By Emma Koehn
Coles boss Leah Weckert is banking on Australians spending more time at home this festive season, but the grocery retailer is also expecting shoppers to stick to strict budgets for their Christmas meals this year as they make trade-offs to balance cost of living pressures.
The home-brand boom in the grocery sector this year looks set to extend to Christmas lunch tables, with the supermarket giant launching close to 300 food and drink items for festive dining this year. Weckert said business was gearing up for an environment where shoppers traded in their restaurant dining for more entertaining at home.
Coles boss Leah Weckert.
“We are very much guided by what our customers tell us. And at the moment, about 50 per cent of them are saying they are eating more at home,” she said.
“They are going to be looking to economise into a lot of areas, and that will play into the value tier [of products].
“For a lot of customers, what they will be making decisions on is where are the areas where they want to bring a few special touches to their celebrations.”
The retailer says it is giving consumers room to “trade up” and “trade down” their spending depending on their preferences, and is spruiking a range of options from a $4 bottle of savignon blanc to $70 bottles of champagne and a range of exclusive desserts and hams.
Weckert said on Thursday that signs continue of grocery price inflation moderating, and prices across red meat and fresh produce are now better than at this time last year.
Spending data from the CommBank Household Spending Insights report from September supports the idea that households are tempering their spending on fine dining. Hospitality spending was up 2.7 per cent in September, according to analysis of data from 7 million customers, but the annual rate of growth is steady at 3.4 per cent.
The jump in food spending for the month largely came from fast food, while reduced spending in cafes, breweries and wineries and with caterers offset the gains.
Analysts believe Coles and its major competitor Woolworths will also have to face up to increased competitive pressure from discount grocery chain Aldi this festive season, as shoppers switch between stores to make their dollars go further.
“Competition among Australian grocers is likely to intensify,” Morningstar analysts said this month.
Last week, Aldi revealed the current economic conditions are driving more shoppers into its stores, with a 5.2 per cent jump in customer numbers in the second quarter of 2023, compared with the same time last year.
Asked about the threat of Aldi, Weckert said Coles was focused on running its own race this Christmas season, but noted, “we are very focused on what our value [proposition] is for customers”.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.