Coles CEO has issued a dire warning, foreshadowing the supermarket chain’s imminent hike in food prices.
Coles CEO foreshadowed the supermarket chain’s impending surge in supermarket prices as it struggles with skyrocketing supplier costs and severe labor shortages.
Speaking to attendees at Australia’s Global Food Forum on Wednesday, Coles chief executive Steven Cain revealed he had received a staggering number of requests from suppliers to raise prices.
“As I sit here today, we have received five times as many requests for price increases as last year. Five times,” said Mr. Cain, the Australian reported.
“And they are not small amounts. It also doesn’t ask for two percent or three percent, so there’s, you know, the usual “pig in the python” trying to work its way through the system, whether things reach a plateau or they slow down. come remains to be seen.”
The pressure on the country’s second-largest supermarket chain was compounded by the extreme difficulty of stores in acquiring and retaining a steady number of enthusiastic employees.
“We have a labor crisis in Australia, across many sectors. It’s been made worse by what’s going on with Covid and the flu, our absenteeism is now twice the normal with Covid, flu and attrition in most industries is increasing,” he said.
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Mr Cain said a Coles store manager told him last week that they had lost an employee to a dishwashing job that paid $80,000 a year.
Labor cost increases would “flow through the system” over the next 12 months, he added.
Customers directly affected by price increases on the shelves would likely choose more affordable frozen and canned options over fresh produce, Mr Cain said.
Woolworths Group CEO Brad Banducci said earlier this year that price increases of two to three percent were inevitable.
He said he wouldn’t be surprised if suppliers contacted him again to request further price increases.
The retail giants struggled with manufacturers raising prices due to higher labor costs, staff shortages, Covid-19 regulations and rising raw material and energy prices, and the need to deliver affordable food to customers.
“It’s now got to a point where the level of costs coming through is just astronomical and companies really can’t control that on their own anymore and are negotiating with retailers to pass on some of that,” head of the Australian Food and Grocery Council. executive Tanya Barden said, according to the publication.
Mr Cain said eventually shelf prices for staples would begin to “soften.”
“We expect some areas of the meat industry to eventually soften after years and years of growth and it’s clear that once this next round of produce is planted, we hope it will be a top year for the farming community because there’s a lot of more moisture around and then we’ll see those prices moderate as well,” he said.
Short-term availability of products affected by bad weather should also improve in the coming weeks and months, Mr Cain said.
“We have more products on the shelves every week. Clearly there are still problems, especially with international freight and… agriculture, especially in New South Wales and southern Queensland.
“Today it is very difficult to get lettuce, it is very difficult to get tomatoes on the vine … and then you get other products like bananas, grapes where there is more supply and prices have come down over the past year.
“So it’s a bit changeable, but on average it’s getting better every week. But it is vulnerable.”
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