Cost-cutting is becoming an increasingly entrenched habit when consumers go grocery shopping, with the sector’s sales recovery expected to take longer than other retailers.
Improving consumer confidence is yet to fuel an increase in supermarket spending, according to a new Deloitte Access Economics report, which revealed supermarket sales volumes declined 0.4 per cent in the June quarter.
This has led to an annual decrease of 0.8 per cent and marked the seventh-consecutive quarter in which annual growth in the sector had declined.
And in further bad news for the country’s two biggest grocery chains, Deloitte’s report, released on Tuesday, said shoppers’ reluctance to return to pre-cost-of-living habits was expected to limit growth in supermarket sales volumes over the coming year.
Following a 0.9 per cent contraction in 2024-25, volumes are projected to rise by just 0.4 per cent in 2025-26. That’s well below the 1.8 per cent growth forecast for the broader retail sector.
Deloitte pointed to its ConsumerSignals data showing consumers are still more frugal at the supermarket checkout in June that they were in September 2022, when the series started.
“Almost a third of consumers are still purchasing mostly store brands and lower cost meats,” it said.
“This has seen little variation over the last few years despite changing economic conditions.”
Last month, the bosses of Woolworths and Coles said they continued to see cost-cutting behaviours that have supported strong growth in their home brands.
“We really think that’s customers trying to still treat themselves and have great meals, but they’re doing it at home and recreating more restaurant experiences,” Coles boss Leah Weckert told The Nightly at the time.
Deloitte said the broader retail recovery to date had been modest, with real growth in spending up just 1.5 per cent in June compared with the same time last year.
Real retail spending is expected to grow by 1.3 per cent over the 12 months to December, and 2.7 per cent over the following 12 months.
“Overall, retail sales are expected to pick up over the second half of this year as consumers feel better off and end-of-year sales support elevated spending,” Deloitte said.
Deloitte’s retail forecast came the same day Westpac revealed consumer confidence retreated in September as households worried about the prospects for the economy.
“Outright optimism remains elusive for Australian consumers,” the bank’s head of Australian macro-forecasting Matthew Hassan said.
“The cost-of-living crisis may be largely over and policy easing generating some uplift but there is still clearly some unease about the path ahead.”
Also out the same day was National Australia Bank’s monthly business survey, showing conditions improved in August. This was led by by gains in profitability and employment.
https://thewest.com.au/business/retail/frugal-shopping-habits-to-slow-supermarkets-sales-recovery-according-to-fresh-deloitte-retail-forecasts-c-19958925
