Drake Supermarkets boss sees strong Christmas despite rate rise as home cooking takes over

Australians will set money aside to splurge on themselves, family and friends this Christmas, says the boss of the country’s largest independent supermarket chain.

John-Paul Drake is full of optimism for supermarkets ahead of Christmas. Picture: Tom Huntley

The boss of Drakes Supermarkets, the nation’s largest chain of independent grocery stores, believes shoppers will set money aside to splurge on themselves, family and friends this Christmas despite the recent hike in interest rates as they cut spending elsewhere.

Drakes Supermarkets director John-Paul Drake said Australian households were increasingly pivoting to home cooking to save money, a trend which was also recently witnessed by Coles boss Leah Weckert, helping drive more people into his stores to fill up their baskets.

And while the decision last week by the Reserve Bank to lift interest rates by another 0.25 points — its 13th rate increase — could add pressure to household budgets, Mr Drake remained optimistic about food and grocery trade for Christmas.

“I think people really want to treat themselves and look out for themselves, so less people are eating out and so they’re going to be wanting to eat at home with their families.”. Picture: Tom Huntley

“We still believe that people are going to be able to buy the things they want because Christmas is a time where you should be sharing those times with friends and family, and people will put aside that little bit of extra money so they can actually have their families over and really enjoy that time,” Mr Drake, whose family-owned supermarket company has 66 stores across South Australia and Queensland, told The Australian.

“So we are still quite optimistic about Christmas this year. We think it will be a strong Christmas again. I think people really want to treat themselves and look out for themselves, so less people are eating out and so they’re going to be wanting to eat at home with their families.”

This month Coles boss Ms Weckert also said there was a strong shift back to home cooking and entertaining in the face of soaring inflation, cost of living pressures and tightening household budgets, all of which should benefit supermarkets.

Drakes is the largest independent chain in the nation and its latest set of accounts showed a healthy 3.3 per cent lift in sales to $1.18bn as profit lifted more than 50 per cent to $36.85m which was partly driven by the consolidation of supply deals after it built its own distribution centre and ended a $270m supply deal with wholesaler Metcash.

“A lot of people have continued to cook at home and we definitely have been the benefactors of that in the supermarket game and people eating at home, because it’s cheaper than going out to a restaurant or hotel for a meal.

“And I still think that Christmas is one of those times that people splurge on themselves and the family … we are all about food and we want to make sure that’s a happy time for all,” Mr Drake said.

Mr Drake, the second generation member of his family to work in the business founded by his father Roger Drake almost 50 years ago, said although many households would still continue to “splurge” on Christmas, there had been this year a continued shift to value food and grocery items and customers favouring products on promotion.

“We have definitely seen an increase of shoppers going into promoted products. So we’ve seen it across our business that promotions in store have increased slightly and we’ve also ‘value brand’ or our ‘control brand’ products which have continued to grow.

“We have about 380 of those in store currently and we’ve definitely seen an increase in sales in our home brand. The interesting part is that cost of living pressures have affected everyone.”

Mr Drake said his supermarkets had also witnessed a collapse in tobacco sales as the soaring price of cigarettes sold by legitimate retailers has encouraged a thriving illegal tobacco trade run by criminals where taxes and other excise duties are not paid and hence can undercut legal tobacco.

He said his tobacco sales had dropped by as much as 15 per cent, all driven by criminal activity.