As a result, Wyndham’s workforce has seen a notable shift towards higher-skilled jobs. The share of managers and professionals in total resident employment rose from 24.7 per cent in 2006 to about 33 per cent in 2021.
Within Tarneit North, within the City of Wyndham, 40 per cent of the population was born in India at the time of the 2021 Census – the highest rate in Australia – and that doesn’t include children born in Australia to Indian parents.
Overseas migration, in general, impacts many suburbs of Australian cities, especially those around universities that are popular with foreign students. “That significantly impacts demand for services, retail and facilities in that area.
“With non-student overseas migration, a lot is concentrated in fringe areas, particularly of Melbourne and Sydney, and that has the potential to impact suburbs at a very local level significantly.”
Many Melbourne and Sydney areas are under pressure due to the housing affordability issue.
This is driving many white collar workers out of inner city suburbs to areas which blue collar groups previously dominated.
Hall adds that supermarkets face challenges from changes in household types. Larger families (largely among immigrant groups) mean the monthly “big shop” has grown into “a very big shop”. And the product mix is changing. Retired couples or single-person households buy a lot less than large multi-generational ethnic households – and the type of food and ingredients foreign-born families buy to cook at home usually differ greatly as well.
“We work with supermarkets to help them understand their local markets, the type of communities they serve, what they value and how that should impact their product mix,” says Hall.
ID also analyses the impact of infrastructure on the future makeup of communities, especially transportation corridors. For instance, a metro line getting expanded has a direct effect on demand for housing. It is a driver for building precincts – a town centre connected to a transport node and surrounded by high-density housing.
Retailers, explains Hall, are looking to identify opportunities to locate stores to meet the increased capacity of such suburbs.
“The density and type of housing, the demographics and the household types greatly impact what store format is most appropriate for those areas. In a higher density area, for example, if most of your traffic to that supermarket is on foot, and they’re not lugging things out to a car, that has implications for the product mix.”
Hall sees the construction sector under constraints currently but believes property will soon cycle back to precinct development as mortgage interest rates begin to fall.
“There is a latent demand for smaller homes that are affordable and in high-energy locations. So I think we will see precincts start to be a bigger player again, probably in the next cycle.” He cites Sydney’s Waverley as an example, where councils are looking to convert some land use into higher-density, affordable housing developments, fuelled by community acceptance around transport nodes.
“The big challenge will be understanding which precincts are feasible and have the capacity to grow.”
