Coles Group boss Steven Cain expects shoppers will still splurge on items such as seafood, ham and Black Forest bombe puddings this holiday season and any major pull-back on spending will not occur until early next year.
Mr Cain told The Australian Financial Review Coles is catering for all budgets and expects “the best Christmas ever” as people travel to see family and get together with friends following a very tough period a year ago amid the pandemic when COVID-19 testing kits were like gold and PCR testing was needed for travel.
“When we did our Christmas research, there were about 10 per cent of customers who said this Christmas is going to be bigger and better than last year because there’s more mobility. We were still in a fair bit of lockdown or restricted travel or fewer planes and all the rest last December,” he said.
“But I think to the extent that there is going to be a pullback in consumer expenditure, it’s more likely to be in January and February.”
The nation’s second-largest supermarket chain and its Liquorland business gave a peek into its Christmas offer with more than 100 new products on Thursday. This includes new items such as a plant-based Christmas ham style roast with a vegan maple glaze, prawns in blankets and mixers brand Sodasmith made with native flavours such as finger lime and lemon myrtle.
Mr Cain’s comments came after the Reserve Bank lifted interest rates for the sixth time since May this week, with more increases likely to come as governor Philip Lowe seeks to cool rising inflation but not push the economy into recession.
Mr Cain said when times are tight, supermarkets are well-placed in the hierarchy of needs.
“There have been reports even today that some people are seeing signs of a slowdown in grocery, [but] we’re not seeing that,” he said.
Mr Cain also looked to tout Coles’ sustainability credentials, highlighting multiple Christmas items such as locally made pine wood decorations; new gift wrap made from 100 per cent recyclable material; and the “pocket bottle” – a 100 per cent recycled PET plastic eco wine bottle used across the Bankrock Station and Taylors brands.
Coles claimed the removal of plastic from bonbons last year saved 3.6 tonnes of plastic out of Coles Christmas range.
Mr Cain said some customers were making purchasing decisions with sustainability in mind.
“There are people who are worried about budgets and people who are worried about climate, and we serve a broad church. So, we’ve got to cater for everybody. Our sustainability offering this year is significantly better than last year,” he said.
He said 94.6 per cent of Coles Own Brand product packaging was recyclable, compared with 87 per cent at the same time last year.
Earlier this week ,Coles dropped and locked the price of more than 150 products, after locking in the price of over 1100 household staples until the end of January 2023.
With cost of living top of mind for an increasing number of customers, Mr Cain said top holiday sellers such as Beechwood ham would be the same price as last year.
UK-based Tesco overnight trimmed its profit forecast and warned still high inflation is affecting shoppers and its own costs. Mr Cain said only a few local shoppers had traded out of fresh into frozen and packaged goods such as $1 pasta or 85¢ tins of tomatoes.
But with the fuel excise reduction ending late last month and petrol prices rising, Mr Cain said people were topping up to a dollar amount rather than filling up the car, and while consumers were still eating out often he expected that to ease and supermarkets would benefit.
Coles – which recently offloaded its Express fuel and convenience network for $300 million cash – is due to report first-quarter sales on October 26.
Inflation among food items stocked by Coles supermarkets rose to 4.3 per cent in the June quarter, taking food price inflation to 1.7 per cent for the 2021-22 fiscal year. There were about five times the price increase requests from suppliers than in 2020-21 as businesses battled higher costs from freight to packaging.
Coles ambassador and Michelin star chef Curtis Stone said this year’s range is focused on providing the best value on locally sourced fresh produce.
“We know that this Christmas more than ever customers will want to have the very best quality products for their family and friends, while also making their household budgets go further,” Mr Stone said.
“Our festive smoked juniper ham embodies the flavours of Christmas; it’s made from 100 per cent Australian pork and delicious served warm or thinly sliced cold. All of our fresh meat is 100 per cent Australian, and we are proud that our range of fresh turkeys has never been frozen.”
Extracted from AFR
