The Woolies’ CEO has told news.com.au the days of rocketing supermarket prices may be over – but there’s a caveat with his bold prediction.
The boss of Australia’s largest supermarket chain has some good news for cash stressed shoppers – rocketing food inflation may finally come down to earth.
But there’s a catch: Woolworths chief executive officer Brad Banducci has said it could take several months, perhaps longer, for people to see the total on their dockets decrease.
“We do believe inflation will start coming off, the question is the speed and that’s a difficult one compounded by the terrible weather,” Mr Banducci said on the sidelines of a global retail conference in New York this week.
In an exclusive interview with news.com.au at NRF 2023: Retail’s Big Show, Mr Banducci also said higher prices had led to a big rise in shoplifting; and one surprising category in store had seen a spike in popularity as Aussies counted the pennies.
Mr Banducci also revealed he’d look into one of the hottest grocery products to hit shores anywhere in the world in recent years – Prime energy drinks. Although he confided he hadn’t heard of the hit item which caused chaos in the UK when it went on sale at Aldi.
Woolworths’ head honcho was in New York to talk to global retail leaders about how the supermarket uses data and analytics.
“The only thing core at Woolworths is the customer; the rest is how we work together for them – whether it’s better ranging, in store promotions or a better service experience,” he said.
“All those things come from enhanced analytics.”
High prices should ease
In its first quarter sales results, which covered the three months to October 2022, Woolworths stated food prices in its stores had risen by 7.3 per cent compared to the same quarter in 2021.
Fresh produce it was even worse with “double digit inflation” in fruit and veg, red meat and dairy.
Just this week, Woolies’ shoppers were stunned to see Red Rock Deli chips had soared to $6.30 a bag. The retailer said that was down to rain and floods devastating potato production.
According to the Australian Bureau of Statistics the overall food inflation figure was even higher last year at 9.4 per cent.
Mr Banducci told news.com.au that predicting where inflation would go was “tricky” but he was confident it would ease.
“The issue we had before is every commodity was increasing in price: fruit, vegetables, meat, seafood. Even chips,” he said.
“There is still inflation but not in every category. We have seen some prices come down but it’s still early days.
“I wish I could be more precise,” in terms of when inflation would come down, he said, but added the outlook should become clearer over the next three months.
Woolworths has recently reduced the price of more than 300 “summer grocery staples” in a bid to ease consumer pain at the checkout.
Category cash strapped customers flocked to
The CEO said there were still “weather challenges” particularly in Far North Queensland which has been deluged with rain.
But even if soaring inflation was reined in, Mr Banducci said, shoppers would likely still be financially under the pump.
The interest rate is the highest it’s been in more than a decade, while the government has predicted power price hikes of 63 per cent across this financial year and the next.
“There will still be stresses in our customer base, like back to school costs, so it’s a very important time for our customers in terms of delivering value.”
As price rose, customers froze – quite literally, said Mr Banducci. They fled fresh produce for frozen food.
“We’ve seen a ‘flight to frozen’ which is really good value and there’s good quality in frozen food.”
‘No question’ shoplifting is up
Mr Banducci said theft in stores had risen along with prices.
“We have seen shoplifting go up – there’s no question.
“It’s a cost but it’s also putting our team at risk and to keep your team safe is priceless.”
He said he had met with executives at Target USA, during his trip.
In November, Target USA, no relation to Australia’s Target, said it lost a huge $572 million due to “inventory shrink,” much of that because of organised theft.
The company has taken to putting huge numbers of products in some stores, including relatively low value items like shampoo, in lockable cabinets which can only be retrieved by staff.
Mr Banducci indicated Woolies wasn’t looking at going down that path for such everyday products.
Hit product Woolies boss hasn’t heard of
One of the biggest grocery hits of 2022 was Prime energy drinks which led to “carnage” in UK supermarkets.
Prime Hydration is owned and promoted by Logan Paul and KSI, two YouTube stars with a combined audience of over 30 million. Their fame led people to clamour for Prime.
The drink sold for approximately $45 at supermarkets in the UK and US after launching at the start of 2022.
However, it recently became available in British Aldi stores as part of a promotion, priced at $3.50 per bottle. That led to huge queues and fights, as it sold out “within about 30 seconds,” The Sun reported.
Mr Banducci conceded he had not heard of Prime Hydration. Although he can probably be forgiven as he is the CEO of Woolworths Group – which owns Woolworths and New Zealand’s Countdown supermarkets and Big W department stores – but he doesn’t directly run the supermarkets so is not across every grocery fad.
Nonetheless, he was keen.
“Prime – I will take action and find out about it,” he laughed.
We could yet see Prime mayhem in Woolies. That’s if Aldi doesn’t get there first.
Extracted from News.com.au
