PwC Retail & Consumer Outlook 2006 released today
The push by the major grocery retailers towards higher levels of private label has every chance of success says PricewaterhouseCoopers in its annual study of the Australian retail and consumer goods sector.
"The highly concentrated Australian retail grocery sector leaves the major retailers in a unique position to push through the changes they seek. While private label products don’t yet have the 30 per cent penetration sought by the major grocery retailers, this figure is possible in the short-to-medium term,” said Mike James, leader, retail & consumer, PricewaterhouseCoopers.
"Consumer goods companies will start to take a hard look at their brands and decide which to protect, expand, sell and discontinue.”
PricewaterhouseCoopers Australian Retail & Consumer Outlook 2006 examines current issues for the sector including private label, price deflation, corporate social responsibility and ageing population.
Price deflation
Billy Bennett, retail partner at PricewaterhouseCoopers said: "Falling prices have become a chronic condition for Australian retailers in the clothing, footwear, audio visual and sport & recreation sub-sectors.
"The stability of the CPI over the past decade has masked a sustained erosion of price in these retail categories.
"One of the strategies retailers can employ to counter price deflation is to encourage customers to trade up, offering low entry-level price points as the first step on a carefully constructed ladder to more expensive items.
"Technology enhancements, consumer expectation, improved processes, intense competition and globalisation have all contributed to falling prices,” concluded Mr Bennett.
PwC predicts price deflation will continue in the short-to-medium term.
Corporate social responsibility (CSR)
Australian retail and consumer goods companies are making progress in managing corporate social responsibility risks, however they lag their overseas peers as well as Australian companies in other sectors, according to PwC’s Australian Retail & Consumer Outlook 2006.
Mike James said: "Internationally, retail and consumer companies have moved beyond initial CSR activities of managing reputation risk, publishing reports and making charitable donations. The debate has moved from how companies spend their profits to focus on how responsibly their products are produced.
"Very few Australian retail and consumer goods companies report the ethical or sustainable sourcing of their products, unlike their counterparts in Europe and North America which place major focus on this area.”
Ageing population: boomer employees and customers
Baby-boomers start turning 60 this year, and they certainly will not be like today’s "seniors". They are less likely to stop working, will have longer life expectancy, and will not appreciate being referred to as seniors.
"Retail and consumer companies need to address myriad issues from retaining and attracting mature age workers and managing boomer-staff relationships, to innovating with new branding, distribution and product approaches that will continue to appeal baby boomers as they age,” said Billy Bennett.
"That’s not to say baby-boomers are one segment. Viewing this group as one grey mass is a fatal mistake. Some baby-boomers are single, some are on their first marriage, others are on to their fourth. Some are in the middle of their prime earning years, others are retired, and still others are students.”
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