Just 12% of Australian consumers use e-commerce services to order groceries online and have it delivered to their home – 13 percentage points lower than the global average of 25%, and well behind the Asia Pacific average of 37%, according to the latest Nielsen Global E-commerce and New Retail Report. Despite this, more than half (55%) of Australian consumers say online order and delivery is a service they are willing to use.
An even smaller number of consumers are using the “Click & Collect” services that retailers like Coles and Woolworths readily offer for grocery purchases. Just 5% of Australian consumers say they order groceries online and pick them up using a drive-thru service. However, more than half (53%) are willing to use this option in the future.
“The Australian landscape and lifestyle is more complex to other markets, with many consumers living a reasonable distance from retail stores and many not being at home to accept grocery deliveries,” said Megan Treston, a Director in Nielsen’s Retail Industry Group.
“Advances in technology are providing greater flexibility for shoppers, and offers like click and collect and, more recently, bundles to overcome individual delivery fees are introducing new ways to overcome barriers for online grocery shopping. The delivery fee bundling offer is very exciting and we’re watching this space closely.”
Nielsen’s Homescan Shopper Panel data shows that online represented 1.9% of all grocery sales in Australia for the year ending 13 June 2015, and growth is substantial; up by 29.3% for the year.
There is a similar trend to growth in online grocery shopping when looking at dollar growth by key department (see below); signaling that online is vital to boosting growth in a relatively stagnant grocery market. The exception to this is Health and Beauty, which is a high involvement category and also faces intense competition from the likes of department stores, pharmacies and other online beauty retailers.
Treston says: “The retailers who will win the most of this prize are those that will leverage technology to enhance the existing shopping experience and meet consumers’ evolving desires with a trustworthy service and by offering real convenience. Consumers are ready for it, so retailers should meet that openness to technology.
“As smartphone ownership and usage reaches saturation point in Australia, mobile commerce opportunities will also thrive and contribute to strong growth of digital grocery sales. We recently predicted the online channel will be responsible for over $1 billion of sales growth the industry is likely to see over the next five years, and this research shows an existing appetite that is waiting to be nurtured if consumer needs are accurately met, “said Treston.
“Retailers and manufacturers can add value by providing digital tools to help consumers take control of their shopping experience while also increasing sales potential. Mobile in particular can tip the scales in favour of increased shopper control, empowering them to shape the shopping experience more than ever before. Introducing digital strategies into the in-store experience is not just a nice-to-have—these options can increase dwell time, engagement levels, basket size and shopper satisfaction,” she said.
Independent arbiter, Jeff Kennett has instructed Coles to refund over $12 million to suppliers and has also allowed suppliers to exit the ARC program without penalty or have their ARC contribution rebates reviewed.
The $12 million is in addition to the penalty ordered by the court of $10 million fine in December last year.
“The arbitration process conducted by Mr Kennett has proven both extremely timely and effective with significant benefits to suppliers,” ACCC Chairman Rod Sims said.
“The process will also deliver flow on effects for suppliers more broadly as a result of changes Mr Kennett says Coles has begun to implement that affect the way it deals with its suppliers.”
The refunds process arose out of the resolution of two proceedings commenced by the ACCC against Coles in 2014: the ‘ARC proceedings’, and the ‘claims proceedings’. In December, the Federal Court made declarations in both proceedings by consent that Coles had engaged in unconscionable conduct in 2011 in its dealings with certain suppliers.
As part of the resolution, Coles also provided a court enforceable undertaking to the ACCC to establish a formal process to provide options for redress for over 200 suppliers. In December 2014, Mr Kennett was appointed to administer the process and to assess the eligibility of:
over 200 smaller suppliers listed in the ARC proceedings, categorised by Coles as ‘Tier 3’ Suppliers, to obtain refunds of any prior ARC rebate payments and seek adjustments of future rebates (taking into account the circumstances of their entry into the ARC program and any benefit received from their access to ARC over and above any arrangements they had with Coles prior to the implementation of the ARC program); and
suppliers referred to in the claims proceedings (in respect of which Coles made admissions in relation to profit gap claims, waste claims, and delivery fines) to obtain possible payments.
“The high level feedback from suppliers is that they are largely satisfied with access to redress from Coles and the timely, efficient and low cost approach. Ultimately, it was a matter for each supplier to decide whether or not to proceed with the resolution proposed, and as Mr Kennett’s report demonstrates, a very large number accepted the relief offered by Coles,” Sims said.
“The arbitration process was intended to provide an efficient alternative to otherwise lengthy and costly processes in determining the loss and damage of affected suppliers. Mr Kennett has now finalised his deliberations and has instructed Coles to refund over $12 million to a number of ‘Tier 3’ suppliers and a further $324,000 to suppliers listed in the claims proceedings. This is in addition to the penalty ordered by the court of $10 million,” Sims said.
Under the arbitration process, it was also open to suppliers to simply exit the ARC program. A number of suppliers took this option. Suppliers who sought a review of their eligibility for refunds also had the option to exit the ARC program.
“Mr Kennett has reported that his arbitration process has resulted in substantial ongoing savings for suppliers. Exit from the program chosen by some suppliers and reduced rates for others will save suppliers significant additional costs into the future,” Sims said.
