Canberra: As Australians struggle with an ongoing multi-decade high inflation, the nation’s largest supermarkets have begun to notice shoppers moving towards cheaper goods.
Alongside their end-of-year results released on Thursday, CEO of Australia’s largest supermarket chain, Woolworths, Brad Banducci, said consumers were beginning to shift their spending towards cheaper goods.
“Inflation is beginning to impact all aspects of our customers’ shop and we are seeing a gradual change in customer shopping behaviour,” said Banducci.
“We are seeing some customers trade down from beef into more affordable sources of protein and trade across from fresh vegetables into more affordable frozen and canned offerings.”
For instance, canned tomatoes ring up at a fraction of the cost of fresh ones — A$2 per kig versus over A$15 per kg.
The company’s financial results noted that average prices in the three months to the end of June rose by 3.6 per cent, an indication that food prices are moving faster than the headline inflation rate of 6.1 per cent in the year to June as recorded by the Australian Bureau of Statistics, the highest level since the early 2000s.
Woolworths’ biggest competitor, Coles, painted a similar picture in their end-of-year results.
The report said that shoppers were shifting away from fresh fruits and vegetables, expensive cuts of meat and name-brand goods, and opting for frozen goods, cheaper sources of protein, and the supermarket’s cheaper own-brand products.
“The need for the Group to evaluate and respond quickly to a changing operating environment has never been more important as we focus on ensuring value for customers in an inflationary environment,” said Coles Group Chairman James Graham.
Both companies attributed the inflationary levels to global supply chain pressures, rising transport costs, and local factors such as flooding which has spurred sharp price increases on impacted local produce.
The supermarkets have implemented a “price freeze” on staples in a bid to keep customers engaged.
Coles locked the prices of more than 1,100 everyday goods, and Woolworths on over 400 items.
Both the supermarkets ultimately posted growth in sales. Woolworths sales grew by 4.5 per cent in the 2021-22 financial year, and Coles posted an increase of 2 per cent.