Australia’s FMCG landscape
There are more than 130,000 retail trade businesses across Australia. Australia’s food and drink retail marketplace has traditionally been dominated by supermarket rivals Coles and Woolworths, with German discount retailer Aldi taking a respectable share of the market in recent years. With liquor sales largely restricted to licensed liquor stores, both the Coles and Woolworths groups also operate their own dedicated liquor retail outlets. These include Liquorland which is owned by the Coles Group, and BWS and Dan Murphy’s which are owned by Woolworths Group. In the electronics segment, JB Hi-Fi and Jaycar are market leaders in the retail of FMCG electronics, with the Good Guys and Harvey Norman also retailing in whitegoods and other household durables. Alongside the major supermarkets, Chemist Warehouse and Priceline Pharmacy are popular retail pharmacies for discount supplements, vitamins, and personal care products. In the department store market segment, which had a turnover of more than 19 billion Australian dollars in 2020, discount department stores Kmart and Big W are also formidable contenders for the FMCG market share.
COVID-19 fueling panic buying and supply-chain issues
Panic buying in early to mid-2020, brought on by the coronavirus pandemic, saw items like sanitizer and toilet paper became some of the most sought-after FMCG items in that year. This sudden surge in purchases caused initial shortages in supermarkets and chemists as retailers and wholesalers struggled to restock amidst the unforeseen rise in demand. Essential items and non-perishable food products like pasta and canned foods also saw spikes in sales during the first wave in March 2020 and food sales remained higher than the previous year, likely driven by more people preparing food at home while working from home and eating out less. Other product segments that saw an increase in sales were alcohol, office supplies, and home improvement.
Online FMCG sales becoming more prominent
Product shortages in physical stores, retail lockdowns, and social distancing in 2020 accelerated Australian retail’s gradual shift online. In that year, total spending on online goods increased by almost 20 billion Australian dollars, and high-demand food products like pasta and canned meals increased by over 70 percent. When making online purchases, the majority of online food purchases remained with the major supermarkets, Coles and Woolworths, while the convenience of online shopping with e-commerce market leader Amazon continues to appeal to more and more Australians. But it is not just the major retailers who are cashing in on the recent increase in online retail activity, already more than half of Australian businesses accept PayPal as a payment method and e-commerce is certain to play an ever-increasing role in all aspects of retail sales.