Retailers adapt to changing shopper behaviour

16 April, 2020 by Deborah Jackson

Unemployment rates are on in the rise so liquor retailers are needing to be more agile than ever to quickly adapt to shifting consumer preferences as more and more consumers are trading down to help manage their household budgets.

Treasurer Josh Frydenburg has predicted that unemployment figures could reach as high as 10 per cent in the June quarter as a result of the coronavirus pandemic. But he notes that figure could have been as high as 15 per cent if not for the JobKeeper stimulus package.

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As such, consumers discretionary spend is much lower and this is already being reflected through liquor retail. Purchasing behaviour is steering away from premiumisation and more towards bulk and value products, according to IRI.

Lachlan Cameron, Consultant at IRI, highlights a “clear preference for quantity over quality, evidenced by stronger growth in larger pack sizes in addition to a sharp increase in Private Label sales”.

“In addition many consumers are sticking to brands they know, spurning experimentation as evidenced by eight of the top 10 growth brands over the last two weeks being in the top 10 biggest brands.”

Cameron also noted that while consumers are definitely more price conscious many are still keen for quality products, which presents a challenge for retailers.

Paul Ververis, Director of Liquor Emporium, has told National Liquor News that liquor retailers need to be agile and able to quickly adapt to the changing market.

“You need to let the shoppers tell you what they want to buy, and they do that with their pockets, so you have to adapt very quickly,” he said.

“We are needing to find better products at a cheaper price. Honestly, I think the average spend from customers is high but they are getting so much more product for what they’re buying. So where they would normally buy a $60-$80 bottle of Champagne, we’re already seeing people buying two $40 bottles instead. And eventually that might go to six $10 bottles. It just has to.

“The $550 or $750, that people are entitled to (through JobSeeker or JobKeeper) really doesn’t go far.

“Don’t get me wrong, there are still people with high disposable incomes that are still buying premium products, but the majority of the customer base is definitely looking for value now, so we’ve just got to be proactive with what we put in our outlets now. We all need to adapt.”

Julie Ryan, the CEO of Retail Drinks Australia points out that very few clear trends can be noticed at this time but agrees that there has been a shift towards quantity over quality.

“Consumers’ purchasing behaviours are still generally erratic, with our retailers reporting that very few clear trends can be determined at this time. This makes demand planning difficult, as unclear demand signals make it very hard to manage inventory levels,” she says.

“One clear and interesting trend is that consumers in bricks and mortar stores appear to be trending back towards value rather than premium, with the mix of products in a basket moving away from the previous premiumisation trends.

“Interestingly though, some of the experiential online retailers who provide customised or curated offerings, are experiencing significant growth. It is surmised, but obviously cannot be proven, that consumers may be trying to replicate the experimentation of drinks in a bar within their own home.

“The most important thing to note, however, is that retailers are still adapting to the practical constraints of trading during COVID-19, and that this remains their highest priority. Keeping staff members safe and adhering to strict social distancing in stores, requires significant investment.”

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