Crossmark has identified key trends affecting the Australian grocery sector, valued at over $100 billion, as retailers approach one of the busiest periods for FMCG brands with heightened promotional and planning activity.

Most of these revolve around changing shopper behaviour and will have a significant impact on how suppliers, manufacturers and their retail partners operate going forward, including an increasing reliance on technology and a growing demand for convenient, healthy food. Tailored ranging and a continued focus on the environment will also shape the grocery landscape in 2020.

Trend 1: Consumer reliance on technology

All signs point towards consumers becoming much more dependent on technology. People today have so much power and knowledge thanks to their phones, with information literally at their fingertips. They rely on this technology as a trusted source of information, which has resulted in a range of different shopper behaviours. For example, the need for instant gratification, and the impact that ‘one voice’ can now have on the success of a brand or product through social media and the rise of ‘influencers’.

Targeted online advertising is also making a difference with consumers becoming conditioned to receiving information that is based on analytical data that identifies products specifically suited to their tastes and buying patterns.

Trend 2: Convenience

Coles and Woolworths both announced plans to redesign their smaller format stores to meet the growing demand for convenience. Consumers are increasingly seeking quick, healthy ready-made meals to eat that night, rather than planning their dinners in advance and doing a large weekly shop. The trend for convenience is a huge growth opportunity for retailers and suppliers but it will present challenges as, ultimately, price remains king.

Trend 3: Tailored store ranging

Bespoke store ranging will become more prevalent as retailers recognise the different buying habits based on demographics in different areas. For brands, the challenge will be around recouping the R&D and manufacturing costs of products associated with the reduced scale of customised ranges.

For the retailer, it presents a logistics challenge around how they manage the numerous varieties within a product range, and the bespoke on-shelf ranging required for each store based on the buying habits of shoppers in a store’s area.

Trend 4: Environmental and health conscious shoppers

This trend emerged last year and continues to gain pace with shoppers, who are becoming increasingly concerned about the amount of packaging used, its impact on the environment, and where their food is sourced from. This year, packaging, plastics and straws were a hot topic for debate.

Trend 5: Stabilised growth

With year-on-year retail sales growth expected to hover around three to four per cent for the next few years, it is a big drop from the seven to eight percent growth the industry enjoyed a decade ago, but a definite improvement on the years prior. Retailers and suppliers are both expected to see an uplift this year, but for retailers the growth opportunities are forecasted to be based on new product development and cost cutting measures.

For the FMCG sector, many of the key trends challenge the basic fundamentals of grocery retailing – speed, mass and scale. The key will be striking a balance between price and quality, and how they remain relevant to shoppers.

Andrew Bosco is Director of Client Service – Grocery for Crossmark.