The reality is that Coles services a divergent population. Cain readily admits that in one large bucket sits consumers that won’t feel the pain of higher food prices. This group can withstand price rises at the checkout - their demand economists would call inelastic.

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There are about 200 stores within the Coles fleet that service the more affluent customers.

At the other end, there are a similar number of stores in more disadvantaged areas. The bulk lies in the middle and this group is generally more cashed up than it was before COVID.

The customers who are highly sensitive to price increases in food will change their buying behaviour. This group is already buying less meat because of two years of sustained price rises and has probably picked up more bananas and avocados than usual - given these two items have significantly come down in price.

Those customers are also more prone to moving to discount supermarkets - by that read Aldi - to shave some cost from the weekly shop. Cain says that while there was less discounting in the quarter, retaining some periodical discounting - like the weekly specials - would appeal to the more value-conscious customers.

But this exercise has been complicated by availability problems that have plagued the wider industry.

‘Forecasting sales for supermarkets is like “throwing a dart at a cockroach on the wall”.’

Analyst

Supply chain gridlock was a feature of Coles’ March quarter. The post-COVID demand has collided with the war in Europe, a lockdown in China and a number of massive weather events across Australia that have savaged logistics networks.

A shortage of workers thanks to almost no immigration have only added to the woes of moving product and getting into stores.

Cain, who distinctly avoids crystal ball gazing, doesn’t want to predict when the supply chain will return to normal but he doesn’t see the problems disappearing before the end of the calendar year.

But he is hoping that the quarter to March, which he described as “the most disrupted (quarter) we have encountered so far”, will be the worst of it.

Not only did Coles incur COVID costs of $65 million during the quarter compared with $10 million in the previous March quarter, it also sustained a $30 million cost hit from the floods.

The supermarket division’s sales performance for the quarter was a respectable 3.9 per cent rise on a like for like basis. But it is difficult to know what the market was expecting in these unusual times.

As one analyst quipped, forecasting sales for supermarkets is like “throwing a dart at a cockroach on the wall”.