26 May, 2024
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People want value, not local shops: Coles

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Supermarket giant Coles expects people to shy away from the pandemic trend of shopping locally and instead prioritise bargains as inflation bites.

The company’s chief executive, Steven Cain, also says the grocery chain expects to benefit from increased skilled migration into Australia as visa processing times come down.

In a statement to the company’s annual general meeting in Melbourne on Wednesday, he said Coles was working with suppliers to deal with higher costs as the impact of inflation increased during the year.

Consumer prices have soared since the start of the year, including a nine per cent year-on-year lift in food and drink prices in the September quarter.

“COVID restrictions and flood-related availability issues have driven ‘local shopping’ trends,” Mr Cain said.

“These trends are unwinding as (product) availability improves and value becomes more important to Australian consumers.”

The Coles chief previously warned cost of living pressures were already starting to bite household budgets and the company expected to see sales drop off as higher interest rates took their toll.

As consumer prices rose, the supermarket chain saw an increasing number of customers “trading down” to cheaper brands.

Mr Cain told the meeting Coles had introduced “dropped and locked” prices on hundreds of products in recent months and the measure would stay in place until the end of January.

“Going forward, Coles will benefit from (opening more stores) as well as the expected reduced processing times for people waiting for visas into Australia and the skilled migration program set to increase,” he said.

Coles recorded a small increase in net profits and sales in the 2022 financial year, despite COVID-specific costs of around $240 million.

Chairman James Graham told shareholders the 2022 financial year had been “marked by significant outside events”, including lockdowns, the Omicron virus wave and widespread flooding.

“(These) all added pressures on our supply chain, store operations and product availability,” he said.

Coles reported a slender year-on-year increase in supermarket sales in the first quarter of the 2023 financial year but alcohol sales dropped as a pandemic bump in liquor demand dwindled.

The company announced in September it was selling its fuel and convenience store operation, involving 710 Coles Express sites, to supplier Viva Energy for $300 million.

The sale is expected to be completed in the second half of the 2023 financial year, pending regulatory approval.

– AAP

The post People want value, not local shops: Coles appeared first on The New Daily.

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