Off Premise Liquor: Know your Shopper, Unlock Your Growth (1hr)

How is the industry performing on the key off premise trends? Find out here!

Every major liquor retailer in Australia joined us in June 2020, as Shopper Intelligence MD Simon Ford and senior insight director David Shukri shared their insight on off premise trends, in this unmissable webinar. Watch now to find out:

• How shoppers think the industry is performing against key off premise trends of price, premium, innovation, and health
• Photos from our store tours: Who’s getting it right
• How the shopper mindset is changing today and what this means for the liquor industry
• What off premise trends you should focus on to maximise opportunities with your trading partners… Enjoy!

Related article: How the Australian off premise mindset is changing >>

Webinar Transcript

Hollie:

Hello and welcome to our webinar – Off premise liquor: Know your shopper, unlock your growth.

Over the next hour, you’ll hear from Shopper Intelligence liquor expert David Shukri and MD Simon Ford. They’ll discuss how the industry is performing on the key off premise trends and what we’ve learned about the changes in shopper behavior.

I’m pleased to say we have a very busy room today, with a really diverse group of retailers and brands.

I’ll put your questions to our experts throughout the session. Without further ado, let me introduce you to David and Simon. Hello.

David & Simon:

Hello, hello!

David:

Hello, thank you Hollie. I’m very excited to be talking to you today. We’re all about understanding your shoppers better, so that you can grow your category.

We actually have representatives from all the major retailers, as well as large and small suppliers. Also hello to our partners at the Drinks Association, who are with us here today.

COVID has happened folks, and it looks as though it’s with us in some shape or form for the foreseeable future. One thing is for certain, It’s been a roller coaster. Our off premise research finished just before all of this kicked off, but our grocery research has been in the field throughout. So we’re going to look at both today to look at the off premise trends and any indicators of what might be coming next.

I’d like to get the ball rolling this morning by asking your opinion specifically about shopping behaviors and needs changing in the off premise.

So our first poll you can hopefully see on your screen now. How much do you think that liquor shopper behavior will change over the coming 12 months as a result of this epidemic? Would you say minimal change? Are we going to go back to previous behavior quickly, with some change in a few specific areas? Or do you think we will have wholesale change, right across the board?

OK, a lot of people playing it safe, 50% voted saying some change, which I think is a reflection of what I see. Interestingly, significant change outscores minimal change.

Now, we’ll talk about this in more detail as we go through the session. This goes to the heart of why we exist, and why we’re doing this webinar today. We believe shoppers are the common language between suppliers and retailers.

Of course, the events of the last few months have really just serve to underscore just how important shopper behavior is to what you and your trading partners are trying to achieve.

Shopper sentiment is a crucial piece of the jigsaw. It’s obviously very important to know what shoppers have done. And there are several data sources that can help you understand things like your sales history.

If you want to consistently and rigorously recreate those conditions or create new ones, then you have to understand how they came to make those decisions. You have to understand the why. In order to influence the behavior, that is where shopper and today’s session come to the fore.

Now very quickly, for those of you who are asking how and what you’re not familiar with. We sampled 24,000 people across all 32 categories in-store. And, bear in mind, those fieldwork dates cover August in 2019 to February 2020. We interview shoppers shortly after that trip and ask them to comment on a single category in just the one retailer, which they shopped.

And those questionnaires cover basically all of the major banners and retailers in Australia.

The biggest off premise trends

Now let’s just keep our minds on what the big challenge in liquor has been for us in recent times.

And that is, we’re just not drinking as much as we used to.

We haven’t actually had such a low per capita consumption in Australia as we have today, since we’re all the way back in the 1960s. So the big question is, how do we secure growth when people are drinking less?

The answers are around four key things:

Firstly, making liquor more convenient.

Secondly, making it healthier.

Thirdly, making it more interesting through innovation.

And finally, making it more premium.

So essentially, people are drinking less and they’re drinking better.

Whatever company you work for, there’s a very good chance that your leadership team, you’ll see as your end date, talking up the importance of some combination of these elements. So, is the talking working, our shoppers actually trading up at the shelf edge?

We will look at that in just a moment.

