Woolworths Group Ltd has announced higher-than-expected sales growth in the third quarter. The surge in sales can be attributed to consumers opting for the company's cheaper house-brand products to mitigate the impact of increasing living costs.
The latest update from the March quarter sheds light on the non-discretionary consumption patterns in Australia, even after a series of interest rate hikes aimed at curbing inflation. The data highlights the challenge the central bank faces, as inflation remains above the target range while financial strain spreads across suburbs.
Woolworths CEO Brad Banducci acknowledged the changing shopping behaviours driven by inflation, stating that budget-conscious families in suburban areas face increased pressure due to higher mortgage and rent costs. To reduce spending, these families are returning to more affordable meal options, such as roast chicken with vegetables and the classic spaghetti bolognese. The company has also witnessed a rise in coffee bean sales as consumers opt for home-brewed coffee instead of purchasing from cafes.
The strong sales performance of Woolworths amidst challenging economic conditions reflects the adaptability of consumers and their focus on cost-saving measures. As living expenses continue rising, Australian households adjust their shopping habits to maintain their budgets.