The supermarket giant has been working on “Project 535” over the last two years, The Australian reported. The first store is expected to open later this year in the Melbourne suburb of Surrey Hills.
The news followed the announcement last month that the company would be going in a new strategic direction. The smaller store format combats the issue of finding large plots of land in already packed city suburbs. The new stores are expected to have 1500 grocery items not available in standard Coles stores.
At the Wesfarmers Strategy Briefing Day last month, the grocer acknowledged that one size does not fit all and recognises the need for tailored stores for the community particularly in inner city locations with smaller store footprints.
Last April, Wesfarmers chairman Michael Chaney said the company was confident on its plans to spinoff its supermarket division.
“The decision to pursue a demerger of Coles comes after a thorough review of our portfolio of businesses and is about repositioning Wesfarmers and Coles for the next decade,” Chaney said. “A demerger would significantly reposition Wesfarmers capital towards higher growth opportunities in its remaining businesses, notably Bunnings Australia and New Zealand, Kmart and the Industrials division.
A spin-off would include the supermarket giant’s national network of 806 stores including Coles Online, 894 liquor stores, Coles Express’ 712 fuel and convenience outlets and 88 hotels.
Inside FMCG contacted Coles for comment.