But I also think it’s important, especially given what we’ve just been through over the last few months, to reflect on a slightly longer time frame. What actually happened in 2019? And the answer is we had a lot of challenges. We’ve touched on the consumption challenge already. The ABS data most recently available for 2017-18 shows,interestingly enough, consumption rose by about a percentage point, thanks largely to spirits. But that moderation trend is still shaping the strategies for most in the industry.

Volume is down at -1% between December and February this year.

Interesting that, while many industries actually struggled, alcohol held up fairly well in the face of all the bush fires. However, it may well be that conditions played a role in the longer term. The final thing I’m touching on here is consumer confidence. It’s falling. GDP per capita fell during 2019 in Australia, which is a pretty big deal. Combining that with the weather events and other economic indicators that we’re seeing and hearing about consumer confidence actually fell last year below the 10 year average. And all of that was before the COVID crisis kicked off.

What we’re going to do now is have a look at what’s driving performance in liquor. I’m going to bring Simon in to make some comparison and contrast with what we’ve seen in grocery and then we’ll discuss what we think that means for you in liquor.

For just a bit of context, I’ll give you a few big numbers.

Overall satisfaction. Very importantly, in the channels sits at 67%, up 2% last year, so that’s good.

We can break that into four different groups of measures. Execution saw the biggest increase year on year plus 2%, that’s where we include things like availability and layout.

All of the other groupings, which are priced product, an assortment, all rose by around about 1%. The key one for us today, which you’ll see why in a moment is product. Product was up a per cent year on year. That’s where we have premium. That’s where we have healthy choices in a grouping. And finally, assortment up just over 1%. That includes innovation.

Now we know satisfaction is actually higher among shoppers who planned to consume their purchases within a week. But generally speaking, the sooner you plan to consume, the less satisfied you are with the overall experience in the off premise.

Half of all shoppers today plan to drain the liquor within a few hours of a purchase – that proportion increased over time. This is fundamental to how the experience and how that communication in-store needs to evolve.

Finally, when you shop with a particular occasion in mind, that tends to go hand in hand with short-term consumption needs. What’s important to you is very, very different to when you’re buying for everyday drinking stocking up, or relaxing at home.

Today, one in three shoppers has a specific occasion in mind when they buy liquor. And that one in three shoppers is more open to innovation, more open to premium products, as well as being more interested in health and responsible drinking. So if you don’t have a tailored, specific plan for those one in three shoppers, you could be leaving money on the table.

Now, let me share with you a slightly longer time frame and also introduced the key contrast between the big boxes, bigger format and the convenience banners. So what we see now is the evolution of overall satisfaction of the industry between 2016 and 2020. Pretty good progress. And we can see the gap in satisfaction between the big box and inconvenience players.

Overall, it’s narrowed by about 3% during that time frame.

Can also tell you is where that gap has narrowed so that you can start to tailor your conversations precisely. Whether it made less headway where the big play, a big book, studies it, responded where they are seeking to maximize their USP. The answer on this, as you can see here, is that it’s a price measures where the gap has closed the most then assortment. Remember, that included innovation. Then your execution measures at plus 2%. This is the narrowing of the gap overall, that thing where we see availability and layout.

And lastly, interestingly enough, where the gap has only narrowed by just over 1%, we have product. And that includes things like healthy options and premium options.

So very instructive around how that has built up over the last five years.

Now, it’s probably a good moment for me to take a step back and take a look at what drives shopper satisfaction. 16 measures that we ask shoppers to score in terms of the importance they attach to them. And then the extent to which they feel they are being delivered in the category in which they bought.

So this is the category level view, obviously rolled up at this stage. But what we see is, broadly speaking, the group on the left, the value for money component price quality can I actually identify value on shelf. Then, you go into the middle, and you’ve got what we consider to be your shelf basics: Availability, offers, layout, range, and so forth.

And then the group on the right, in the dark blue, are the ones that really differentiates one brand from another, one retailer from another.

And this is where we have premium, enjoyment, innovation, healthy choices.

What I’ll flash up now is the three factors that have increased the least in importance, over the last five years. Maybe give you a sense of the direction of travel and the changing demands of the liquor shopper. The three that increase the least are actually price, offers, and range, probably no surprise to you. What I’m going to flash up next is three factors that have increased the most in importance over that time frame. So you can see it’s premium is innovation, responsible drinking, So at least on this level, is absolutely appropriate, that we do spend so much time talking about some of those things.

