A global grocery consultant is urging Western Australian growers to prepare for serious change in the state’s retail space, with the entry of discount supermarket chain Aldi expected in 2016.
AUDIO: Hear Tristan Kitchener talk about the arrival of Aldi in WA next year (ABC Rural)
Tristan Kitchener has worked in the grocery sector both in Australia and the United Kingdom, advising retailers, manufacturers, and growers on their supply chains. In an address to growers in Carnarvon this week, Mr Kitchener said WA’s retail landscape is about to go through unprecedented changes.
“Certainly Aldi has been very successful since their entry, in 2001, down Australia’s east coast,” he said. “Their reason for coming over here is presumably because they see a profitable opportunity, so there will be an increased level of competition. “In WA they will probably have 30 stores and are forecasting to be about five per cent market share by the end of next year.” In order for local growers to thrive in a busier retail landscape, Mr Kitchener recommends strength in numbers.
“The challenge for horticulture in Australia is that it is still very fragmented,” he said.
“Growers don’t necessarily work together, which means it is difficult for retailers to engage with that volume of growers. “Coming together as co-operatives or larger entities and having a more strategic, collaborative relationship with retailers can often be a better way to go. “Given the timelines in agriculture, and fresh produce, it’s probably the time to start thinking about this now, rather than later.”
According to Mr Kitchener, consumer trends also show the story of fresh produce’s origin plays an important role in supermarket sales. “Fresh produce, in particular, tends to have a high emotional connection with consumers,” he said.
The ‘middle’ consumer is disappearing and becoming more polarised towards the budget end or the premium end.
– Tristan Kitchener, grocery industry consultant
“The Australian consumer is quite similar to the Mediterranean, Italian, Greek consumer.
“You pick produce up, you touch it, you smell it, you’re very emotionally connected to your food!
“Therefore provenance is really important.”
The entry of a major discount retailer into Western Australia is also likely to change the way consumers are marketed to and put pressure on independent supermarkets.
“The ‘middle’ consumer is disappearing and becoming more polarised towards the budget end or the premium end,” Mr Kitchener said. “That ‘budget’ consumer is very well suited to a chain like Aldi.
“The concern is probably around how the independents [retailers] will react to this. “Independent market share in WA is about 30 per cent, which is heavily over indexed, compared to the east coast.
“I think we might see it get a little bit tougher for the independents moving forward, as consumers respond to the entry of Aldi.” Mr Kitchener spoke to local growers as the guest of the Gascoyne Food Council.