Coles, Kmart, Bunnings and JB Hi-Fi price cuts: The real reason major retailers are set to slash prices
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It’s been a tough couple of years, hasn’t it? Inflation is on the rise, the cost-of-living crisis continues to strain our wallets, and the food price hikes of essential grocery items don’t make it easier to plan our budgets for the week.
However, it seems as though after a long time of financial strain, relief is finally coming. Reports of several major Australian companies are now hinting that they’re slashing prices.
This can only mean good news…right?
Life has been rough for Australian households in the last year. Everything from broccoli and iceberg lettuce to petrol has been costing more and more as inflation kicks up. Natural disasters have also impacted the food supply and resulted in shortages and higher prices.
Even discount retailers have been repricing their items higher and higher. Australia’s buying power has also declined as our dollar continues to fetch less and less at the checkout.
But many of Australia’s major public retailers – including JB Hi-Fi, Coles, Bunnings and Kmart – are allegedly hinting at reducing their prices as their suppliers promise to give them lower prices.
This comes after these large retailers have just reported their half-year profit results – and it looks like it’s been a good year for most of them.
Recorded phone calls between proud CEOs and their investment bankers coming from places like Goldman Sachs and Bank of America, boasted about how well they’ve performed amid inflation and the cost-of-living crisis.
These phone calls are available to the public because these retailers are public companies. You can generally find these by Google searching the company name along with ‘Half-year Results 2023’ or ‘Earnings Call’.
It was previously reported that millionaire businessmen Jack Gance and Mario Verrocchi, the owners of the discount retail chain Chemist Warehouse, have seen continuous profits despite the pandemic and inflation. The pharmacy giant managed to bring in a gross profit of over $1 billion in the last financial year, with a total revenue of over $3 billion. You can read more details here.
The major stakeholders and bosses of these public companies warned their investment bankers of the ongoing increases in the costs of goods they buy – but some items are unaffected. Some CEOs even shared their joy at their suppliers lowering prices.
In one instance, JB Hi-Fi CEO Terry Smart said that the company still had good stock availability and that they will ‘continue to push hard’.
‘We did suffer some problems with phones in December, they have come back into stock …. Suppliers are willing to support all that at this point as well, as stock is returning to normal,’ he said.
Mr Smart hinted that JB Hi-Fi was going to run ‘promotions’ which includes sales and discounting because the electronics companies that supply their goods were trying to increase sales.
‘Suppliers themselves are really looking to push stock out and to drive their market share. We are seeing a lot of activity coming from suppliers, in other words, supplier-funded promotions coming,’ he explained. This also means that competition will heat up in the retail industry.
We’ve already seen an example of this when both Coles and Woolworths announced that they were locking in prices near the end of 2022. However, Woolworths didn’t extend the deadline for their promotion, meanwhile, Coles did.
In response, Woolworths announced that they’re having a new huge price drop as part of another promotion. It can be assumed that these two major retailers are encouraging ‘healthy competition’ for their prices.
Additionally, a representative for Bunnings also told analysts that the company is in a good position too.
‘We are starting to see price decreases from some of our suppliers – we absolutely pass them on, when we need to,’ they said.
With all that said, do we, the customers, gain something in this scenario?
Well, while this price decrease is good news for many, it doesn’t necessarily mean that these companies will actually decrease their prices when the time comes. It is believed that falling input prices can go two ways. If JB Hi-Fi and Bunnings are expecting the cost of some goods to fall, they can either:
It’s not easy to predict, but it’s important to be aware that some of the costs from these retailers have gone down or will go down in the future. Additionally, this kind of awareness will show retailers that they should refrain from increasing prices on items where the costs are falling.
You can look for hints in their Half-year Results. For instance, Kmart Chief Executive Ian Bailey said: ‘What we are seeing now is a reduction in costs, particularly in raw materials, things like cotton and polyester and some of the other raw materials are starting to fall now, relative to their peak through COVID.’
This should translate into lower prices of clothing as prices of raw materials have decreased.
In another example, Coles’ CEO Leah Weckert shared that she expects falls in costs that should help the supermarket giant to moderate prices for consumers, stating that she expected decreases in the cost of wheat and pork.
This means that bread and meat could see price decreases as well.