I’m just going to stop for a second. We’ve had a couple of questions in. Asking us about the key determinants, if you like of a retailer choice. So what does a shopper have in mind that drive their choice of retailer? Good question. The answer is, the most important factors actually tend to be logistical, if I can put it that way. The number one reason a shopper chooses a retailer is because it’s close to home. Number two is because the prices are good. And then, number three is because there’s access to easy parking.

Number four is actually also quite fundamental. Products I want in stock and easy to find – about navigation and basic delivery. And then number five, takes us back over to the left-hand side of the screen, I should say, because the fifth reason is a good value for money.

So, of course, we’re going back there to price, even quality.

Thanks for the question. We’ll, we’ll keep trying to introduce as many of those as we can as we go through.

OK, now what we’re going to do is explore for these measures, a little bit more detail.

And also, this is where we start to compare and contrast with what we’ve seen in grocery and the grocery world over the past 3 or 4 months.

This is going to start to give us some sense of the direction of travel, and also what we need to do to respond and stay in touch with shopper behavior. So we’re going to look at price, premium, innovation, and health.

But first, another quick poll.

Which of these three things you think needs the most attention from the off premise?

Clearly, we’re not going to put all our focus on one area. But if you have to pick one, if you have $1 to invest would it be premium, would it be healthy choices? Would it be innovation?

OK, so what have we got? Just under half of you, are voting for innovation. Interesting, we’re going to talk about innovation in a moment, and what will that mean for shoppers. Healthy choices comes in at one in three of you, and then what about one in five, the same premium.

Now, obviously, I didn’t include price, because I think it’s a fair assumption to say that price is going to remain the most important factor over the coming 12 to 18 months. Well, we’ll talk about those three in a moment. First of all, let us just have a quick look at price.

Price performance

Important of course. But increasingly, what we’re seeing in liquor is that price is not sufficient on its own to satisfy shoppers. Necessary, but not sufficient if you like.

Year on year, we can see how the market is narrowing in terms of price performance. The convenience, banners, as we saw earlier, doing best here, versus big box in terms of narrowing the gap. And the independent vendors have driven hard, very hard on this over the last five years. You’ve also got Bottlemart in the yellow line, flattening out a little bit recently but still showing great progress.

Conversely, the orange line at the top of the chart, have stalled a little bit since 2017. In terms of driving that cost performance score. Now, starting from a higher or lower based, depending on which group you’re talking about, of course. But what we’re saying here is, this is not a differentiate to any more shopping treated like given. So that 2% improvement overall is good. But generally speaking, we’re looking for new ways to engage with shoppers.

Now, having said that, if you operate in one of these categories that are coming up on the left hand of the screen now, that quite definitely needs to be at the top or very near the top of your agenda. These are the top 10 categories where price is most important to shoppers and remember this is one of the beauties of what we can do is to say well Christ is important to shoppers. So we rank by category in order that we can understand exactly the differential between each category so that you can all go and have different conversations instead of everyone saying, Well, price is most important. So that’s all focused on that.

Conversely, what we can see on the other side of the chart. If you’re involved in any of these categories, there may be an argument to put some emphasis on some other measures, because even the categories in which price is least important, compared to say, to stop and say, this is the subtlety of shelf with behavior onto the liquor. For example, We know the price is the most important factor to RTD Liqueur shoppers.

But if you only have to go into a catalog space, $1 to invest in price and price messaging, then you would want to be giving it to chardonnay before you did Pre-mix liqueurs.

Hollie:

We’ve got a question from a brand here. Are there any categories in which price isn’t the number one importance factor for shoppers?

David:

So, it doesn’t happen often, but it does happen. Out of the 32 core categories that we survey, there are a handful, probably no more than about 7 or 8. Four are wine categories, two in beer, and a couple in spirits. And just to give you a bit of a sense in gin and in sparkling wine, the number-one shopper importance factor is actually quality and in cask wine it’s fixed low price and if you’re looking at mainstream vodka it is a value.

