Datamonitor View 1
CATALYST 1
SUMMARY 1
Analysis 2
The evolution of the Australian grocery market has been characterized by retail consolidation 2
Competition Commission findings in 2008 provide optimism for rival retailers 2
Retail concentration reportedly impacts healthy eating 2
High rental prices and large geographic spread hinder competition 3
Freshness and quality of products are the key determinants of where Australians do most of their grocery shopping 3
Australian consumers consider a store's location to be influential in choosing retailers 4
Private label penetration in Australia is still behind that of the US and Western Europe 5
Just a tenth of Australian consumers regard private label products as superior to leading brands 6
Woolworths and Coles have utilized economies of scale and vertical integration to grow market share 6
Strong supply chain efficiencies, a tiered private label architecture and growing consumer trust make Woolworths the "best in game" 7
Woolworths' expansion of private label lines has driven store loyalty 7
An emphasis on value for money characterizes Woolworths' marketing 8
Expansion through acquisitions and product development 8
Wesfarmers is reinventing the Coles shopping experience 9
Coles is placing a renewed emphasis on private label 9
A focus on on-shelf availability, providing better value to customers and expansion of house brands characterizes Coles new strategy 10
Online presence presents opportunities 11
Greater pressure on suppliers has attracted criticism for Coles 11
The dominance of the Big Two is coming under increasing threat from Aldi, and more recently Costco 12
Aldi poses a considerable competitive threat to the Big Two 12
The 2009 Australian Retail Innovation of the Year award demonstrates Aldi's considerable impact on the Australian retail sector 12
Growing consumer acceptance demonstrates continued potential for Aldi in Australia 12
Consumer perceptions have moved away from just cheaper pricing to quality 13
Costco's low cost model and diverse range of products are well suited to the Australian retail sector 14
Conclusion 15
APPENDIX 16
Case study series 16
Methodology 16
Secondary sources 16
Further reading 16
Ask the analyst 16
Datamonitor consulting 17
Disclaimer 17
List of Tables
Table 1: Total private label penetration and spend ($ millions) in Europe, Asia Pacific and the US, by country, 2002-2012 5
Table 2: Australian consumers are divided on their opinions about how famous branded food products, soft drinks and hot drinks compare to private label equivalents 6
List of Figures
Figure 1: Freshness and quality has more influence on Australians than overall quality of products sold and proximity to home 4
Figure 2: Woolworths private label range has two distinct price points 7
Figure 3: Woolworths' expansion of private label lines drives store loyalty 8
Figure 4: Woolworths intends to expand its private label beer offering 9
Figure 5: Coles unveiled a three-tiered private label strategy in 2005 10
Figure 6: Coles has extended its private label offering into ethical offerings and also alcoholic beverages 11
Figure 7: Aldi has been recognized for its innovative approach to retailing by the Australian Retailers Association 13
Figure 8: Aldi's private label stock does not have a common brand for all ranges (unlike Coles and Woolworths) 14