John-Paul Drake, Director, Drakes
The grocery industry has taken hits for almost every challenge possible in 2023. Director of Drakes Supermarkets in Australia, John-Paul Drake, said it was easy to forget how global conflict, extreme weather events such as bushfires and floods, inflation and supply chain disruptions all influence the cost of goods.
"The increase in Input costs has been one of our biggest challenges," said Drake.
This includes tackling and navigating the higher costs of living from all angles, such as electricity costs, raw ingredients, and fuel. These higher costs have compounded to hit suppliers' prices and, subsequently, the price of products on supermarket shelves.
Retailers such as Drakes are left to bear the brunt of consumer concerns, with consumers being particularly more cautious with their spending as the same things impacting retailers and suppliers are also impacting them.
"It's no secret that supermarkets have been a benefactor of the pandemic."
This reintroduced the habit of eating at home again, and the ongoing economic challenges mean consumers have continue this trend in 2023. This trend will likely remain the same in 2024, particularly considering the continued interest rate increase and cost of living.
Labour and utility expenses for the supermarket will continue to increase. Drake said that electricity expenses alone will almost double in 2024 and come straight off the bottom line. Across Drake's 66 stores, this will be a considerable expense to pull back just to keep the supermarket level year-on-year.
To manage these challenges, Drake said that the supermarkets would lean into its biggest strength: its people.
"We continue to invest in our team, providing them with certified training and career pathways – whether it is progressing through our business or into the field they want."
Drakes Supermarkets encourages open communication and honest feedback from its 6,000 team members so that it can continue to build on a culture that they are proud to be a part of. In a world where self-service checkouts and pre-packaged deli items are becoming the norm, Drakes Supermarkets focuses on the human element of the shopping experience.
"Drakes is more than just a name on the door – it's a community."
New Product Development (NPD) from our supplier partners has kept consumers engaged and excited to enter our stores. Nostalgic products like those Drake grew up with in the 80s and 90s are making a big comeback, as are brand collaborations.
Products stemming from social media memes are filtering through, too.
"Who knew we needed Coriander Doritos or Raspberry Twisties? With cooking shows on TV and TikTok food trends, people are willing to try cooking more adventurous dishes at home and are looking for those ingredients they've seen on their screen."
Drakes Supermarkets customers are looking for something new, something they haven't tried before, and Drakes stated that it appears the whackier the better.
Online shopping poses an ongoing challenge, which means Drakes Supermarkets has to spend even more money to get customers into stores, and the retailer wants to ensure it surprises and delights them when they do.
Introducing things like The Little Kitchen, the café wall, and new concepts like its F'real machines and Milk-on-tap units have been popular and means that customers find something new each time they are in store, while also giving them what they want – range, sustainable options and Drakes Supermarkets is constantly on the hunt globally for new concepts and is happy to trial anything for the benefit of customers.
Moving forward into 2024, Drake said that creating theatre in-store is crucial to attracting customers, giving them a unique, fun experience and a reason to come in-store. He continued that sometimes it was the simplest things that captured customers' attention, for example, Drakes Supermarkets fresh popcorn.
"Don't be afraid to collaborate with the brands you know and trust. Our customers loved our Hot Wheels promotion this year, and to think that it was the first time Hot Wheels has collaborated with a supermarket in Australia, and it was our family-owned and operated business out of South Australia. If you don't ask, you won't do."
He encouraged businesses to be agile enough to quickly adapt to trends and pay attention to customers' feedback.
Drake concluded that 2024 was bound to be an exciting year, where the pandemic will no longer be able to be used as a scapegoat as it has been established as the new norm.
With all the upcoming and ongoing challenges, Drake said it was time for businesses and consumers to throw support behind local to ensure that the smaller industry players can see the year out.
See more insights from the 2024 Buyer's Guide below:
