The supermarket giant said the possible invasion of Ukraine and Russia and other factors could result in price rises, but there are goals to keep bargain hunters happy.
Coles has flagged the potential invasion of Ukraine by Russia and worker shortages could cause pressures on the price of grocery products but the supermarket giant has plans to ward off rises.
It announced it would be rolling out more own-brand products, with premium and discount ranges, and plans to generate 40 per cent of its sales from those products, up from 32 per cent last year.
The supermarket giant has already introduced 840 new home brand products in the past six months, including a range of pasta and family salad kits.
Coles boss Steve Cain said oil prices jumping on the back of Russia’s threat could cause some price pain for the retailer, alongside potential pressure if staff shortages continue to bite.
“Everyone (is) aware of what that (Russian invasion) might do for energy and oil prices,” he told the Australian Financial Review.
“Clearly in Australia, we’ve got a bit of worker shortage in some areas around backpacking, hospitality, technology and if more people don’t come to the country, then you can imagine that wage inflation will increase.”
Rising interest rates and petrol prices means consumers will be seeking out budget-friendly offers, which is where Mr Cain sees Coles-branded products stepping in to fill a need.
While he said his crystal ball couldn’t help him forecast exactly what’s going to happen in the next six months, he expected “home brand penetration to continue to increase for those who are looking for value”.
Mr Cain added that while red meat prices were still being impacted, it was offset by a drop in fresh fruit costs due to favourable growing conditions.
In terms of overall price rises on the shelf, Mr Cain added it was too early to predict whether rises would happen but did flag supply chain increases becoming more prominent.
But Coles will also take a greater focus on operating and cost efficiencies – through the use of technology and automation to help offset inflationary pressures, he said.
The retailer has also been rejigging its overall product range, with more than 300 reviews completed during the half year in categories such as health foods, convenience meals, international and Indian/Asian foods.
Innovation was also delivered with pet treat bars added to a further 115 stores, according to the supermarket giant.
At Christmas, customers opted for top-shelf products, including rock lobster, croissants, macarons and premium cheese, while gin and seltzers were increasingly popular.
Extracted from news.com.au
