Coles unveils plans for sustainable growth

Coles has announced its refreshed strategy to deliver on its vision of becoming the most trusted retailer in Australia.

Speaking at Coles’ first Investor Day since listing on the ASX in November 2018, Group CEO Steven Cain said the business wants to sustainably feed all Australians to help them lead healthier, happier lives as it sets the foundations for a second century of sustainable growth.

“Our strategy will truly differentiate Coles in the Australian retail market, allowing us to lead in online through an optimised network, as well as making Coles an Own Brand Powerhouse and a destination for health,” he said.

“It will also provide long-term structural cost advantages while making us Australia’s most sustainable supermarket.”

The three pillars 

 The strategy is based on three pillars:

  • Inspire customers through best value food and drink solutions to make lives easier.
  • Smarter selling through efficiency and pace of change.
  • Win together with our team members, suppliers and communities.

“Our strategy directly aligns with the creation of long-term shareholder value by growing revenue at least in line with the market, reducing costs, and generating sufficient cash to fund growth and innovation while delivering an attractive dividend payout ratio,” Mr Cain said.

“As time-poor customers increasingly demand solutions to feed their families easily without compromising on quality, value or nutrition, Coles will expand its convenience and health offerings.

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

Smarter selling

The smarter selling strategy is expected to deliver $1 billion in cumulative savings by FY23 through initiatives including the use of technology to automate manual tasks and simplifying above-store roles to remove duplication. This will allow Coles to offset the impact of rising costs including energy and labour.

Tailoring floor space 

Coles says it will optimise its store network to increase sales density and improve profitability, tailoring up to 40 per cent of floor space in stores to meet the needs of local customers.

New store openings and online plans 

According to Coles, new store openings will be carefully targeted, with expansion opportunities focused on areas with significant population growth.

Coles Online, on the other hand, will focus on improving profitability as the Ocado partnership enables an expanded range and more flexible delivery options.

Other initiatives 

The growth of Coles Own Brand, says Coles, will remain a focus, with improved quality and lower costs through collaborative relationships with suppliers that will foster innovation.

Additional resources will be allocated to driving incremental revenue streams including meat exports and leveraging the flybuys joint venture.

“We have an ambitious change program ahead of us, and as we deliver it, we are determined not to lose sight of the things that matter most to the communities we serve,” Mr Cain said.

“That’s why we are embedding sustainability processes across the business to improve outcomes in areas like energy use and waste that will set Coles up to be recognised as Australia’s most sustainable supermarket.”

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