AGRICULTURAL producers need to be thinking about the changing retail landscape in order to stay relevant and profitable.
That's according to management consultant and advisory firm, Kitchener and Partners.
Independent consultant, Tristan Kitchener, addressed the Australian Mango Conference at Bowen recently providing his take on the opportunities and challenges facing suppliers as the retail landscape evolves.
Mr Kitchener noted the general trends which had occurred, including the rise of Aldi as now a mainstream competitor, and the resurgence of Woolworths claiming back ground against Coles.
Mr Kitchener referred to the "complacent duopoly" which has allowed Aldi to have such an impact on the market.
Looking at the United Kingdom, Mr Kitchener said a price war between the majors has been going on for five years and Australia was heading in the same direction.
The smaller, independent grocery stores such as IGA, Campbells Wholesale and Friendly Grocer, may also be heading for pain as well.
"Some analysts say in eight to 10 years, Metcash won't exist. There are some massive challenges within that business," Mr Kitchener said.
But it was the new players which held the potential to really shake things up.
Mr Kitchener said German giant Kaufland was eyeing off the Australian landscape, having already established an office here.
Kaufland is a subsidiary of the Schwarz Group, the world's fourth largest retailer, operating in seven countries across Europe with more than 150,000 employees.
According to the Kaufland Australia website, the store is "coming to Australia" and offers a "unique shopping experience by bringing our values to life and making the difference in the lives of our customers".
Another player that could add variety to the mix is online retailer, Amazon Fresh.
Mr Kitchener said the company was opening a warehouse in Sydney but overseas reviews of the business's effectiveness had so far been mixed.
"How readily will consumers switch from their bricks and mortar shopping to online shopping? That's the question," Mr Kitchener said.
Amazon Fresh is currently delivering fresh groceries and local products in Seattle, New York City, Philadelphia, Los Angeles, San Francisco, Boston, Northern Virginia, Chicago, Atlanta, Dallas and London.
Mr Kitchener said traditional bricks and mortar retailers must compete on price on lines that matter to consumers, in order to grow.
The strategies retailers will most likely use to battle it out include:
1. De-ranging: Providing less range, but more choice;
2. Affordability: Coupons, deals, etc.
3. Promotions: Discounting verses everyday low price (EDLP);
4. Loyalty: Reward loyalty through cards and schemes;
5. The War for Fresh: Bulk displays, production education, multiple promo mechanics;
6. Online: Increase in online trade presence.
He said producers and suppliers should be planning for the future and looking at: reducing costs; improving skillsets; using global consumer insights; entering strategic alliances with shared goals; diversifying; and seeking mindset alignments.
"It's going to get a lot tougher," he said.
Ashley Walmsley
Ashley Walmsley is the editor of ACM's only national, fresh produce magazine, Good Fruit & Vegetables, while also covering horticulture stories for the agricultural papers and websites. He also writes the weekly, The Ringer, column in the Qld Country Life.
Ashley Walmsley is the editor of ACM's only national, fresh produce magazine, Good Fruit & Vegetables, while also covering horticulture stories for the agricultural papers and websites. He also writes the weekly, The Ringer, column in the Qld Country Life.
