While Coles didn’t win Christmas this year, the race was far closer than it was in 2017 according to UBS’s 25th Supermarket Supplier Survey.
The newly independent supermarket saw growth across all categories, closing the gap between itself and market leader Woolworths considerably and reversing the free-fall the business’s score had seen since 2016.
“[This] suggests share loss is moderating, with suppliers getting more positive on Coles outlook,” UBS analyst Ben Gilbert said, indicating there were beginning to be ‘green-shoots’ at Coles.
Additionally, supplier morale has improved since the appointment of chief executive Steven Cain, due to a focus on longer-term opportunities instead of short-term wins. Gilbert posited that Woolworths may have hit its peak, citing the fact that while supplier perception improved over the year, the rate of gains slowed and the lead over Coles narrowed.
“On a medium-term view, suppliers indicated further like-for-like performance at Woolworths will be harder to come by, with scores across all categories near historic (~12 year) highs,” Gilbert said. “With [that] in mind, we believe there is increasing risk that the like-for-like gap between Coles and Woolworths (in favour of Woolworths) closes faster than we had originally anticipated.”
According to the study, the data collected raised two key questions. Is Coles’ new management already executing better? And is Woolworths making an adequate return on its store investment?
