Coles hom­ing in on house brands

Mercury (Hobart) - - BUSINESS - JOHN DAGGE

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.

Pic­ture: AAP/David Clark

RECORD SALES: Savvy shop­pers are boost­ing Coles’ own-la­bel prod­ucts.

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