Thursday, February 9, 2012

Retailing in the 90's and today Part 1

Australian retail in the 1990s saw the emergence of a new style of supermarket, described as “mega-supermarkets”, the influence of bulky goods centres and the evolution of shopping centres to include exciting leisure concepts designed to entice the discerning consumer and give a centre a competitive edge, some of which remain at the forefront of centres today and others best forgotten. What innovations and new trends have emerged in 2011 and what has remained the same? What if any will still survive in 2021?

We have outlined some of the key Australian retail trends for 2011 and compared them to 20 years ago and part 2 of our review later this month investigates new concepts, key emerging socio economic trends influening retailing and an outlook for 2012.




· Woolworths and Coles were the supermarket leaders. Franklins the discount supermarket chain was popular in the 90’s with a reputation for low prices. Many stores were sold and rebranded soon after 2000 and all stores ceased operation by 2010. Giant Supermarkets were introduced to the market in 1993, expanding to 50 purpose-built stores but failed to have any significant long term impact.

· Woolworths and Coles are still the supermarket leaders with a combined total grocery market share of 81%. Bi-Lo (which once comprised a chain of 180 stores) was largely rebranded as Coles supermarkets in 2006/07 and by 2011, less than 50 stores remained open.

· The emergence of the “mega-supermarkets” trend with supermarkets stocking traditional grocery items as well as an emphasis on fresh food and services not normally found in a supermarket made way for a new level of convenience for consumers.

· The introduction of Aldi (which has a 5% total grocery market share) and Costco have further evolved the supermarket sector with the offering of not only traditional products, but providing access to a variety of non-traditional products within the one store. Unlike other supermarket entrants in the 90’s, these new multinational entrants are expected to be here for the long haul and have already changed the way consumers shop. E.g. Private labels.

New Retailers

· Niche volume saturation operators such as Toys R Us emerged, gaining significant market share by dominance of range, effective cost reduction in operation, low margins and low prices, with the evolution of bulky goods centres having an indelible impact on the retail landscape.

· Popular TV shows such as ‘The Block’ and ‘The Renovators’ have driven increased popularity and self-confidence for the consumer in the DIY sector, with hardware retailers, such as Bunnings and now Masters capitalising on this popularity.

· After years of speculation fashion giant Zara has finally opened in Australia with announcements that other foreign invaders eg. Sephora, Banana Republic and Abercrombie & Fitch will follow.

Economic Conditions

· With the evolution of Australia’s middle classes pushed either downwards into a large underprivileged class or upwards into a smaller affluent sector, came the emergence of discount stores carrying a wider range of cheaper goods which catered for the reduced spending power of a large section of the population.

· Recent economic conditions have facilitated the rise of home brands with consumers searching for cost cutting avenues. This has been amplified by grocery wars between Coles and Woolworths and challenges from new entrants with consumers being the beneficiary.

· A consumption boom was evident in Australia during the mid-90s to the mid-2000s. Consumers enjoyed shopping frenzies and retail turnover growth was strong.

· The days of mindless consumption are gone with consumers trying to save more than ever. The Neilson Global Online Consumer Survey Q2 2011 reported that 45% of consumers put their spare cash after covering essential living expenses into savings, with this figure remaining steady over the last two years.

aprt 2 of our review will

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