Shoppers spending less
Energy costs spook customers: Coles
COLES chief executive Steven Cain says he is concerned about Treasurer Jim Chalmers’ warning for Australians to brace for energy price hikes of up to 56 per cent, which he believes will worry shoppers who are already reining in grocery spending.
Mr Cain added that the Australian economy was still “not at its full potential in terms of productivity or growth” and that more progress was needed on those twin prongs of economic reform to pay higher wages.
Unveiling the supermarket giant’s first-quarter trading performance on Wednesday, which showed the strains of rising inflation, Mr Cain reflected on the mini-budget released overnight as well as the quickening pace of food and grocery prices that are racing through the economy to place further pressure on budgets.
He said many of his shoppers were already changing their habits to make their budgets stretch further, by cooking in batches and freezing meals, clamping down on waste or buying less fresh food. He said the spectre of a 56 per cent energy price shock would worry many shoppers more.
“Probably the biggest concern (of the budget) was probably the remarks about energy price increases over the next 18 months and that will obviously worry consumers,” Mr Cain said.
“And all we can do at Coles is to make sure that we are offering the best value we can.”
But if the nation wanted higher real wages there needed to be economic reform, including industrial relations where he said early signs were of some positive progress.
“Clearly we want the economy to grow and Australia is still not at its full potential in terms of productivity or growth and we’d still like to see more initiatives that will drive those two things.
“It looks like the better off overall test (BOOT) is heading in the right direction but to pay higher wages, that is best funded from higher productivity and that’s what we are working on at Coles.”
Coles reported on Wednesday first-quarter revenue of $9.9bn, up 1.3 per cent, with JP Morgan estimating that Coles would record total sales growth of 2.7 per cent year-onyear in the first quarter of 2023.
Mr Cain said elevated inflation was already having an impact, with about 20 per cent of surveyed households reporting they were under “extreme pressure” when it came to cost of living expenses.
Higher income households were still happy to spend.
“It’s a tale of two cities, this growing divide,” Mr Cain said.
“If you look at the lower demographics, what we are seeing is that they are buying less and that both in sales and volume terms are obviously the ones that are most impacted. And we did a bit of research last week, we asked 8000 customers just to see how they’re reacting to all of the changes and it was interesting that 75 per cent of them said they were now more actively managing waste in the household – so there’s a war on waste taking place.”