So yes, it does happen, not very often, but again, that that’s the beauty of having this perspective. So you can line up all the categories on these measures, and you can go and have the right conversation for the shoppers in your category.

Now, I’m just going to turn to Simon and actually start off with another question from the audience.

And that is: Is price going to be more important now, post COVID? Tell us about what we’ve seen in grocery.

Simon:

Yeah, thank you David, and good morning, everybody. We’re going to shift gears a little bit here and switch to the grocery channel. Just quickly, the reason we’re going to do that is because we run a very large grocery program across all categories, every week through the year. So it’s a really good opportunity to look at the COVID period.

I would say we’re going back into the field in liquor in a couple of weeks, so we will have something similar to this perspective shortly. So watch this space. But returning to the question around price, the big thing that hit us was out of stocks during the short period.

And so shopper concern shifted into the supply chain and confidence in stocks.

During this time price dropped in terms of importance. However, you can also see from the slide that it came back quite quickly through mid April onward.

And actually now, where we are now, from a grocery perspective, the importance of price is actually slightly higher than it was pre-COVID. The next thing I wanted to look at quickly was just how you trigger that and how you activate price.

Again, during the shock phase in March/April people were very erratic and impulsive, because they couldn’t count on their categories and brands being in stock. They were visiting stores a lot, though making impulsive decisions a lot of in-store store trigger points around price and other things were triggering the decision. That has now completely shifted the other way. And the behavior we now say is very reminiscent actually at how we used to shop 10 or 20 years ago, which is infrequent shopping, you know, once or maybe once every couple of weeks. Going infrequently doing large basket shops and highly planned behavior, as people don’t want to go into stole that often, that I didn’t have competence in the supply chain.

So they are planning more than they used and what this slide on the right reflects, is the role of catalogue in terms of actually triggering decisions instore. Again, a dip through the pandemic, significant increase during the first stage is the recovery in terms of the role of catalogue, actually triggering purchase decision.

And again, know that higher than it was pre-COVID. So this is the highest point we’ve ever seen for grocery catalog triggering category and brand decisions in store. And clearly, there’s a price lever there as well. Not just the paper catalogue either being diluted or removed. There’s a big role for digital, not just digital catalog but, you know, ads, blogs, social media, in terms of driving price importance.

Clearly, then, the obvious question is, well, what does that mean for us in terms of liquor and what are the implications? Well, my advice would be understand how price, reassurance, and price in terms special offers, are important in your category for your segment, for your brands. Because it’s not a one size fits all. And, we’ll be able to look at that when when we have the new liquor reporting in the next month.

David:

OK, thank you Simon. So price importance dipped in grocery, now it’s back. We’re seeing this continued rise in purchase triggering off the catalog and also to digital. So let me just round out the section on price with a couple of key pointers. As far as liquor is concerned, the market’s continuing to converge. We’re definitely on the lookout to elevate Premium, Innovation, Health. From a grocery perspective, service resumes to a degree. Availability trumped price during the shock. Now we’re seeing very much that focuses on much more around catalogue and comms. From a liquor perspective, I think what we can take from that the possibility for a new role of value, engagement, and a well stocked to pivot a little bit, back towards price, EDLP and offers.

Premium performance

So that’s a pretty good segue into what this could mean for us in Premium now. What does that really mean?

This is all about delivery, it’s all about how the actual product actually performs compared to the standard options catch up with really noticed the difference, when they buy the premium. So, vital, given the consumption challenge, given the moderation trend, if we’re encouraging people to trade up, they have to feel they’re getting something for the money. And, there is some good news here.

Even though the rate of progression has slowed somewhat, we still see shoppers responding very, very, much more positively in terms of premium delivery. If we go back to 2016, when, it was only about one in three shoppers who scored favorably, now, we’re up over the halfway mark. Certainly, a lot more of a feel today, that, when they buy premium products, They do notice the difference.

The difference year on year is around 2%. And what’s interesting here as well as you can see the responses by store type. Clearly, it’s the Dan Murphy’s, First Choice’s that consistently get highest ratings on this higher, than the convenience banners. So I think that’s very interesting. We could probably hypothesize around better range management. Tighter range, curation certainly goes to a point around being more tailored. And again, this is, this is a worthwhile exercise. Not just to cut by shopper groups and demographics as an example, but also to cut by different sites, and different location types.

