“Disruptive forces” are again at work in Australia’s fresh fruit and vegetable retail market, according to a newly-released report, with a combination of new market trends presenting challenges and opportunities for the horticulture industry.
The report Fresh pathways to market, from agribusiness banking specialist Rabobank, says recent developments – including the rise of ‘hard discounter’ retailers, the growth in online shopping and the ‘premiumisation’ of fresh produce consumption – are seeing Australia’s fruit and vegetable suppliers face greater complexity as retailers look for more customised and differentiated supply solutions.
Report author, senior analyst Marc Soccio says with radical changes in grocery retailing, fresh produce has become the key strategic battleground for retailers looking to compete – both in the physical and digital marketplace.
“It is well proven that the fresh produce section in the grocery store is the key driver of store traffic, average spend and store loyalty,” Mr Soccio says.
“So in today’s market, with consumers becoming increasingly promiscuous and piecemeal in their shopping behaviour, retailers need to get them in the door with a compelling fresh fruit and vegetable proposition.
“This is having far-reaching consequences for fresh produce suppliers, as they need to continually deliver product and marketing solutions that resonate with changing shoppers’ needs and behaviours,” he says.
The future of grocery retail channels
The Rabobank report says that with growth in per capita fresh fruit and vegetable consumption remaining fairly stagnant, there is growing opportunity for suppliers to “tap into the premiumisation trend” with more shoppers increasingly willing to pay more for convenient, interesting and healthy products.
For suppliers, Mr Soccio says “this may mean concentrating on giving up some production yield in favour of a more value-oriented strategy that provides the consumer with a more interesting, wholesome and flavoursome eating experience that they’re willing to spend-up for.”
The report says not only do suppliers need to meet the evolving needs of today’s consumers, but it is just as important to find the right retail partner to bring the products to market.
“With the retail landscape becoming increasingly diverse, suppliers are now faced with a wider array of retail business models,” Mr Soccio says.
“At one end of the spectrum you have hard discounters taking market share from the full-service supermarket chain model,” he says. “But we are also seeing the evolution of traditional formats such as, independent non-supermarkets and high street produce retailers, which are needing to deliver more meaningful points of difference to compensate for their relative lack of convenience.”
Mr Soccio says understanding this increasingly complex and changing market also requires a tailored approach according to the type of produce in question, with the retail route to market varying considerably for different fresh fruit and vegetable categories.
The rise of online grocery shopping
The Rabobank report says while Australian consumers have been somewhat hesitant to adopt the online grocery shopping phenomena, there is little question that its appeal will continue to grow strongly.
“Presently, only around three per cent of Australian’s buy their groceries online, but the uptake is growing strongly as consumers look to make more convenient, informed and real-time purchasing decisions,” Mr Soccio says.
“To take advantage of this trend, retailers are increasing their investment in online shopping channels, and suppliers should also be thinking about how their products, marketing communications and supply chains could adapt to this online model.”
Mr Soccio says while the perishable nature of fruit and vegetables create more ‘last-mile logistical challenges’, this can be overcome with customised products that incorporate packaging and logistics solutions to minimise the impacts of product handling.
“However, one of the biggest opportunities that the digital world brings to fruit and vegetable suppliers is in opening up more direct communication channels with their consumers,” he says.
“For example, suppliers can provide fun, easy and enjoyable serving suggestions – all with the view to translate this into purchasing decisions, whether the consumers are commuting, out shopping or transacting in the comfort of their own home.”
Rabobank Australia & New Zealand is a part of the international Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has more than 115 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of approximately 8.8 million clients worldwide through a network of more than 1000 offices and branches. Rabobank Australia & New Zealand is one of Australasia’s leading rural lenders and a significant provider of business and corporate banking and financial services to the region’s food and agribusiness sector. The bank has 94 branches throughout Australia and New Zealand.
Head of Media Relations
Rabobank Australia & New Zealand
Phone: 02 8115 2744 or 0439 603 525
Media Relations Manager
Rabobank Australia & New Zealand
Phone: 02 4855 1111 or 0418 216 103