Business Irish

Monday 24 October 2016

From coupons to convenience foods: 10 trends every Irish retailer needs to know to make an impact in a competitive industry

Times are changing and consumers' habits are too - the Kantar Consumer Countdown is the essential guide to the direction of Irish retail, writes Georgieann Harrington

Georgieann Harrington

Published 28/02/2016 | 02:30

In the last 12 months alone the leading Irish grocer has changed four times
In the last 12 months alone the leading Irish grocer has changed four times

It's a busy time for Irish retail, with an ongoing battle for the top spot. In the last 12 months alone the leading grocer has changed four times, with SuperValu overtaking Tesco once again at Christmas. For those in the sector, there are 10 key trends they should be aware of if they want in on the action.

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10 Is the boom back for Ireland?

Figures published by the Government show GDP rose 6.8pc year-on-year in the third quarter of 2015. So what might this change bring? Will retail brands grow if Ireland does?

There are definitely some opportunities. Looking at the growth rate from 2012 to 2015 we can see that brands have taken a plunge. Growth in GDP could mean more disposable income for consumers and a potential for brands to capture this.

Might there also be a return to the spending levels of 2008, when average grocery spend was around €600 a year higher than it is now? Food as a proportion of overall household expenditure has fallen over time, so it's likely this will be back on the up. However, there are threats from an increased inclination to dine out, whether that's fine dining or a return to buying a prepared sandwich instead of a packed lunch. The likes of Domino's have seen their growth spike over the last number of years - so if you're a retailer in the macro-category of in-home entertaining, you'll need to stand out to take advantage of our bigger wallets.

9 Where do your loyalties lie?

Loyalty cards are increasingly important across retailers. In Scotland, Lidl has trialled a card scheme that offers lower prices as well as discounts at the till, while Waitrose lets you pick your own offers.

Closer to home, Lidl trialled its Stikeez toys campaign in 2015, driving loyalty from a young age - tell your kids you need to spend over €15 before they can get one of the toys and they'll be taking a lot more interest in what's in the trolley.

We know that for retailers these schemes are important to drive value and differentiate themselves from the crowd, but how do brands increase loyalty? The building blocks must include creating a strong brand identity - what is your brand known for? Think about aesthetics, image, and brand personality - is it fun? Brands like Lynx and Paddy Power offer good examples: they have clear benefits, stay relevant, have consistent messages, and use multiple marketing channels to reach their audience.

8 Online or out?

We go online in every other area of our lives, so why should grocery be any different?

The retailers know the importance of this, and we saw a marked push throughout last summer from both Tesco and SuperValu. Tesco pushed free delivery to encourage online spend, while SuperValu offered free click-and-collect over €50.

Online isn't just about delivering to your door. Across the water, Poundland is realising the importance of an online presence, while locally, Dunnes has also announced its intention to launch online food shopping. We see small players like Buymie also entering this space, offering to deliver groceries in as little as one hour.

Succeeding online requires a healthy partnership between retailers and brands.

For retailers a wide range of products, an easy-to-navigate site and reasonable delivery costs are vital. For brand owners it's about having an online strategy and understanding consumer motivations for going digital.

Is it to save time? Control budget? Reduce the need for heavy lifting?

Whatever the motivation, retailers have to work hard to get more products on our online shopping lists. Over half of online shoppers use the same list for their next purchase, and it can be hard work to encourage digital impulse buys.

7 Is convenience king?

We buy 'top-up' shops 188 times over the year - often a panicked trip for last-minute goods. The essentials - milk, bread, beer, wine - are obvious, but meal solutions 'for tonight' are vastly growing in importance.

With health riding so high on the agenda it's no longer enough to look just at stocking ready meals - also catering for the 'meal ready' and offering fresh ingredients beside kits in-store.

6 An ageing demographic

Older dependents spend €7,556 a year on groceries - far more than any other demographic. Retailers and brands must ask what they know about older shoppers - do they understand their mind-set, what's important for this stage of their life?

If older shoppers are so important, why do so many ad campaigns still fail to target them?

5 Healthy living

Over 80pc of people say they try to lead a healthy lifestyle. The newspaper headlines have been full of calls for the government to intervene while WHO branded Ireland as the future fat-man of Europe.

Nowhere is the health agenda more prevalent than in the lunchbox. We're seeing categories like fruit and yoghurt in growth, while biscuits are in decline. The retailers have already made great strides in their product ranges, more consumers are choosing to buy more gluten- or dairy-free products and more brand owners are exploring how they can operate in this area.

4 Buying for a cause

Campaigns encouraging consumers to buy Irish, buy local, Fairtrade, organic, or eco-friendly are all important to shoppers. Retailers should think about what causes make a real impact - shoppers can easily see through insincerity.

3 Simplicity is key

Elsewhere in our lives we buy solutions to make our lives easier - apps that manage our dry-cleaning and order taxis for us on the spot.

Yes, ready meals have grown by 10pc in the last year - but are the retailers doing enough to keep up with the way we lead our lives? There are huge opportunities to be creative in this arena but the grocery sector isn't keeping pace with this lifestyle revolution - fall behind and someone's bound to overtake.

2 Vouchering

A regular feature of weekend newspapers, vouchers are here to stay. They're incredibly important in people deciding where to shop, but for brands and manufacturers there are implications - changes in forecasts and a challenge in driving long-term loyalty.

If you can understand how your brand features in shoppers' mind-sets when they use vouchers then you can harness this knowledge and help tip their spend in your favour.

1 Consumer choice

Discounters are here to stay and Irish shoppers have more choice than ever.

Pricing is competitive and the discounters are already over-trading rivals in alcohol and fresh foods, but they will move across the sector. For some retailers this is a chance to target other niches, but for many it's a threat. They say if you can't beat them, join them, but this isn't always an option - tackling them will be top of the traditional retailers' agenda.

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