2.8 per cent growth limited over cost of living, supermarket says

Banducci said the supermarket could improve on communicating its value to customers, but said he would like to “see a more balanced narrative in the community”.

“One of the key things we can do better is communicating unit prices,” he said. “A lot of the media right now is not helping that narrative right now, quite frankly.”

Online shopping sales grew in the third quarter by 18.4 per cent to $1.6 billion compared with Coles’ growth of 34.9 per cent.

In other parts of the business, Big W sales fell by 4.1 per cent to $1 billion as lower-income households shop at the discount department store on a needs basis and are pulling back most significantly on clothing and homewares. For instance, Lego sets under $20 now account for half of all Lego sales rather than a third, and customers are pivoting away from higher-priced vacuum cleaners for cheaper alternatives.

“Budget customers have unsurprisingly been impacted the most with increased trading down to cheaper items, deferring purchases or not purchasing at all,” Banducci said.

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The supermarket said that customers who were most exposed to higher housing costs – such as mortgaged families, young singles, or families who rent – were the most focused on buying groceries on promotion, comparing prices and making the most of loyalty programs.

Banducci was forced to defend the supermarket in a call with investors and analysts who grilled him on the supermarket’s execution against Coles’ strong performance and about its value proposition for customers as Australians increasingly shop across various supermarkets and retailers to save money.

“We were out-traded in the quarter. Let me just own that,” he told analysts.