Coles boss Steven Cain believes Aussies will ‘push the boat out’ for Christmas but rein in spending next year amid rising interest rates

Glazed hams, puddings and a big range of vegan foods are set to fly off the shelves at Christmas, but the boss of Coles expects rising interest rates to rein in spending next year.

Coles boss Steven Cain is expecting the supermarket’s best ever Christmas as people spend up on glazed hams, wine and decorations, but is predicting the cumulative impact of six interest rate hikes to finally rein in consumer spending in the new year.

Unveiling Coles and Liquorland’s Christmas range on Thursday, Mr Cain said he believed Australian households would “push the boat out” for their spending on holiday season celebrations, lunches and dinners and then turn to focusing on household budgets in January or February as credit card bills land and many roll from fixed to new variable home loans.

“I think we’re pretty confident that it’s going to be definitely the biggest Christmas ever,” he said.

“And obviously what we are focused on is trying to cater for everybody out there no matter what their budget is, and that’s what this Christmas will be about.

“There will be a lag effect (of rising interest rates) but I’m expecting it to be beyond Christmas. I think no matter how tight things have been, people always push the boat out for Christmas and when you look at where some of the pain will be in terms of people coming off fixed rate mortgages, a lot of that is around that time as well.

“So clearly there is a cohort of customers who are doing it tough now, but I wouldn’t expect that it will have a material impact, certainly on our Christmas we’re expecting a very good one.”

Coles ambassadors Curtis Stone and Courtney Roulston at the supermarket chain’s Christmas launch at La Botanique, Sydney. Picture: Hanna Lassen/Getty Images

Many economists and analysts have argued that while the string of interest rate rises by the Reserve Bank have yet to lay a glove on what has been strong retail spending that would likely change by Christmas or the new year, as monetary policy has a lag or delay in forcing consumers to change their spending habits.

“In the new year once people get their credit card bills and if their home loans go up then there will be some belt tightening then,” Mr Cain said. “And as we’ve always said, we’re in a good place as supermarkets relative to other industries, and we’d expect that maybe hospitality and some of the discretionary areas of retail would be impacted, yes.”

Mr Cain also expected as interest rates start to bite that people begin to rein in their currently high expenditure at cafes, restaurants and takeaway meals, which would bring more customers back to its stores.

“Every meal that they don’t eat out, they need to buy from a supermarket.”

With an eye on rising inflation, higher cost of living and stressed household budgets, Mr Cain said this year’s Coles Christmas launch – which features 151 new own brand products and 106 new exclusive products made by suppliers specifically for the supermarket – would be focused on easy entertaining, sustainability but also crucially for all budgets.

Many of its Christmas products have kept the same price as last year, led by key items such as its Beechwood half leg and full leg ham and follows Wednesday’s announcement by the retailer that it had dropped and locked in the price of 150 popular grocery items, on top of locking the price for 1,100 household staples until the end of January.

Some of the highlights from Coles’ new Christmas range include a Christmas juniper berry seasoned ham, a luxury Black Forest bombe pudding, prawns in blankets and for the first time, a plant-based Christmas ham style roast with a with vegan maple glaze which is among more than 25 festive vegan, vegetarian and gluten-free products aimed at the increasing number of Australians with diverse dietary needs.

The focus on value comes as Mr Cain expects a Christmas boost for Coles’ too from the first holiday season since the pandemic that is free of travel restrictions and social distancing.

“We have done quite a bit of research for today, and it seems that there’s about 10 per cent of people who say that they’re going to have a bigger Christmas event at home than last year because there’s more travel and mobility.

“Then there is a few percentage more people who are saying that they’ll definitely be more focused on promotions and value and everything else because they’re concerned about their budget.

“So hopefully when you look at both ends of the spectrum, we will come out positive, but the focus is definitely on making sure we understand how everybody’s travelling and what they’re worried about and what they’d like.”