Coles pushes suppliers on costs

One of Coles supermarket’s most senior executives has written to packaged food and grocery suppliers urging them to cut costs, amid political pressure for shelf prices to come down.

In a letter to suppliers last week, Coles executive general manager for packaged grocery Jonathan Torr reminded the companies that stripping away costs was a “joint obligation” of the supermarket and its supplier base.

This would help shoppers “stretch their wallet further”, Mr Torr said, as pressure grew on suppliers to help supermarkets bring down shelf prices while also preserving their profit margins.

Coles has started to tap its vast supplier base on the shoulder to reflect moderating inflation and a slide in many commodity prices, which the supermarket chain will ultimately use to lower its own prices at the checkout and neutralise some of the negative publicity around allegations of supermarket price gouging.

These allegations, as well as accusations of Coles and Woolworths misusing their market power to beat out competition and cow suppliers, will come under the spotlight this month as the Greens-led Senate inquiry into the supermarkets kicks off. Public appearances will include Coles chief executive Leah Weckert and outgoing Woolworths chief executive Brad Banducci.

Mr Torr’s letter was a followup to a Coles conference for its packaged grocery suppliers two weeks ago.

“Affordability is key. Whether it is offering the right pack size, great convenience, reduced waste and great value offers to ensure that our customers can stretch their wallet further,” he said. “With many Australians doing it tough, I see this as a joint obligation between all of us to working together to reduce costs and be more efficient.”