Steven Cain, Coles CEO, has answered five key questions about 2019 as part of annual survey of key business leaders.
Mr Cain gave his responses last week to reporter.
The top executives maintained that economic growth, a national energy policy and most of all long-term stability were the key agenda items.
In the wake of the financial services royal commission, the survey revealed an almost religious devotion to customers as the route to prosperity for corporate Australia.
These were the five big questions:
1.What should be the key issues in the next federal election campaign?
2.What use are you making of customer and company data and how are you collecting it?
3.What are the key challenges for your company next year?
4.How can big business regain community trust?
5.What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so, how much?
What should be the key issues in the next federal election campaign?
Economic growth: Maintaining Australia’s solid economic growth track record requires government policies that increase the underlying productivity of the economy. Four priorities in this regard are:
Productivity and innovation: After several years of subdued wages growth, it is imperative that government does all it can to continually improve productivity so that all stakeholders may share in the benefits of economic growth.
Cost of living pressures: we are committed to continue delivering value to our customers, but the growing strain on household budgets requires a concerted effort across all parts of the economy, particularly in areas that account for a large proportion of living expenses such as utilities and health care.
Transport infrastructure: continued economic growth requires targeted public funding for and timely delivery of high priority transport infrastructure.
Tax reform: Proposals to make the corporate tax rate more internationally competitive would help Australian businesses not only to attract more investment capital to fund growth, but also lower the hurdle rate of return for viable investments.
What use are you making of customer and company data and how are you collecting it?
Customer data collected through Flybuys helps us to assess new store locations and make ranging decisions to meet the needs of local customers, as well as provide more relevant offers to customers.
Each week, we survey 35,000 customers and hear from another 20,000 through social media and 25,000 via our Customer Care team. We use this information to help guide our thinking and assess how well we are executing against our aim of making life easier for our customers.
What are the key challenges for your company next year?
Cost of living pressures, low real wage growth and a slowdown in the housing market remain headwinds for consumer spending. The impact of drought on fresh produce and some agricultural commodities is also expected to add to input costs, while the competitive landscape continues to rapidly evolve in response to the entrance of new offshore competitors and the growing importance of technology in all aspects of retailing.
How can big business regain community trust?
Trust takes a very long time to build and can be lost very quickly. Therefore it’s not enough to treat Corporate Social Responsibility as simply an add-on to your business. It needs to be embedded in everyday processes that meet and exceed community expectations. At Coles we have worked hard to earn the trust of customers on delivering value by lowering the price of a weekly shop every year for the past decade.
At the same time we have committed ourselves to serving the communities in which we operate through initiatives like our partnership with SecondBite our $50 million Coles Nurture Fund which provides grants and interest-free loans to foster innovation in food production.
We have also done a lot of work to strengthen our relationships with suppliers, including through our work in formulating the Food and Grocery Code of conduct to which we were among the first signatories in 2015.
At the same time, our own Supplier Charter, which has been in place since 2014, is alone in the retail space in including an independent arbitration process that is both binding on us and carrying no cost to suppliers.
What cost pressures are hitting your company? How are they being offset and do you see any pressure to lift wages? If so how much?
Like all Australian businesses we are seeing higher energy costs, the impact of which we are seeking to reduce with more efficient store design. We have called out that we will face higher wage costs this financial year as a result of our new enterprise agreement, which came into effect in April.
Our Supermarkets store team enterprise agreement is in place until April 2020 and increases in wage rates are based on the annual increase applied to the General Retail Industry Award by the Fair Work Commission. Coles has also seen some increase in food commodity, some of which we are absorbing to reduce the impact on customers at the checkout and make their lives easier.
We are also reducing costs throughout our supply chain via the use of technology to better plan transport movements, and the two new automated ambient distribution centres we will build in NSW and Queensland over the next five years will also allow us to reduce costs and improve stock availability for customers.
