Sustainability at centre of Coles’ refreshed strategy

Coles is aiming to become “Australia’s most sustainable supermarket” with a refreshed strategy focused on its online and own brand offerings.

At the retailer’s first Investor Day as an independently listed company, Coles Group CEO Steven Cain told investors that the refreshed strategy “will truly differentiate Coles in the Australian retail market” allowing the supermarket to lead in online through an “optimised network”, and make Coles an “Own Brand Powerhouse” and a destination for health.

The supermarket will expand its own brand convenience and health offerings as it seeks to deliver “the best value” for time-poor consumers. Cain said value is “still the most important feature after location”.

The retailer, which sold $40 billion dollars worth of product last year, expects to make $1 billion in cumulative savings over the next three years through investments in technology, automation, and artificial intelligence. 

“We will make extensive use of data analytics and artificial intelligence to ensure we are anticipating and fulfilling customers needs as they continue to evolve – we want Coles to be a truly customer-obsessed retailer,” Cain told investors on Tuesday.

The supermarket chain will also optimise its store network to increase sales density by tailoring up to 40 per cent of floor space to meet specific local customer requirements.

Online offering

In March, Coles announced a $150 million partnership with the world’s leading online grocery platform, Ocado, and Cain believes this partnership will help Coles achieve the highest productivity in the online space and double the range available to consumers online.

He said that the retailer will be announcing significant progress at full year on online profitability.

He also signalled that the coming years will see a lot more partnerships focussed on convenience, like the one with Uber Eats which was rolled out to more stores in March.

Tough times ahead

Cain said the supermarket has an “ambitious change program” ahead and is determined not to lose sight of the things that matter most to customers.

The supermarket is embedding sustainability processes across the business to improve outcomes in areas like energy use and waste.

The Coles boss also highlighted the need to prepare the business for the tough times ahead.

“The next five years are going to be the toughest we have faced as a company and the toughest the industry will face,” Cain said, adding that a “flexible approach” is needed to manage the fragmenting consumer base.

“The biggest challenge is ensuring Coles moves faster than the competition.”

Coles said comparable sales growth for the fourth quarter is expected to be between 1.7 and 2.1 per cent, adjusted for the impact of New Year’s Eve.

The supermarket will report its full year results on August 22, 2019.

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