What do you think of this news, members? Let us know your thoughts in the comments section!
However, it seems as though after a long time of financial strain, relief is finally coming. Reports of several major Australian companies are now hinting that they’re slashing prices.
This can only mean good news…right?
Life has been rough for Australian households in the last year. Everything from broccoli and iceberg lettuce to petrol has been costing more and more as inflation kicks up. Natural disasters have also impacted the food supply and resulted in shortages and higher prices.
Even discount retailers have been repricing their items higher and higher. Australia’s buying power has also declined as our dollar continues to fetch less and less at the checkout.
The country’s purchasing power has decreased. Credit: Liza Summer/Pexels
But many of Australia’s major public retailers – including JB Hi-Fi, Coles, Bunnings and Kmart – are allegedly hinting at reducing their prices as their suppliers promise to give them lower prices.
This comes after these large retailers have just reported their half-year profit results – and it looks like it’s been a good year for most of them.
Recorded phone calls between proud CEOs and their investment bankers coming from places like Goldman Sachs and Bank of America, boasted about how well they’ve performed amid inflation and the cost-of-living crisis.
These phone calls are available to the public because these retailers are public companies. You can generally find these by Google searching the company name along with ‘Half-year Results 2023’ or ‘Earnings Call’.
It was previously reported that millionaire businessmen Jack Gance and Mario Verrocchi, the owners of the discount retail chain Chemist Warehouse, have seen continuous profits despite the pandemic and inflation. The pharmacy giant managed to bring in a gross profit of over $1 billion in the last financial year, with a total revenue of over $3 billion. You can read more details here.
These phone call records are available to the public. Credit: Alex Andrews/Pexels
The major stakeholders and bosses of these public companies warned their investment bankers of the ongoing increases in the costs of goods they buy – but some items are unaffected. Some CEOs even shared their joy at their suppliers lowering prices.
In one instance, JB Hi-Fi CEO Terry Smart said that the company still had good stock availability and that they will ‘continue to push hard’.
‘We did suffer some problems with phones in December, they have come back into stock …. Suppliers are willing to support all that at this point as well, as stock is returning to normal,’ he said.
Mr Smart hinted that JB Hi-Fi was going to run ‘promotions’ which includes sales and discounting because the electronics companies that supply their goods were trying to increase sales.
‘Suppliers themselves are really looking to push stock out and to drive their market share. We are seeing a lot of activity coming from suppliers, in other words, supplier-funded promotions coming,’ he explained. This also means that competition will heat up in the retail industry.
We’ve already seen an example of this when both Coles and Woolworths announced that they were locking in prices near the end of 2022. However, Woolworths didn’t extend the deadline for their promotion, meanwhile, Coles did.
In response, Woolworths announced that they’re having a new huge price drop as part of another promotion. It can be assumed that these two major retailers are encouraging ‘healthy competition’ for their prices.
Additionally, a representative for Bunnings also told analysts that the company is in a good position too.
‘We are starting to see price decreases from some of our suppliers – we absolutely pass them on, when we need to,’ they said.
With all that said, do we, the customers, gain something in this scenario?
Well, while this price decrease is good news for many, it doesn’t necessarily mean that these companies will actually decrease their prices when the time comes. It is believed that falling input prices can go two ways. If JB Hi-Fi and Bunnings are expecting the cost of some goods to fall, they can either:
1. Maintain prices and pocket big profits.
2. Pass on the lower cost to customers.
It’s not easy to predict, but it’s important to be aware that some of the costs from these retailers have gone down or will go down in the future. Additionally, this kind of awareness will show retailers that they should refrain from increasing prices on items where the costs are falling.
You can look for hints in their Half-year Results. For instance, Kmart Chief Executive Ian Bailey said: ‘What we are seeing now is a reduction in costs, particularly in raw materials, things like cotton and polyester and some of the other raw materials are starting to fall now, relative to their peak through COVID.’
This should translate into lower prices of clothing as prices of raw materials have decreased.
In another example, Coles’ CEO Leah Weckert shared that she expects falls in costs that should help the supermarket giant to moderate prices for consumers, stating that she expected decreases in the cost of wheat and pork.
This means that bread and meat could see price decreases as well.
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