From e-commerce to private labels: The pandemic shopping trends that are here to stay
In 2020, the coronavirus pandemic dramatically upended the retail landscape in Australia and around the world.
Retail experts IRI’s FMCG Outlook Report, released this week, looks back on the major consumer trends of the past year and those that are set to stay in 2021.
They include the online shopping boom, the rise of ‘own-brand’ products and shoppers’ desire for sustainability as the threat of climate change grows.
“Never before have we witnessed so much change in the FMCG [fast moving consumer goods] sector within such a short period of time,” said Alistair Leathwood, IRI’s chief commercial officer for Asia Pacific with IRI.
“Not only were Australians hit with destructive bushfires, we also experienced floods and then a life-changing pandemic. Within a matter of months, COVID had permeated the planet and affected every aspect of society.”
The pandemic forced a “rethink” of “how we socialised, shopped, lived and worked”, Leathwood said.
“For some, the reset was an opportunity and for others, a challenge. But, all in all, 2020 has proven to be a great leveller as well as a major disruptor”.
Three themes that will continue in 2021
The report highlighted major themes that emerged during the pandemic and will continue in 2021.
Chief among them is the acceleration of e-commerce.
Online sales have surged due to COVID-19, with Australians spending a total of $27.9 billion online from September 2019 to August 2020.
This represents $8.1 billion in online sales growth, surpassing the prior two years combined.
Many also started doing their grocery shopping online, with a 9.4% increase of Australian households purchasing groceries online from the nation’s two supermarket giants Coles and Woolworths between August 2019 and July 2020.
The next major theme was the push for more sustainability as the spectre of catastrophic climate change looms larger.
“Australians are hugely concerned about climate change — and those that weren’t could not help but be swayed by the bushfire impact,” the report said.
Over the last four years, almost six-in-10 of us continually expressed intent to purchase environmentally friendly products, research showed.
The pandemic further highlighted “the link between FMCG and the communities it serves, as well as the fragility of personal and environmental health,” the report said.
Increased at-home consumption “means household waste footprints are even more confronting as we wade through over-packaged online orders and single-use products such as coffee cups and cutlery”, it said.
“The legacy of 2020 is that doing the right thing has never been more important, and sustainable innovation will be at the forefront of FMCG in 2021,” Leathwood said.
The third major trend highlighted by the report was the “pull power” of private-label products, sometimes referred to as ‘own-brand’ or ‘home-brand’ products.
Once the poor cousin of name brands, supermarket private-label products have become popular choices among shoppers, offering good quality at prices that undercut the competition.
Popular own-brand offerings are now critical to success for supermarkets, accounting for a large portion of shelve space and profits.
In 2019, Coles added 1,200 private label products to its range, with private label items comprising around 30%-and-growing of the chain’s’ sales.
Woolworths also boasts shelves lined with their own label products, positioning its Macro Organic range to promote itself as Australia’s healthiest supermarket own brand, the report found.
German discount chain Aldi has also been embraced by Australian shoppers for its budget-priced private label products.
It’s a trend that shoppers can expect to see much more of.
Australia’s first recession in three decades is “likely to encourage greater consumption of private label offerings by value-conscious Australians”, Leathwood said.
“Sixty-one per cent of Australians say private label products are a good alternative to branded products.”