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Coles chief says expensive grocery prices are ‘crazy’

Coles supermarket2Coles’ boss said Australia’s food and grocery prices have to decrease because they are “crazy” compared to the rest of the world.

“It’s already an overpriced grocery market in my view and I’ve been saying that for nine years,” said Coles managing director John Durkan to analysts during Wesfarmers’ strategy day meeting on Wednesday.

“I still look at products here that are made overseas and they are crazy prices.”

Durkan commented that the cost of those products meant there was room for growth for Coles’ private labelled products. His comments came after the consumer magazine CHOICE’s latest supermarket price survey was released yesterday. It has shown consumers can save nearly $80 a shop by switching from leading brands to a basket of Aldi budget products.

Durkan also announced Coles’ major plans are underway to convert an additional 180 stores to include bakeries as the supermarket giant works toward offering freshly baked bread at every store.

“I want Coles to be famous for its fresh bread,” he said.

The supermarket boss also announced the grocery’s plan to focus on increasing its fresh produce and reducing the range of some products to make it simpler for the customer.

Sales in pasta sauce and garbage bags had risen after Coles recently shrank both of those products’ range, he said.

“We have moved eight lines out of our garbage bag category, which was 20 per cent of the items in that category, and in response, sales have increased by five per cent.”

Pasta sauce sales also lifted after Coles narrowed its range by about 17 per cent. However, Wesfarmers shares have been a major drag on the ASX on Wednesday morning after outgoing chief executive Richard Goyder said the group’s hardware business in the UK was likely to make a loss in the second half of 2017 and into the first half of 2018.

The company also warned its supermarket margins continue to be under pressure amid intense price competition. Wesfarmers’ shares were down more than 2.3 per cent to $40.43 by 1048 AEST.

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