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Consumer packaged goods

The speed of change within the consumer packaged goods industry is putting increasing pressure on both manufacturers and retailers.

Retail trends

Internationally, the retail trade is becoming more concentrated with global retailers increasing in importance. In many countries, strong private labels are putting pressure on proprietary brands - an extreme example is the UK, where private label accounts for 55% of packaged grocery expenditure.

In most developed countries, low population growth means that expansion is a significant issue in the grocery industry. Many manufacturers and retailers are focussing on business process improvements such as Efficient Consumer Response to improve bottom line profits.

Australia has been affected by most of the trends impacting the industry worldwide. Trade concentration is amongst the highest in the world but despite this, competition at store level is fierce. High levels of price discounting makes the Australian shopping basket among the cheapest in the Western world. Private label, however, remains relatively underdeveloped and is actually declining

Shopping Habits

Many of the changes within the CPG industry have been consumer-led. People are working longer hours than before, and many married women with children are working.

Today’s shoppers want the convenience of longer trading hours and Sunday opening and, where possible, retailers have responded - for example, 12% of packaged groceries in Sydney are now bought on Sundays and many stores are open until midnight.

Recent ACNielsen Homescan consumer panel research indicated that increasingly, people are shopping "when I need to", "at no particular time " and "on no particular day". Consumers are shopping more often and buying less per shopping trip.

The implication for retailers is that they must work harder to maintain customer loyalty as more shopping trips mean shoppers have more opportunity to be disloyal. We already know that many people shop in multiple stores even over short periods of time. Many retailers have introduced more fast lanes to accommodate the "little but often" shopper. Longer opening hours also means that management of out-of-stocks is critical.

Purchasing Habits

In terms of what people are buying, the emphasis is on value, convenience and variety. There has been an increase in the purchase of semi-prepared and prepared meals for home consumption, and restaurants are showing dramatic growth.

Brand Marketing

Brand marketing is becoming tougher. There are more products and brands than ever and supermarket shelf space is at a premium. Product lifecycles are becoming shorter as consumers demand innovation and variety. At the same time, the fragmentation of the media has made them more difficult to reach and influence.

The Challenge

Business practice in the Australian consumer packaged goods industry has also changed significantly in recent years. The entrenchment of category management has fundamentally changed the manufacturer/retailer dynamic. Today’s retailers are demanding more information and more market insights from their suppliers.

Understanding the changing needs of consumers is critical to stay ahead. For both manufacturers and retailers, success or failure often comes down to utilising market information effectively to meet consumer needs and hence drive sales and profit.

Your competitive advantage

ACNielsen has a large team of executives dedicated to helping Consumer Packaged Goods manufacturers and retailers understand their business via the intelligent application of marketing research to specific business issues.

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