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Customer update

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State of the Australian Grocery Customer

 


August 2024: This looks at the evolving purchasing behaviour of grocery customers at Woolworths in the context of current cost of living pressures and rising inflation. The report is based on customer insights gathered by Wiq, part of Woolworths Group.

 

Increased housing costs is the largest expense

 

Housing is the largest expense for Australian customers on average, and represents a significantly higher proportion of expenses for younger customers (both families and younger singles and couples) - driving much of the incremental cost of living strain for those cohorts. Housing costs have also grown at the fastest rate of all major expenses over the past year as rental rates have increased (driven by housing supply constraints) and mortgage repayments have strongly grown.

australian average household spend
australian average household spend

Customers are looking for ways to save

As cost of living pressures have increased, customers have been increasingly leveraging ‘value-seeking behaviours’ in order to stretch their spend. Value-seeking behaviours such as buying on special have always been significant - and risen gradually over the past year - but historically less used behaviours such as changing the location for main shops have also stepped up markedly. The use of these ‘value-seeking behaviours’ has been particularly prevalent for our most financially strained

average food price change

Customers lifestage is a determinant in how they find value.

Our younger customers have been most impacted by cost of living pressures and have been looking for ways to save. Being more digitally savvy, e-commerce and digital mechanisms have been used to a disproportionately high extent by our younger customers in order to realise value. In contrast, families look to convenience to achieve value.

how group revenue is distributed
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Household spend on food is beginning to decline

 

A variety of factors, including COVID-driven supply chain disruption, climate events and the Russia-Ukraine conflict, drove up food prices and with them, the proportion of household spend on food. Subsequently, the proportion of household spend on food has again moderated, with the magnitude of food inflation declining, while inflation on some other major spend categories has remained at significantly higher levels.

australian and new zealand food
australian and new zealand food
australian and new zealand food

A typical Woolworths food trolley is 1% less than a year ago.

Strong moderation of inflation has led to stabilisation of grocery spend over the past year - including across most major categories of spend.

 

australian and new zealand food