Less is more: How Metcash’s Supa Valu is doing things differently

High cost-of-living has become a massive driver for customers’ shopping habits in recent months, with many Australians seeking to avoid price increases where possible.

Shoppers are increasingly trading down to cheaper brands to avoid the rising costs of groceries. In certain instances, they are even moving to value-focused supermarkets for their daily shop.

Metcash’s IGA-adjacent value supermarket Supa Valu, which launched almost a year ago, has seen an increase in foot traffic in recent months as customers continue to look around for the best value. 

“In this market we’re seeing value become more important to shoppers,” Metcash’s head of Supa Valu Steve Stewart told Inside Retail. 

“The feedback we’re getting from shoppers is that they’re seeing the value, they’re seeing the price points, they’re seeing the range and what we offer.”

According to research from Shopify, The Australian Retail Report 2023, consumer groups are increasingly focused on saving on essentials and groceries, and are choosing cheaper discretionary items.

The Value Valuer and Savings Seeker, which make up 32 and 22 per cent of Australian consumers respectively, are willing to change brands for the right price – with an older demographic including Gen X and Baby Boomers most willing to make  the change. 

Meanwhile, younger Australians are more likely to be considered ‘mindful or ‘picky’ shoppers, and are more willing to stick to a brand that they trust, or which can justify its higher price point by offering environmental and sustainable benefits, the report found.

Less is more

Supa Valu, which currently has three stores across New South Wales and Victoria, is in the process of launching its first store in Western Australia, where it will be trialling a number of new initiatives. 

These plans, which include clearer pricing details as well as a tweaked product range, could eventually make it to the business’ remaining stores ahead of an expansion on Australia’s eastern seaboard. Pending its success, it might also be implemented across the broader IGA network.

Customer feedback has helped the business to better focus its overall offer, and while the business is still keen on keeping it simple, feedback suggests there’s room for more information on the shelves. 

According to Stewart, the brand’s minimal signage has made it difficult for customers to properly understand its product pricing compared to Supa Valu’s competitors, so the business is working to better illustrate the value it provides. 

“Our tagline is ‘less is more’, but we also need to focus on what’s right for the shopper,” Stewart said.

Abundance over variety

One of Supa Valu’s key philosophies, buying goods in bulk from suppliers at the best price and providing customers with ‘abundance over variety’, has served the business well.

Rather than operate a more traditional ‘just in time’ model, where products are ordered when stock is running low to fill shelves, Supa Valu  purchases bulk amounts of select products and offers them at a cheaper price.

In doing so, the business avoids the pitfalls of empty shelves that other supermarkets have fallen prey to in recent years. 

“Not being a just-in-time model gives us a lot of flexibility, from our warehouses to our stores. We can carry more, and we run out less frequently,” Stewart said.

However, while customers certainly want the option of bulk buying certain product segments – largely non-perishables, such as toiletry, laundry, and non-foods – there is  an opportunity for Supa Valu to carry more ‘essential’ products in smaller quantities.

“The mainstream lines are what people are looking for [and] we need to make sure we’re giving customers value on everyday [purchases], so they can balance the household budget,” Stewart said.

While abundance is part of the plan for its stock, it isn’t for taking this approach to its stores. Stewart said that Supa Valu is still very much in a ‘pilot’ phase, and while it will likely launch a few new stores in the near future, a wider roll out isn’t on the cards.

“The Supa Valu offer is only here to complement IGA, and it’s designed to operate in key catchments where … value is the primary driver for shoppers,” Stewart explained. 

“The good thing is that we’re not in a rush, there’s no mad space-race for us to have a large rollout. We want to let it grow organically.”

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