Coles reports sales growth as farmers suffer

As fresh produce and dairy farmers continue voice their outcry over Coles’ predatory pricing which they say will put them out of business, the supermarket giant has reported strong growth sales.

Wesfarmers’ second quarter retail sales results for the 2012 financial year showed Coles’ sales increased by almost 5 per cent from the previous year, to $13.6 billion.

Wesfarmers’ managing director, David Goyder, expressed his satisfaction with the profit increase.

“Given a relatively tough retail environment and widespread deflation, I am pleased with the momentum with Coles, where business has recorded good sales growth in the second quarter,” he said.

“Coles has reported its fourteenth straight quarter with customer numbers and units growing faster than sales”.

While Coles is getting more people though it’s doors and they are spending more once inside, farmers say it is at the expense of their operations and the future of Australian industries.

“We believe the tactic all along by Coles was just to get people through its doors, and since dairy products are in 97 per cent of consumers homes, it’s a draw card they’ve used,” Australian Dairy Farmers Association president, Chris Griffin, told Food Magazine.

“It’s always at the back end of the supermarket, so you have to walk through all the other products and displays to get to it, so it is simply a marketing ploy they’ve implemented at the expense of the dairy industry.”

Produce growers have slammed the decision by Coles to slash the price of fresh fruit and vegetables in half this week, also labeling the pricing “unsustainable,” and predicting a future filled with imports for Australia.

“Long term this could deliver lots of damage to the industry,” Simon Coburn, spokesperson for AusVeg, the peak representative body for produce growers, told Food Magazine.

“Depending where the reduced retail price is going to be absorbed, whether it’s a small grower or a big business, this will damage them long term.

“Eventually it will come back to growers and that’s where they’ll get into trouble.

“These prices aren’t sustainable if they’re passed onto growers, small operations and even big ones won’t survive this.

“The perspective is that if there’s no Australian industry, just import.

“The industry will die off, probably not slowly, and imports will start flooding the market.

“So we face more imports and lose our identity and in the end the consumer will pay the same if not higher and we won’t have an Australian industry to fall back on.”

Calls to Coles about the produce pricing were not returned.

It is the fourth year Coles has posted a profit increase since Wesfarmers implemented changed to the supermarket’s operations.

According to the report, volume growth for Coles has exceeded sales growth, which it said was largely due to the increase in fresh produce sales.

Coburn told Food Magazine that while most Australian consumers want to buy local produce, the current economic environment is forcing shoppers to buy the cheaper, often substandard, product.

“But what we’re trying to promote is that they should take a long term view and think about what it’s really doing,” he said.

“All of Coles’ businesses had made good progress in the second quarter and customers rewarded Coles for its continued investment in lower prices as part of our ‘Down Down’ campaign,” Coles Managing director, Ian McLeod said.

McLeod said he is pleased with Coles’ continued strong volume growth which “has been driven by investment value, quality and service at a time when Australian families are looking to manage tight household budgets.”

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