Woolworths CEO Brad Banducci says he is anxious about consumer confidence

Woolworths chief Brad Banducci warns consumer confidence probably won’t last and a major societal split is emerging.

Woolworths CEO Brad Banducci says his biggest worry is consumer confidence. Picture: Adam Yip

Woolworths chief executive Brad Banducci has conceded he feels the “most anxious” about the state of consumer confidence in Australia and the potential polarisation of the community into haves and have-nots.

The supermarket boss told the Australian Food and Grocery Council suppliers forum on Thursday that the company was coming under cost pressure from sources such as shipping. But he ranked consumer confidence as the most pressing issue for the retailer.

“The biggest issue we are most anxious about right now is consumer confidence — actually now it is pretty good. But it is hard to believe it will continue,” Mr Banducci said.

He then raised the issue of growing inequality in Australia which the supermarket giant was also looking at, sounded a cautionary note on a growing split between rich and poor Australians.

“We think there is going to be potential bifurcation of the haves and the have nots in Australia, so the value we deliver in certain demographics is going to be very different in terms of what is value to other demographics.”

It is one of the strongest comments by a leading corporate chief on the currently buoyant consumer confidence levels, which to date has driven booming sales and profitability for discretionary and non-discretionary retailers as stimulus packages from JobKeeper to home-building subsidies boost shopper spending.

Earlier at his presentation to the food suppliers, Mr Banducci said the retailer was witnessing cost pressures in the system, and said Woolworths was striving to rein in prices and resist pushing back on suppliers.

“We are always trying to balance things as you know. We can see the pressure, we can see the freight rates going up internationally, we all understand that and we are all under the same pressure.

“We are always trying to balance affordability for the customer, be competitive with our competitors and of course and reflect the reality with suppliers, how we manage that balance is never easy.”

Reflecting on the looming demerger of its drinks and hotels business Endeavour Group, which will create a new stand-alone ASX top 50 business, with a market value of as much as $15bn, Mr Banducci said if the demerger was approved by shareholders in June it would see Woolworths become a different company demanding different strategies.

“Woolworths will be a new group actually, and I am really excited about what that new business will be. We need to think about ourselves as a new business, how we get more agility into what we do, and more broadly about partnerships, not inside Woolworths but across the value chain, how we transform our stores.

“I think we are a new business on June 28 (when the demerger is executed).”

Mr Banducci also revealed at the conference that Woolworths would improve the privacy of its customers’ shopping data by unwinding the link between a shopper’s credit or debit card and their Everyday Rewards profile.

The unbundling or unmatching of credit and debit card data would cost Woolworths $15m next financial year as it reworks its back-end technology and data collection systems.

“We want to be very focused on first-party data and get out of third-party data monetisation … we want to use our customers’ data to help our them better shop at Woolworths and partners. That is really our focus and we don’t want to start monetising it for other purposes.

“Just use it for the purpose in which we believe the customer intended to give it to us.”

This means that in future Woolworths will only collect shopping data from a customer if they first swipe their Everyday Rewards card.