Now, what I wanted to do here was, if you like, create a bit of a scorecard on premium, give you some sense of what does it mean to focus on premium? Where should you focus? Who should be focused on?

So firstly, in terms of retailers, high satisfaction, retailers are Dan Murphy’s Vintage, and Bottle Mart. But the most improved between 2019 and 2020 are actually Liquorland, BWS, and Dan Murphy’s. So, the momentum, certainly, with the most improved. We have the category perspective, something that always generates a lot of interest from our clients.

Category where shoppers feel it’s most important for those premium options to deliver. And, in fact, pretty good correlation, actually, between importance and satisfaction on this measure. The odd ones out, being tequila and gins. And so there’s a mismatch in other ways that between the important stroke and attach and the delivery they feel they get from the premium products in those categories.

Let’s touch on who we’re actually talking about.

Now, if you’re 30 to 34, you are likely reporting the highest satisfaction with premium options.

As you get older, you generally tend to get less satisfied, perhaps more, more difficult, too, to surprise and delight. Except, however more worrying is 18 to 24-year-olds also under index, in terms of their perceptions of premium delivery.

Now allows us a bit more of a concern. Obviously, if you’re 18 to 24, you probably got a long, long future ahead of you, in terms of liquor consumption. These are the folks that we need to start targeting premium and our innovation and our health a little better at.

Also, if you’re buying for a specific occasion, you’re generally over indexing significantly versus the average in your interest. So your need for premium products, deliver well is higher. Also, what’s quite interesting is from a digital engagement standpoint, we touched on this when we talked about price.

If you’re engaging with adverts, are getting involved with discussions and social media, you’re actually reporting higher satisfaction with premium options than if you’re receiving EDMs from retailers, or searching via retail websites, or apps.

So it just gives you a sense of how specific you can get, and how you can target a very specific group of shoppers.

Now, final thing I want to build in here, because this is also a pretty interesting aspect for an angle to look at.

In terms of brands, some of those who’ve made the biggest gains with shoppers in the last three years on premium, deliberate and create the Canadian Club. So, when you’re talking about momentum and you’re looking for examples of people who have come out of this trend and delivered it well for shoppers, these are the sorts of brands that you want to be looking at.

Simon – tell us what’s what’s going on in grocery in terms of the premium equation.

Simon:

Well, in terms of willingness to pay more to. The first slide here is, and, how willing people are to pay a bit more for something new or better quality. We saw that start to decline along with a number of measures, like price that we saw last time.

The willingness to pay more consistently declined since the shock, with significantly lower levels of willingness to pay more, willingness to buy premium, compared to pre-COVID.

The next thing to show you is the willingness to consider private label. There is a clear trend upwards, in terms of willingness to consider private label. At the same time, less willing to pay more.

What I find interesting if we cast our minds back to previous recession, the GFC obviously a large one – 12 years ago now. But what we saw coming out of that was certainly strong increases in willingness to pay more in certain categories where people perhaps don’t have the money to go out, but they treated themselves by choosing premium options, trading up into premium options from the supermarket.

My expectation would be that in certain categories and segments and brands, this would absolutely happen. Whether it’s enough overall to balance out the trend towards value and towards private label, who knows? But again, the importance of understanding your brand at that level.

David:

Interesting. Not quite yet what we saw in the GFC if you are the last big shock that we had. Things are clearly different in liquor anyway. What do you think this means for the audience today?

Simon:

Yeah. It’s a good question because I accept the private label position is quite different in liquor. If I put my ex-Tesco retailer hat on and if I had hard targets on private label penetration, which I know some of the retailers very much do, I would certainly use this as an opportunity to make a step change in the category And in a potentially de-list brands and put private label in.

I personally think a lot of manufacturers are going to get a shock when they walk into their next brand review, because they’ll be faced with this decision from the retailer. There’s a big risk of losing space to value brand or private private label and it’s it’s a real threat if you’re a premium plan and you’re in a category where, you know, you haven’t got the evidence to back that up.

David:

Yes, indeed, the threat is there. Take your retailer hat off for a minute and put your supplier hat back on. What’s the focus do you think, for suppliers in liquor over the next 12 months? How do you face into this?

