A seismic shift in global retail is occurring amid profound changes in consumer culture and technology advancement. The race to keep pace is fast and furious, while executing new product innovation is tough.
Forces driving global change
In the 2019 calendar year, IRI data revealed a 3.6% dollar increase in New Zealand grocery FMCG sales. We continue to outperform other markets, such as Australia which recorded a 2.4% dollar increase (financial year 2018-19). New Zealand grocery growth is also not too far off the 4.0% annual increase seen across Total Retail as reported by Statistics New Zealand’s Retail Trade Survey: September 2019.
The ability for grocery to deliver growth is challenged by:
- increasingly complex paths-to-purchase
- intensifying omnichannel experimentation
- profound generational shifts in consumer preferences
- market fragmentation
- entrepreneurial disruption
- personalisation, an impactful but challenging industry imperative.
An increasing number of technology-enabled touchpoints have cropped up along the path to purchase, giving consumers virtually unlimited options of where to shop and what to buy. The rapid adoption of e-commerce, mobile payments, delivery and click-and-collect reflect this. There are now over one million young adults (18-34 year olds) in New Zealand. These are particularly demanding customers who seek instant gratification; they want to purchase what they want, when and where they want it.
E-commerce continues to be a significant pocket of growth in New Zealand retail. According to BNZ, online retail grew 6 per cent in the three months to December 2019. A key driver has been accelerated growth in Grocery and Liquor where retailers have rapidly expanded their digital capability over the last year. 2019 saw New World continue to rollout I Shop online shopping, and Woolworths and Foodstuffs rapidly expanded click-and-collect. Woolworths New Zealand announced online growth in July to September 2019 was 38%, now accounting for 8.5% of total sales.
Voice technology: revolutionising retail
IRI is a big believer in the transformational impact of voice. The many known, and as-yet-unknown, applications of voice technology will increase business efficiency and improve information accessibility. In the last month, 37% of New Zealanders have used a voice-operated assistant (i.e.
Google Home/Google Assistant, Apple Siri, Amazon Alexa, etc.). Among younger adults (18-34 year olds) this increases notably to two-thirds (66%). Google Home/Assistant (19%) and Apple Siri (18%) are the clear standouts among the technology adopters. In this nascent phase of the technology, recent Australian data shows usage is largely anchored to checking the weather, listening to music and setting alarms / reminders. That said, 10 per cent of those using a voice-operated assistant claim to frequently use the functionality to shop and order items.
In 2020, we will likely see further investment among retailers tapping into the burgeoning role that virtual assistants and voice search will play in the consumer journey.
A recent example is UK supermarket chain Tesco launching the open beta of its new voice shopping service, which lets customers complete the entire shopping experience on a Google system. The service automatically integrates customers’ online accounts with Google Assistant to enable them to “talk to Tesco”.
In-store purchasing remains the preferred method by most consumers for Grocery shopping but, as the level of omnichannel experimentation intensifies, suppliers and retailers will be forced to find new ways to stay relevant with their key consumers and shoppers. Particularly so around new omnichannel touchpoints. For retailers the implications are clear: moving early to satisfy these fast-shifting consumer behaviours is a must. The aim is to provide considered, innovative, and helpful solutions that enable shoppers to get everything they want, whichever way they want it.
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By Samantha Firsow, Market Insights Consultant
- Stats New Zealand
- BNZ Online Retail Sales
- IRI MarketEdge, Grocery New Zealand MAT to 29/12/19
- IRI MarketEdge, Grocery Australia MAT To 09/07/19
- IRI 2019 State of the Industry Survey – New Zealand