Discounts dragging down growth


50 per cent saleLow promotional prices are not driving topline growth in the current retail market so retailers and suppliers need to collaborate to provide overall value, says Nielsen’s head of retail, Kosta Conomos, presenting at the Efficient Consumer Response Australasia (ECRA) annual conference.

Recent research by Nielsen shows that increased price promotions are not changing shopper behaviour, and low prices are instead now seen as a hygiene factor.

“Just one per cent of shoppers believe they are getting better value overall compared to last year – and instead are using promoted products to supplement their shopping basket as a whole,” said Conomos.

“Neither retailers nor suppliers benefit from this behaviour and instead they need to work together to offer overall value for the consumer to differentiate themselves through a combination of national brands and great quality private label goods in a far more targeted manner, as opposed to marketing to the masses. The key retailer battleground is set to become how to deliver more value.”

Correspondingly, when asked what good value entails, just 20 per cent of Australian shoppers said ‘low prices’, and instead ‘fresh food and groceries’ was favoured by 30 per cent; 27 per cent want ‘good private label alternatives’; and 23 per cent said ‘good deals and promotions’.

According to the study, one in four shoppers has swapped brands in the past year to buy what was on deal, and 20 per cent will switch the store they shop at depending what is on special that week. More than half of shoppers who bought products on deal used promotions to stock up on what they already buy and weren’t expanding their basket overall.

“We support joint industry efforts such as today’s ECRA conference that encourages various players to unite and strategise how to differentiate and improve the overall experience for shoppers, which therefore bolsters the industry as a whole,” Conomos said.

“Another factor set to have major impacts on the industry is the shifts in purchasing behaviour, as more people go online to buy brands and do their shopping. Retailers need to understand this new dynamic, and work with suppliers to offer consumers an experience they feel is providing good value both on and offline, as this will allow for greater topline growth.”

Nielsen analysis shows that that 87 per cent of shoppers make an online purchase every six months, while 16 per cent make an online purchase at least once a week.

“There is no slowing this online movement, and as Australian consumers continue to engage with and uptake multiple digital devices, there is a huge opportunity for retailers and brands to capture the full path-to-purchase of the online shopping experience.”

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