Simon:

Well, yeah, it’s reversing it round really. Be prepared going into those discussions and what that means is really understand your shopper. What is the premium opportunity with your shopper? Are they willing to trade up? What segments and brand can lead that?

Having strong, fact based decision making to go in and prove to the retailer that whilst this might be a macro trend, it’s not relevant for my category, or my segment, or my specific brand. Or, even if it is, well, there’s a strong play for private label. You can take that Mr Retailer. But here’s my premium brand, is still has a strong role to play. Here’s some evidence to command the range, but to command the price as well.

David:

I think that the same is true of how we deploy Premium and trying to encourage the retailers to take on premium options. We might actually start to see a bit more cautious approach to this, and in some categories, for example, we know the importance of premium delivery in gin far outweighs the satisfaction that shoppers have on this in the category today. So, maybe this is a good opportunity to think again and be a little bit more targeted around premium and consider the value side of it as well in liquor?

Simon:

Yeah, Look, I think is a great example. You know, Premium, gin brands to use it as actually an opportunity and a launch pad. To take a constructive discussion around the role of that brand and the role of the segment and category in driving this for the retailer. And use it as an opportunity to increase the price differential, and really own that as a brand.

David:

What does that leave us way, as well, as, we say, a premium, still progressing well to date, as, as per the recession, we’ve got like, a big book does best. But it’s very good creating opportunity for format based strategy. You’ve absolutely got the opportunity to be very, very targeted now, very specific, in terms of the group of shoppers, that you want to land a premium range with.

And really, definitely getting under the skin, and understanding the risks and opportunities in your category, and being prepared to pivot.

Innovation performance

In many ways, innovation can be very closely linked to premium and higher tier products, especially if you take a narrow view on innovation and consider that it just talks about NPD and range. From my perspective, as you’d imagine, it is about more than just NPD. Back to the polling earlier, this is where I think the 40% of you felt we should be putting most of our focus. So what have we seen?

To be honest, the industry has not made much ground with shoppers, year on year, in terms of innovation. But the question on the statement that people responded to in our surveys doesn’t talk just to NPD. This is actually a much broader concept around how we bring new ideas to the shelf. Product matching, product pairing, different occasions, different consumption ideas, cocktail mixing, even, so it can be very, very broad. So it’s not just a question of NPD.

Now, we’ve seen smaller banners have closed the gap since 2016, but only by about 1.5 percent compared to the big boxes. So, next question is, what happened in the last 12 months getting shoppers reported very favorably on this?

In the previous year in 2019, I suggest there is a need to be more, more targeted there, and that may increase, given what we said in the last segment, relating to premium and value.

Occasion based shoppers, younger shoppers – both of these groups are significantly more interested in innovation, but actually neither reported an increase in satisfaction on this measure year on year.

Now, we’ve spent a lot of time out in stores themselves, and the team as well. Earlier this year, we saw a lot of different things around innovation instore. We’ve seen the digital POS in Dan Murphy’s up in their new, smaller format store up in Ellanora Heights, linked actually to their online platform, so that’s where you get the star rating. So that is a great example of a nice, new idea of innovation as something that we’ve seen before.

Of course, in the middle there, giving shoppers a little bit more information. Again, this, that’s one of the key requests from shoppers that are looking for innovation. Give me better information, better signage at shelf. And finally, it can be something as simple as a unique product. Innovation, making this gift-able, making it easier, more convenient.

I’ll give you the scorecard as well on innovation. We’ve covered these top elements previously so you know the format. Highest satisfaction retailers actually, the same as they were for premium, Little bit of a change of order on most improved year on year. And you can also see most important for innovation, top five by category, and also the highest satisfaction.

The really interesting bit is in the bottom half. If you are a female shopper aged 30 to 34, that’s the sweet spot. Female shoppers over index in terms of their satisfaction with innovation, certainly the group to be going after is the particular occasion shopper compared to the everyday drinkers. Because it is innovation. It is premium. It is healthy options that the particular occasion shop are much more interested in.

Interestingly, from an instore space perspective, you are getting more cut through on your innovation if you are presenting your products and your new ideas at the front until the end of the aisle. Shoppers are buying from this space, rate innovation more highly. If you’re interested, actually, right at the front of the store, behind the counter, probably not the best pieces of space to be using for that.

