Dec 19 2017
Australian consumers have been slow to go online for their weekly groceries. Supermarkets such as Coles and Woolworths have extensive store networks, and most consumers have access to a supermarket near their home.
Australian consumers have tended to prefer to shop in store, particularly for produce such as fruit, vegetables, meat and eggs. Online shopping limits consumers’ ability to inspect products and pick the best produce on offer, while high delivery fees and inconvenient home delivery times have also deterred some consumers.
However, the Online Grocery Sales industry has grown strongly over the past five years. Overall, industry revenue is expected to rise by an annualised 14.2% over the period. Woolworths and Coles, the major players in the Supermarkets and Grocery Stores industry, are increasingly developing and expanding their online channels. For example, in June 2016, Coles opened its first online-only dark store in inner-city Melbourne. Dark stores, which only employ staff to stock online orders, are likely to become increasingly prevalent over the next five years. The opening of Coles’ first dark store is part of a company strategy to boost online grocery sales. Online shopping is anticipated to become increasingly important for industry operators over the next five years, with time-poor consumers demanding convenient and affordable online grocery delivery services.
Time-poor customers are beginning to realise the convenience of shopping for groceries online, and having orders delivered to their door. Australia’s ageing population has also boosted industry revenue growth over the past five years, as some older consumers are restricted in their mobility and benefit from their groceries being delivered.
Demand for online grocery services is projected to continue rising over the next five years, particularly once AmazonFresh enters the industry. AmazonFresh, the grocery division of US-based ecommerce company Amazon, is expected to launch in Australia in 2018. This will increase price competition over the next five years. AmazonFresh will likely offer lower prices due to the company’s strong negotiating power and lack of storefronts.