The establishment of international supermarkets chains in Western Australia has caused fresh fruit and veg prices in supermarkets to drop by the greatest margin across the country.
Perth also has the country’s lowest CPI for food and non-alcoholic drinks, with Perth shoppers spending 1% less in September 2017 compared to the previous year.
That’s according to the Bankwest Future of Business: Focus on Supermarkets report, published by Bankwest as part of its Focus on Industry series.
The report shows the newly established competition in WA is driving down supermarket prices. Prices for Perth fruit and vegetables declined by 6.9% in the year to September 2017. Similarly prices for bread and cereals dropped 1.6%, meat and seafood prices fell by 0.2% and dairy products were down by 1.4%.
Commenting on the report Bankwest General Manager of Business Banking WA, Richard Bator says 'The supermarkets industry is now one of the most fiercely competitive industries in the nation due to the rapid growth of international retailers competing for a share of the $100 billion industry. Discount retailers are all rapidly growing their market share and the effect is being seen nowhere more than in WA.'
According to the report Australian prices for food and non-alcoholic beverages declined by 0.7% in the year to September 2017 compared with Australia’s Consumer Price Index (CPI) growth of 1.8%. Notably Perth’s CPI also was the lowest across the country.
The report also highlights the effect the increased competition is having on smaller retailers.
'The grocery price war, caused by this intense competition, is making it difficult for the smaller businesses in the sector, with the number of grocery retailers employing fewer than 20 staff declining by 10.6% in the year to June 2016.'
'However, opportunities remain for smaller operators to diversify into more specialised markets - a move which has proved successful for those retailers who’ve already made the switch. The growth in demand for gourmet, organic and gluten free products present opportunities to differentiate and meet changing customer needs,' said Mr Bator.
The report predicts a positive outlook for the Australian supermarkets and grocery stores with the authors projecting revenue growth of 9.3% in the five years to June 2022.
'Technology and big data will become increasingly important as companies seek to better understand their customers and offer greater convenience. However, success hinges on their ability to provide customers a seamless digital experience and maintain a high level of trust in these channels,' added Mr Bator.
Key findings in the report:
- $100.1bn total revenue
- 1,913 businesses
- 368,202 employees
- Specialised food retailers with <20 employees have grown by 3.8%.
About the report:
The Bankwest Future of Business: Focus on Supermarkets Report covers Australia’s supermarkets and grocery stores, providing insight on grocery and specialised food retailers, summarising trends based on statistics from IBIS World, the Australian Bureau of Statistics and other reputable sources.