Coles homing in on house brands
THREE in every $10 spent at Coles now goes towards a product owned by the supermarket heavyweight.
And sales of house-brand products at the grocer are growing at three times the rate of their branded rivals.
The growing success of Coles’ private-label range was revealed in a trading update yesterday that also showed the retailer was beginning to win back motorists with a more competitive fuel offering.
Shares in Coles rallied more than 3 per cent after the retailer eked out its 48th consecutive quarter of sales growth.
The result defied predictions of a sales retreat for the quarter, a year on from the original and wildly successful Little Shop collectibles promotion.
For the 13 weeks to September 29, like-for-like supermarket sales, which strip out the impact of stores opening and closing, rose a wafer-thin 0.1 per cent from the same period a year earlier.
That was the lowest growth rate for any quarter in more than a decade.
It is well down on the 5.1 per cent jump in sales notched up in the same period last year when Coles was enjoying the rewards of its original Little Shop promotion and its decision to slow the phase-out of free plastic bags.
The latest trading update covers the period of its Little Shop 2 promotion, which has failed to match the success of the original as it came up against Woolworths’ popular Lion King Ooshie collectibles campaign.
Sales revenue at Coles was also boosted by a 1.4 per cent increase in food prices — mainly fresh items — linked to drought conditions.
Stripping out tobacco and fresh items such as meat, food inflation ran at 0.2 per cent.
Total sales across the Coles group, which includes its petrol station and liquor outlets, rose 1.8 per cent to $8.69 billion for the 13 weeks to September 29.
Like-for-like sales were up 0.2 per cent.
Total supermarket sales rose 1.6 per cent to $7.7 billion.
But sales of Coles’ ownbrand products jumped 4.7 per cent, and its private-label ranges now make up a record 30 per cent of all sales revenue. This includes sales of Coles-branded meat and non-branded fruit and vegetables.
Former Coles chief John Durkan set a target of having 40 per cent sales penetration for its house-brand range by 2023. Current chief executive Steven Cain has not set a hard target, but has homed in on private-label products in order to win the business of value-conscious shoppers.
Mr Cain has focused on rolling out various sub-brand categories within the retailer’s private-label range, such as a “WellnessRoad” health food range.