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Coles invests in price and service

Coles Online achieved double-digit sales growth in the half year to December 31, 2017, with growth accelerating in the second quarter as further investments were made to improve the customer experience.

According to parent company Wesfarmers’ half-year report, Coles opening its second dark store in Sydney’s Alexandria significantly improved fulfilment and delivery capabilities for customers across the NSW metropolitan area.

During the half, Coles also launched a 12-month trial with Airtasker, a platform that offers a personal-shopping alternative for customers and greater flexibility in delivery times.

The report also highlights Coles’ focus on rolling out its click-and-collect offering, with more than 800 supermarket and Coles Express sites expected to offer the service by the end of the 2018 financial year.

Coles’ overall food and liquor division generated revenue of $17,056 million, up 1.1 per cent over the previous corresponding period. Headline food and liquor sales growth for the first half was 1.9 per cent, with comparable food and liquor sales growth of 0.9 per cent.

Sales momentum in supermarkets improved during the half, underpinned by strong comparable-transaction growth, particularly for larger-basket customers. Comparable-transaction growth accelerated in the second quarter to the highest level achieved in six quarters.

Coles expanded and improved its supermarket network during the first half, with 14 supermarkets opened, nine closed and 35 renewals completed. As at December 31, Coles had a total of 806 supermarkets, 894 liquor stores and 88 hotels.

Coles Express reported revenue of $2,922 million for the first half, 8.1 per cent lower than the previous corresponding period, due to lower fuel volumes.

Total convenience-store sales increased 0.9 per cent for the first half, or 0.4 per cent on a comparable-store basis. The report says growth in convenience-store sales continued to be driven by double-digit growth in the food-to-go category, an increasing ‘Every day’ value proposition and refurbishment of the store network.

As at December 31, there were 712 Coles Express sites, with 12 new sites opened and two sites closed during the period.

Wesfarmers reported a net profit after tax of $212 million for the half-year ended December 31.

Managing Director Rob Scott says higher earnings across most of the group’s businesses were offset by losses in BUKI (Bunnings UK) and lower Coles earnings following planned investments in price and service.

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