Planning your growth strategy into Australian Retail through a deeper understanding of the leading retailers financial reporting and market outlook

The socioeconomic conditions of Australia make it an attractive market to many food and drink businesses targeting strategic growth. For well established brands the opportunity to engage with the two leading retailers Woolworths Group and Coles Group providing access to almost 2/3rds of the country’s grocery market and around 40m customer transactions per week. The diverse population creating demand for a wide range of foods, flavours and cuisines.

This week both retailers have delivered their trading updates for the first 3 months of this financial year ahead of the run into the peak festive trading season. The updates providing valuable insights into both the headwinds and opportunities in the market and the outlook ahead to help you capitalise on the opportunity for your business either as a branded supplier or a Private Label contract manufacturer.  Crucially these two retailers have combined turnovers exceeding $90bn

In our latest blog post, we’ll delve into what this means for both the market landscape and explore the strategies you need to thrive in this exciting new territory. Understanding the high growth categories. Brand strategies and changing customer dynamics enables you to better understand the growth opportunities for your business

This report offers valuable insights on how the investment market has reacted compared to expectations. It also delves into the impact of consumer habits on driving growth and changing purchasing patterns, which in turn shape the retail landscape. Additionally, it highlights the key challenges that will require strategic attention in the current financial year.

For UK manufacturers seeking growth in markets like Australia, it’s essential to grasp trading updates and financial reporting. This understanding allows tailored offers to align with the market’s current narrative.

Coles Group

Key callouts being: –

• Total sales increase of 2.9% with sales to $10 548m for the 3 months until 29^th September
• Supermarket Business reporting 3.5% growth to $9.5b (ex-tobacco 4.95 vs comparable sales at 2.4%)
• Winter and Spring value campaigns recognised as key growth drivers alongside the continued growth in support for Own brand lines
• eCommerce growth strong
• Exclusive to Coles sales increased 4.5% to $3.3b (this will include Private Label)
• Liquor sales were flat
• A major supply chain investment announced with a 3^rd Automated DC to be built, this time in Victoria with a $880m investment, a larger format with 15% more capacity than the 2 facilities just launched and the  ability to process over 4.6m cartons per week

Headwinds or Challenges?

• The performance was attributed in part to a strong value or promotional program, helping the value focused customer although failing behind market expectations
• Cost of living challenges as customer shop value across multiple stores reducing total spend per transaction, shoppers are shopping promotional products across various retail outlets
• Premium brand (Coles Finest) continues to drive growth

Woolworths Group

Key callouts being: –

• Australian Food Sales $13 595B up by 8%
• Australian B2B $1 473B up 6.9%. (This is the investment in PFD a leading Food Service provider
• W Living which includes Petstock and Market place $1 357 up 17%

Headwinds or Challenges?

• Focus on value and promotional plan to drive longer term customer loyalty
• Increased shelf space for Own Brand (significant interest as in our opinion WW had previously slowed the rate of PL innovation where Coles had continued to push penetration)
• Big Box Pet store format continues to perform well

What does it mean? Is it a good time to target the Australian market for UK-based food manufacturers or brand owners?

Yes, in our opinion there remains 2 strategies when looking to engage the 2 largest retailers in the market that should appeal to UK based food and drink businesses targeting the Australian market. Firstly the demand for branded innovation to inspire consumers whilst delivering a clear point of difference in a highly competitive retail landscape remains a key trading objective.  Secondly the growth in Private Label and the access needed for best in class contract manufacturing.

Firstly, through a deep understanding of the target category taking proven innovation from other established markets into Australia or products that have a clear USP should appeal to buyers.

Secondly is understanding the strategic growth in Private Label and the opportunity this creates for your business, as buyers target best in class contract manufacturers, proven innovation capabilities, lowest cost operators or suppliers that can deliver on the increasingly demanding responsibly sourced agenda.

There is also the hybrid combing the launch of your brand alongside Private Label supply to drive growth into the total category.

A standout opportunity that is reflective of the UK market is the strong growth the UK retailers are reporting in premium products, fueled by consumers spending more in store whilst eating out less. With Coles clearly accelerating innovation in this area the demand for premium products will continue to be a priority.  The additional movement towards co-branding with premium products to increase the connectivity with consumers has the added benefit supporting longevity of supply

The consistency of messaging regarding Private Label and its strategic importance by both retailers creating demand for innovation that can support the ongoing momentum behind Private Label growth. The past 2 years have seen an influx of new international brands offering innovation, choice, and consistent supply – boosting confidence among buyers and consumers – a trend expected to persist when products have an appealing purpose. We believe the emphasis on health and well-being will continue to grow faster than the market as value-conscious customers aim to indulge in those special moments affordably.

In summary the opportunity for innovative or exciting UK Food and Drink businesses targeting growth in the main Australian retailers continues to look attractive. To succeed its essential to take a strategic approach to retailer engagement understanding the competitive landscape, key marketing messages resonating with consumers and have a route to market through a robust supply chain solution

Prof. Consulting Group.

Are you looking to break into the Australian food industry? Look no further than Prof. Consulting Group! With our team of industry-leading experts and extensive range of services, we’ll help you take your business to the next level.

For more information or to discuss how Prof. Consulting Group can support your business, Contact Us Today.