etcash’s FY24 could look quite different from its FY23 results if the changes in customer behaviour continue. Food for thought At IGA, supermarket sales rose 2.1 per cent year-on-year in FY23, despite the fact that, since January, more customers have been trading down to value items in anticipation of the cost-of-living crisis now impacting Australians nationwide. According to the Australian Bureau of Statistics’ latest data on retail spending, food retailing has recorded a monthly rise in spending in 16 of the past 18 months, with “most of the growth in food-related spending this year [being] driven by rising prices.” IGA’s Community Co private label saw sales growth of approximately 20 per cent over the course of the year, while average basket size stayed flat, showing higher-priced items were indeed traded out. This echoes sentiments expressed by leadership at Coles and Woolworths, which have also seen customers trading down in order to avoid heightened prices caused by rising inflation. Both supermarket giants will release their full-year results in late August. Despite efforts to curb inflation, Jones expects more price increases to come due to increasing manufacturing and supplier costs. “I think [inflation] has been more sticky than many would like, and with that said, we still see suppliers coming to us for price increases,” Jones said. If Australians continue cutting back on non-private label brands, more pain is likely to come for suppliers. According to Jones, IGA’s prices on the shelf are still higher than they would be in Coles and Woolworths, though that price gap has narrowed. However, Jones believes that the business’ network provides other benefits to customers beyond prices. “We think our network offers real value when it comes to product,” Jones told The Sydney Morning Herald. “The customer value proposition in an IGA is fundamentally different [than Coles or Woolworths]. The community-based store resonates with Australians, because the managers or the owners are from and of the community, [and] often source products that are particularly relevant to their local communities.” Paying the price While supermarkets have been raising prices to cover additional costs in their supply chain, questions have been raised about the ethics of profiting off of charging people more to eat. France’s finance minister Bruno Le Maire reached a deal with 75 food manufacturers to drop food prices after it became clear that the price of raw materials had fallen, and threatened financial sanctions if manufacturers failed to drop prices accordingly. The United Kingdom’s competition watchdog has kicked off an investigation into the “greedflation” it is seeing in the country’s supermarket sector, where grocery prices are reportedly up 17 per cent. Closer to home, a recent Guardian Australia analysis of Coles’ and Woolworths’ financial accounts over a five-year period found that the duopoly used the pandemic to not just sell more goods, but to widen their profit margins beyond what was necessary to cover additional supplier costs. Both supermarkets rejected the claims. K2 Asset Management’s executive director George Boubouras told Guardian Australia there should be an inquiry into the increasing price of food, which has been rapidly outpacing the rate of inflation.  Jones told investors that Metcash has more work to do to keep its goods affordable, especially in some of its smaller stores, and that it will achieve this through a combination of IGA’s price matching program and “really strong execution in store”.