Article by Stephen Wilson, Category & Insights Manager at Strikeforce.
There has been a tidal wave of news on the dire economic circumstances facing Australians over the next few years.
Pundits are united in the view that we are entering a period of enforced economic restraint that will impact on choice, whether making a major or minor purchase.
It has been well documented in recent weeks that the impact of frequent interest rate rises will place additional stress on already stretched household budgets with predictions that 30 year fixed mortgage rates with head north of 4.8 per cent by the end of 2022.
In addition, energy prices are tipped to surge by as much as 18.3 per cent, fuel prices remain stubbornly high and food inflation is rife with the cost of fresh fruit and vegetables alone growing by 6.7 per cent in the last year alone.
The result is inflation growing at the fastest rate in 20 years, eroding the value of a typical worker’s pay packet. Not a pretty picture. For the foreseeable future this will drive shoppers to make ‘safe’ choices – trusted brands that offer value for money and help save a few dollars along the way.
We believe that this will also be the case for both on- and off-premise liquor and expect drinkers to make choices based on their individual financial circumstances. Decisions that will be impacted will include things like: “Will I go out and meet my mates at the pub or invite them around for a BBQ and a few beers?” or “Will I go top shelf or mainstream?”
Occasion will have a place in driving these decisions, with after work drinks more likely to see drinkers seek solace in their usual repertoire of category choices and brands as opposed to the special occasion where they are more likely to look to drink outside their usual repertoire and gravitate towards more premium brands.
So, what does this mean for off-premise liquor stores? It’s more about monitoring any noticeable changes in category and brand sales trajectory and making incremental changes to either the range on offer, apportioning sufficient space on-shelf and in cool rooms and fridges, and allocation of space for ambient products on the floor, rather than any major shift or revolutionary changes.
Keep cognisant of trends and shopper preference and if you notice that some of your regulars are brand-switching from their regular purchases, ask them: why?
Shoppers love certainty and consistency and this was evident during the early stages of the pandemic, where brands that delivered a level of comfort during turbulent and uncertain times flourished and prospered.
While the challenge for households now differs from 2020, an uncertain economic outlook is sure to drive similar behaviours.
The challenge for retailers is to identify change, deliver on value for money, retain loyal shoppers and tweak the offer to attract new customers to continue to drive growth.
This article originally appeared in the August issue of National Liquor News.