Lower price strategy, fresh food boosts Coles

Coles’ low price strategy, improvements in its fresh food offer, and the roll out of new and refurbished stores have helped give the supermarket chain a solid start to the new financial year, according to Wesfarmers MD and CEO, Richard Goyder.

Speaking at Westfarmers’ annual general meeting, Goyder said the group was pleased with the continued momentum of the supermarkets business in what is a very competitive sector, adding the retailer sees significant opportunities in its growing fresh food offer.

“We are seeing significant opportunities to continue to improve our fresh offer and afford customers trusted value. Whilst there has been lots of media commentary covering the supermarket industry structure, the board and I are very confident the strategies that John Durkan and his team are implementing are the right ones, with a focus on generating satisfactory results to shareholders. And by the way, we are not standing still,” Goyder said.

He added continued investment in lowering prices and better customer service is driving growth in volumes, transaction and basket size. Coles recorded the strongest level of quarterly food and liquor price deflation in two years, 1.3 per cent in the first quarter of the 2016 financial year, and according to Goyer, Coles estimates that “a typical family shopping at Coles is now more than $600 a year better off” than they would have been before Westfarmers acquired the Coles business in 2007.

“People often talk about market disrupters, but Kmart, Bunnings, Officeworks, Target, and Coles are disrupters in their own way. Their continued drive to innovate across product ranges and categories and in expanding our brand and channel reach, specifically in the digital space, will underpin the sustainable success of Wesfarmers,” Goyder said.

Convenience stores tracking growth in first quarter sales

While Goyder did not address Coles’ convenience and fuel operations in his presentation, the retailer’s convenience store sales growth was one of the highlights in Coles’ first quarter 2016 sales results for the three months to 27 September 2015.

Convenience store sales grew strongly by 12.9 per cent for the quarter while comparable store sales were up 9.1 per cent. This is in stark contrast to the continuing decline of fuel sales.

Coles Express sales, including fuel, for the quarter were $1.8 billion, a decrease of 7.8 per cent on the previous corresponding period driven by lower fuel prices. For the quarter, headline fuel volumes increased 1.4 per cent and comparable fuel volumes decreased 1.8 per cent despite increased investment in fuel offers,” the company said in October.

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