Five trends shaping grocery retail in Australia in 2021

Date : 26 February 2021

Nick Miles

Head of Insight - Asia Pacific

Half year results season in Australia is out of the way, with both Woolworths and Coles having released their HY performance reports over the last two weeks. As the attention swings towards H2 and the rest of 2021, we believe that there are five major trends that will shape the Australian grocery market as we cycle out of the pandemic...

1. Acceleration of online grocery

Over the past few years Coles and Woolworths have significantly increased their focus on online grocery, however COVID-19 has led to an even greater surge in demand for the service. The capability and capacity of retailers to deliver online grocery continues to increase. With penetration hitting record highs, we forecast online to make up 5% of total grocery sales by 2022. New solutions to fulfill orders, boost capacity and drive profitability will continue to emerge. 

We predict online grocery to stay inflated post-pandemic. With online growth of 47.7% in H1 at Countdown (Woolworths) in New Zealand, a market that has been predominantly COVID-19 free during the period, this could well be accurate. Retailer's will continue to invest in online, with Woolworths having launched its first store with automated Takeoff micro-fulfillment technology at Carrum Downs in Melbourne in October 2020.

Source: Woolworths

2. Digital marketing evolution

Retailers in Australia are increasingly building their capabilities to shift marketing strategies away from traditional methods and putting a greater focus on new digital solutions. Coles and Woolworths both have well established loyalty programmes. However, evolution of the schemes and capability to use the data to drive strategic advantage has been slow. In 2020 we started to see some significant developments in this area, with retailers utilising digital solutions in-store, via smartphones and on new platforms.

3. Healthy living differentiation

As in other markets around the world, health and wellness continues to grow in prominence in Australia. Shoppers are more aware of their diets, with a recent survey by Woolworths showing that 60% of Australians seek out products that are healthier for them. Retailers are responding to the demand by putting health as a key part of their strategies and using the opportunity to help drive differentiation in their offers. 

A great example of this is Coles' Healthier Living campaign. Over a 28 day period, the retailer is offering daily special offers, recipe inspiration and fitness tips from Australian sports stars, plus rewarding shoppers with double flybuys points on all fresh fruit and veg and selected Coles Brand products.

Source: Coles

4. Battle for convenience

Convenience is an area that has seen a growing amount of attention over the past few years in Australia. Retailers are investing more in the channel, starting to raise the standard of convenience retailing and realising the growth opportunity that is untapped. This is coming in the form of both new forecourt and standalone store concepts, as well as the development of stronger convenience ranges and foodservice solutions. We expect this trend to accelerate further throughout 2021, with one element of this being retailers opening more smaller format stores as competition increases.

5. Responsible retailing

For the last few years retailers in Australia have been increasing their focus on ensuring that their businesses have a positive impact beyond their core operations. This trend has been thrown into the spotlight even more over the past year due to the global pandemic, with retailers supporting the communities they serve, their customers, teams and their business partners as a top priority. As a key part of retailer’s strategies, we expect this trend to grow in importance over the next 12 months and beyond, with partnerships a key element helping retailers bring initiatives to life.

For example, Aldi has committed that 100% of its operations will be powered by renewable energy by the end of 2021. Solar and wind power will supply electricity for all of its 550+ stores and eight distribution centres around the country.

Source: Aldi

Retail Analysis subscribers...

Read our in-depth report, Australia retail outlook 2021, for more detail on each of these trends, along with further retail examples that bring them to life.

Sign up for our webinar...

Join our session looking at 'Australia and the future of online grocery' on 11 March 8am AEDT / 10 March 9pm GMT, where we will be joined by Ben Hassing, Chief Executive eCommerce, Coles who will share his view on the future of the channel...

Australia and the future of online grocery


11 March 2021 | 8:00AM - 9:00 AM (AEDT)
10 March 2021 | 9:00PM - 10:00PM (GMT)

Join us to learn more about how global trends are impacting Australia, plus how online grocery will continue to drive significant growth and evolve over the coming years. For subscribers only.

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