Woolworths supermarket boss Natalie Davis said large retailers “ strike a balance ” between managing cost pressures from their suppliers and creating value for shoppers in the face of rampant inflation caused by higher shipping costs and higher prices for commodities such as meat.
Ms Davis told Australia’s Global Food Forum in Sydney on Tuesday that food and grocery inflation was particularly noticeable in meat, as farmers rebuilt their herds after the recent drought, but this was moderated by bountiful fruit and vegetable crops and no acute problems to secure fruit pickers. despite the closure of Australia’s borders.
The Woolworths executive said inflation was currently “relatively stable” but there was pressure from shipping and livestock.
“I would say the two areas that people are talking about are shipping costs. And then obviously red meat costs have gone up as farmers rebuild their herds after drought,” Ms. Davis told the forum. .
“But then in fruits and vegetables, it is maintained.”
The challenge for the country’s largest supermarket then was to balance these cost pressures while remaining price competitive.
“I think the outlook is very uncertain. And, you know, that’s the balance that we play as retailers to manage the real cost pressures our supplier partners face with the value our customers are looking for.” .
You know, on the other hand, in the face of which we have had a lot of deflation since February, we have had abundant stocks. We didn’t have too many picking labor shortages.
“So we’ve been able to offer great value on fruits and vegetables, whether it’s broccoli or tomatoes and avocados. At the moment there is a fantastic harvest.”
Ms Davis credited the Covid-19 pandemic to the increase in sales of baked goods and the growing popularity of convenience products such as ready meals, as well as the rise in online shopping.
Ms Davis said the uncertainty created by several lockdowns across the country that left Australians turning to cooking to fill their days, changed consumption patterns and pushed sales of flour, sugar and spices 15% higher than pre-pandemic levels.
“We’ve had a sourdough phenomenon in Australia and New Zealand and a lot of home cooking has happened over the past year,” she said.
“And this has passed peaks of panic buying and lockdowns, but we are still seeing high levels of purchases of flour, spices and sugar – 15% more than before the pandemic.
“So that desire to cook at home and entertain is still there.”
In one of her first interviews since leaving New Zealand earlier this year, Ms Davis also said that consumers, accustomed to cooking at home after the hospitality industry faced numerous interruptions last year, they were looking more and more for small “luxury” products in the supermarket.
“People have fun on the weekends and you can see people interacting with a lot of seafood, a lot of meat like our top quality cuts like the pasture steak, the roasts,” she said.
“When people are at home they are looking for these affordable little luxuries and celebrating Australian products which is fantastic.”
Ms Davis said foods designed for convenience, such as convenience foods and pre-prepared meal kits, also remained popular among consumers.
“Especially in the middle of the week, not everyone wants to cook amazing meals every day, so the little shortcuts are incredibly popular with our customers,” she said.
“So we have a stove where you put something in the oven, Beef Wellington or a simple stir-fry that you just throw together.
Ms Davis also noted a shift to online ordering and picking, after the industry switched to contactless picking last year, with Woolworths staff placing grocery orders straight into car boots across the country.
“We have seen real change in Australia over the past year,” she said.
“Previously, if you picked up from our help desk, the team would go out in the back and pick up your order.
“We now have about 600 stores across Australia where we have a direct pickup service, where moms pull up with the kids in the back and she gets the team up, up in the back, and she leaves. When I talk to these moms, they are incredibly grateful.
“We think of convenience as an urban thing, busy people in Sydney and all that, but one of our most popular collection stores is Dubbo.
“Farmers and people in rural communities will place a massive order online, go to town and pick it up.
Originally published as Woolworths “Watching” Rising Meat, Shipping Charges