Broke Coles’ Buyers “Trading Down” To Prosecco & Mince
Coles reported a 3.6% revenue increase to $10.3 billion between June and September, but the grocer says consumers buying habits have changed.
Australia’s second-largest supermarket brand said their consumers are reaching for value buys like rosé or prosecco instead of pricey champagne, mince instead of steak, and mainstream beer brands as opposed to craft brews.
Despite cost-of-living pressures mounting, liquor sales are doing well for in-store Liquorland, which saw online ecommerce sales shoot up 32.2%, with a 24.6% growth in online grocery shopping.
With Christmas quickly approaching and experts predicting two more rate hikes by 2024, Cole’s Chief executive Leah Weckert said in terms of shopping trends, consumers will continue “trading down”.
Weckert said that the grocery brand is looking for ways to decrease the price of products like ham and will stock more value options for the upcoming holiday season.
“Customers are trading out of, for example, steaks into mince, or out of red meat into chickens, to find cheaper and more affordable alternative for protein. Some of the other things we’re seeing is that they’re buying in bulk and then cooking in bulk and freezing at home,” Weckert said.
Recently, investors brought Cole’s share price down 0.5%, due to the company missing quarterly figures expectations.
According toMST Marquee senior research analyst Craig Woolford, Coles’ sales growth “slowed more markedly” than revenues at rival, Woolworths.
“We expect small downgrades to earnings given the weaker trends are likely to continue,” he said.
Woolworths has revealed better than expected sales for Q1 2024 of the financial year but had a cautious forecast for the upcoming holiday trading period.
Due to colder weather and La Niña flooding, grocers like Coles saw fresh fruit and vegetable prices soften, dropping 14.5% contrasted to the same period last year.