Coles winning price war

COLES has maintained its pole position in the price wars, owner Wesfarmers says, despite rival Woolworths pouring millions into campaigns to improve its image.

Wesfarmers managing director Richard Goyder said price reality was more important than perception and costconscious customers were responding to Coles’ offer.

Coles chalked up a 4.7 per cent lift in food and liquor sales to $7.6 billion for the three months to September.

“It’s about price trust,” Mr Goyder said.

“When we took over the business in 2007, the perception was that Coles was more expensive than Woolworths and we had to fix that.

“Customers know quickly if the weekly shop costs more and you can’t muck around with that.

“Now we’ve got the perception, we will double up on efforts, because it’s the reality that matters.”

After years of playing catchup, Coles is riding high as its larger rival struggles with weak profit results and job cuts.

Mr Goyder said Coles was also keeping a close eye on German budget brand Aldi as it continues to roll out stores and looks to launch in South Australia and Western Australia next year.

Across the rest of the group, hardware chain Bunnings was once again a standout performer, reporting an 11.6 per cent lift in sales to $2.47 billion.

Home improvement managing director John Gillam said the result showed the group’s work to create more value, improve experiences and extend the brand reach was resonating well.

Amid talk that Woolworths could scrap its loss-making Masters hardware chain, Mr Goyder batted away questions on whether Bunnings may snap up vacated sites.

“Our assumption is that Masters continues to operate and improve itself,” he said. “If that changes, we will continue to look at it.”

Problem child Target showed the first signs of a resurgence, reporting a 3.1 per cent lift in total sales to $776 million.

Key like-for-like sales rose 3.2 per cent.

Fellow discount retailer Kmart saw sales jump 12.5 per cent to $1.1 billion, while Officeworks sales rose 6.5 per cent to $429 million.

Mr Goyder said consumers seemed positive and he believed the new Turnbull Government would be one of action rather than words.

“I would say there was probably a bit more of an optimistic tone around the place at the moment,” he said.

“When you look at these numbers, they are good numbers and they don’t reflect consumers being depressed or not coming into our stores.”

Wesfarmers shares closed up 0.5 per cent at $40.92.