Also, if you are expressing less satisfaction with innovation, you are also expressing greater desire for better signage and staff stop helpfulness.

So very clearly it’s around helping them navigate to it and also to a retailer for your people to be set up, to guide shoppers to those innovations.

Simon, much to say on this from a grocery perspective?

Simon:

Not too much and national level, simply because it didn’t really move too much, hasn’t yet. I think the key thing, again, is to come back to, even at macro national level. It might not move. It might not be too much change, but they’re definitely will be at category, or segment and Brian level. The key thing is, everybody to understand the importance of innovation and how that shifting within your category, within your segments and brand.

Fact, based decision making, right? Take that story to the retailer to prove that it’s the right thing to do.

David:

Just connect with that. Because I know we’ve got some of these these brand owners on the call today. Talking about connecting very, very closely with The shoppers in your category. Some of the brands that have gained the most traction on innovation over the last three years. It’s great news if you are working with, or for one of those brands, and we can dive into more around what that looks like. If you’re not, then, it’s a good place to start to go and have a look at what they’ve been doing since 2018.

We have healthy choices left to look at. So, this is the, this is the big one, really. How have we done on healthy choices?

Health performance

I can reveal that the news could be better. In total, the channel has actually gone back 2.5 percent on the satisfaction with delivery with healthy choices. Liquorland is the only major player to make progress on this measure, year on year, the rest, struggling.

In terms of the big box convenience split again, 1.4% of the amount by which the gap has closed on this measure, over the last five years. So, not a huge amount, but it’s worth saying, despite the likes of Bottlemart and Thirsty Camel making some very, very good progress on this between 2017 and 2019.

I should also point out, three of the five product departments actually saw satisfaction with healthy choices going backwards, fastest out of all those 16 measures year on year. So, widely reported that this is a key trend, we have to ask ourselves, what role our efforts are playing. And whether what we’re doing is actually adding value for shoppers.

For suppliers, health is getting more important, but we’re not really seeing anyone in the market own it. We’re not really seeing anyone in the market drive it to become a USB for them. So there’s a big opportunity for brands, is to really go and own health and to work together to make this something that stands out.

We can then take a bit of a look if you like it, what the diagnosis might be around health.

Before we do that, I want to touch on how we actually define health and healthy choices. We’ve got a question from the audience. Basically, what does it comprise? What is ‘healthy choices’ composed of?

So last two years, we’ve broken that down into five options, and we’ve asked to shoppers to rate low sugar, low calorie, low carbs, organic and natural ingredients, and lower alcohol. And we’ve asked them what’s most important? And how and how are they being delivered?

As far as important is concerned. It is low sugar. Those come out on top again, this year.

And actually, individually, these five components have increased in satisfaction, year on year. Yet we still see overall healthy choices going backwards.

So it’s an interesting dynamic between other things that we need to be asking about. If you are asking about those individual components, shoppers will tell you that a big delivered back to you and year. But as a whole shoppers don’t feel that healthy choices are being delivered.

The most dissatisfied group is your female shoppers. So health is really all about female shoppers – Older female shoppers are bringing the satisfaction scores down. Low alcohol options – they are the least important of the five that we’re asking shoppers, but they also record the lowest satisfaction.

In department terms it’s spirits and wine where there is the most work to do, averaging -9% across those five aspects of health year on year.

And last but not least, it is you impulse shoppers. The unplanned shoppers are less satisfied year on year. And again, unplanned female shoppers, less satisfied on health plan and their satisfaction deteriorate the fastest year on year.

So, you really get a very good sense of where way you need to put more focus, where we as an industry need to put more focus in order to try and tackle this.

This one, I’ll just touch on some more things that we’ve seen out in the industry. There has been no shortage of health messaging. And we’ve seen different approaches, different angles. Certainly, on the basis of performance around this is the Liquorland results, where you see them breaking out these specific types of products in their own piece of space. And that correlates with the input in an increasing performance on this measure that we haven’t seen elsewhere.

