‘Out-traded’: Food prices easing as Woolies boss admits failures

Source: The New Daily

Australians are enjoying lower prices for red meat and fresh food staples like fruit and vegetables as major supermarkets Coles and Woolworths try to win back angry shoppers.

Both chains reported sales for early 2024 this week, revealing an ongoing moderation in grocery inflation after a turbulent period in which supermarkets copped criticism about their profits.

Woolworths Group chief executive Brad Banducci said on Thursday that Australians are “struggling to make ends meet” and are looking to supermarkets to deliver grocery relief, saying a 0.2 per cent fall in average prices over the March quarter is evidence of change.

That includes a 9 per cent fall in red meat and a 6.2 per cent decline across Woolworths’ range of fruit and vegetables, Banducci said, with even more price falls expected.

“Food price inflation has continued to moderate materially,” Banducci told analysts.

Coles chief Leah Weckert delivered a similar message earlier this week after the chain posted a 2.2 per cent lift in prices over the same quarter, down from 6.2 per cent last year.

That has been driven by falling fruit prices – particularly apples and avocados – and also red meat, particularly lamb, though bakery prices remain elevated due to expensive wheat.

Woolworths boss admits failures 

It’s all welcome news for Australian families who have been squeezed by massive hikes in grocery prices over the past few years, a trend that has sparked a series of public inquiries into the stranglehold Coles and Woolworths have over Australia’s concentrated food market.

Banducci was even threatened with jail by Greens Senator Nick McKim at a torrid Senate inquiry into supermarket pricing last month in a distillation of growing political scrutiny.

The veteran supermarket executive, who will soon retire, was on the defensive again on Thursday as stock analysts probed why Coles has continued to outperform Woolworths.

Woolworths posted 1.5 per cent sales growth over the March quarter, which was much lower than Coles’ 4.2 per cent; sparking accusations that Woolworths isn’t executing well.

Banducci admitted Woolworths had been bested by its rival recently, blaming the timing of collectibles promotions and stock availability issues plaguing the supermarket in early 2024.

“We were out-traded in the quarter, let me just own that,” Banducci conceded to analysts.

Banducci laid part of the blame on growing public anger at Woolworths, suggesting that as the bigger of the two major grocery chains they had copped more negative media attention.

“It would be fair to say that a lot of the negative media and political context we’ve operated in was even more challenging than we had anticipated,” Banducci said, admitting to a “tough quarter”.

But the retail boss pushed back when asked whether Woolworths should reinvest a recent lift in gross margins back into prices to better compete with Coles for stretched wallets.

“We are where we need to be on price, and you see that in our deflation,” Banducci retorted after an analyst suggested Woolies was eroding its own value proposition.

“Can we do a better job of communication of our price mechanics? Yes.”

That means Woolworths is making big changes to its promotional program, with Banducci saying the supermarket must do a better job helping customers understand its prices.

“We need to own the fact that a lot of the media and political right now is not helping in that narrative quite frankly,” Banducci said.

“There’s a suspicion somehow we’re doing something wrong.”

Woolworths’ investors were clearly disappointed with the third-quarter update, with its stock price plunging 4.18 per cent to $30.49 by early afternoon on Thursday.

Stay informed, daily
A FREE subscription to The New Daily arrives every morning and evening.
The New Daily is a trusted source of national news and information and is provided free for all Australians. Read our editorial charter
Copyright © 2024 The New Daily.
All rights reserved.