We’ve seen a lot of individual product labeling and colors. It’s probably quite effective from an individual perspective, but probably doesn’t hang together quite well across the store. And then, of course, we’ve seen these efforts to try and introduce some sort of POS scheme or or system for identifying products. It can get a bit challenging. It’s all a little bit broken up, and I think of a strong sense, this is what’s driving a lot of this, is that it’s actually just difficult to find what it is they’re looking for.

Finally, we just got a few minutes left, Hollie is going to introduce the final poll, essentially what next on health, So, I’d love to get a sense from you now. What’s the most important aspect of health and wellbeing activation that you think the industry needs to address, over the next 12 months?

Would you say, is more choice? So more of the existing healthy products that we’ve got? Do you think it’s about greater variety of variants on health? Or do you think it’s about pre-store comms? Again, it’s not going to be just one of these, but if you have to stick your neck out. Which one of these would you go for?

Hollie:

OK, lot’s of response. Going to close that share that now. And here are the results.

David:

I’m not hugely surprised with that. We’ve basically got a third of the audience saying stronger merchandising, slightly fewer saying better pre-store messaging. And the remaining said voting for increased breadth or depth of range.

Yeah, I would actually concur with that. I think the, the answer here lies in understanding a category level. What the best navigation and what the best representation is, at shelf.

Simon, I’m gonna go you. What have we seen in grocery?

Simon:

A couple of things here to talk to you about. One is the importance of healthy choice, a nice surprise that shot up during that short period and sustained at that level. What I find particularly interesting is that we’ve seen further increased during the first stages of recovery through May and into June.

So the importance of healthy choices from a grocery perspective are at significantly higher levels than they were pre-COVID. I think this is more than just safety, but health and hygiene and wellbeing all wrapped up.

Now, the second thing I wanted to share was at the importance of quality.

It’s a bit like we saw a price earlier on. It dipped during the shock period, with out of stocks. But that you can see significant trend up in terms of the importance of quality, and with this I’d link in trust. Trust, again, significantly higher levels of importance than pre-COVID.

David:

So it’s not just the health and hygiene thing, it’s continued beyond that. What’s next from a grocery perspective?

Simon:

Shoppers are increasingly looking for ranges, but also reassurance from existing products, but healthy and good for their well-being. Explain that to people, help them with that. We saw things like the merchandising come out on top – the role of the shelf in the store. Reinforce all of these: trust, quality, health.

There’s a couple of things there. One is around the hygiene factor – excuse the pun – but from, in terms of things that people just expect now, reassurance. And that what that means is health, quantity and trust needs to be delivered through the range. It’s as much about the value end of the range as it is the premium.

But then, of course, Secondly, it’s a way to differentiate and potentially, in a commander price premium within that. It all comes back to understanding how important is health, and hygiene, and trust, and quality in your category, your segment, your brand. And therefore, how can you build a brand to differentiate? To command a premium? To command the range? Command the price point? It all comes back to fact-based decision making to do that.

David:

I would also say, as we saw in the poll, lot of you agree with it as well.

A lot of it is going to rest on how brands and retailers choose to communicate pre-store as well as in-store. And this is where you cannot just skip who and what type of shopper is is interested in improving focused on premium. But also correlating on cross referencing that with other measures like layout, like, desire for better information, or navigation. What triggers are the most relevant? Someone who is engaged with premium in your category versus how many disengaged – that’s where you find the specific stories and this bring it right back to the start.

This is how you, as retailers and suppliers, will have ultimately more productive, more effective conversations by getting down to that level of granularity.

And we’ll just round that out. It’s been a challenging year for the industry as it grapples with how best to get this message across – this is certainly what we’ve seen in grocery. The communication is critical on health, on quality, on trust. The off premise trends are being delivered in many cases, but it hasn’t really hung together well enough. For a lot of shoppers the story needs to be clearer, simplified, before and in the shop.

Hollie:

And that’s really all we have time for! Thank you so much to everybody who attended this off premise trends webinar today. Those of you who sent me your questions this morning. Now, there’s so much more detail we can go into by retailer, category, and brand. If we didn’t get to your question in this session we’ll be in touch. Also, we’re always sharing our insights to our LinkedIn community – follow Shopper Intelligence ANZ to get your updates.

Thank you so much for joining us, thank you David and Simon.

Have a great day.

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