Kennett’s determinations, as the independent arbiter, are binding on Coles and Coles has already moved to implement steps necessary to comply with those determinations. Kennett also made a number of non-binding recommendations to Coles on the basis of his discussions with some suppliers.
“The ACCC recognises and acknowledges Coles’ co-operation in acting upon the binding determinations made by Mr Kennett and in making some of the non-binding changes recommended by Mr Kennett. It moved quickly and without challenge to accept the decisions and implement changes,” Sims said.
The Australian Competition and Consumer Commission will shortly commence a public review of Coles’ proposed acquisition of Supabarn supermarkets.
ACCC Chairman Rod Sims said: "Given Supabarn’s position as a significant independent supermarket chain, an important focus of the ACCC’s review will be whether its removal as a competitor would substantially lessen competition between supermarket chains. The review will also examine each of the individual local markets in which the Supabarn stores operate, and any effect on grocery wholesaling and supply markets".
“The legal test which the ACCC will apply in considering the proposed acquisition is in Section 50 of the Competition and Consumer Act (2010). Section 50 prohibits acquisitions that substantially lessen competition in a market, or are likely to do so.”
“The main indicator of a substantial lessening of competition is whether the acquisition would enable firms in the market to raise prices or reduce product quality (including service and choice) or innovation following the acquisition. Section 50 does not allow the ACCC to consider factors other than those related to competition. In particular, the ACCC cannot oppose a proposed acquisition because of its potential to impact on the character of a local area,” Mr Sims said.
As part of its review, the ACCC will invite submissions from consumers, suppliers, supermarket operators and other interested parties.
The ACCC will commence its review this week and will be accepting public submissions until mid-July.
If speculation that German discount supermarket, Lidl, is preparing to launch into the Australian market is correct, it will be the biggest shake up in the grocery sector since Aldi’s arrival in 2001.
With potentially five viable combatants in the mix, the way we shop and how supermarkets and suppliers compete, will fundamentally change.
It’s not a matter if, but when
While Lidl has stated it has “no current plans”, it recently trademarked 500 brand names in Australia, including its own, and there have been media reports of it investigating logistics and distribution options.
Woolworths’ chief executive Grant O’Brien has sought to allay investor concerns about the impact of Lidl by pointing out it would take time for another grocer to gain traction and scale in the market – but with Aldi having laid down the foundations, market penetration and expansion will happen a lot quicker.
But it’s important not to understate the enthusiasm Australian shoppers have shown for the discounter model and more importantly, private label products. It is likely that private label product manufacturers would enthusiastically want to work with Lidl. Where once the option was to deal with either the big two or Metcash’s IGA stores, suppliers now have opportunities with Aldi and potentially Lidl. Lidl’s entry could provide a fundamental shift in power from the big supermarkets to suppliers.
Should the supermarkets be a Lidl worried?
The Schwarz Group, owners of Lidl, are the fourth largest retailer in the world, operating across more than 26 counties and generating more than US$100 billion in sales every year – substantially more than Australia’s Coles and Woolworths put together.
With more than 60% of revenues coming from its international operations, Lidl has both scale and foreign market entry know-how on its side. Lidl’s stores are larger than an Aldi site and while predominantly carrying private label products, they offer a fixed ranged of appliances, general merchandise, apparel and brand name products. All at very low prices.
Across Europe and the United Kingdom, discounters like Aldi, Lidl and Netto have carved out a strong market position and attained shopper loyalty. In Britain, the Lidl brand was considered more likable than Twitter, by young people, aged 18 to 24 years. We should expect to see the same market shift here in Australia.
If the experience of UK brands such as Sainsbury’s and Tesco are a guide, Coles and Woolworths should expect to lose market share. But it is independent grocers that would be would the worst hit. As the grocery market polarises, with full-line supermarkets at one end and discounters at the other, being stuck in the middle is not the place you want to be.
With grocery prices in decline since the “supermarket wars” began, it goes without saying that shoppers will be winners.
Strategically, it is not uncommon for global firms to keep their market expansion and entry plans to themselves, rather than letting the incumbents know their planned locations and who their proposed suppliers may be, as global food retailers greatly rely on local supply and third party logistics providers.
The current leaks surrounding trademarking activity and alleged discussions with suppliers and logistic providers would not be sitting well with Lidl, and this may hasten their entry plans, before competitors can lock up key locations and suppliers.
In a move possibly indicating the big supermarkets want to lock in supply before Lidl arrives, Woolworths has been attempting to negotiate to extend supplier contracts from 18 months to between three to five years.
While it will be tempting to compete on price, trying to beat these global discounters at the own game is fraught with danger. Such at strategy hasn’t worked elsewhere. In the UK and (specifically Holland), the impact of a prolonged price war has lead to eroded margins, and led to loss of market share and closures.
Woolworths and Coles should focus on what the discounters don’t offer, rather than compete on what they do best. IGAs appear the most exposed with the current business model not allowing operators to compete on range or price; accordingly we should expect to see structural change here.
With Aldi’s expansion into Western Australia and South Australia, and potentially Lidl’s entry, shoppers and suppliers will be the winners at the end of the day. As the market, once concentrated around the “big two” starts to distribute proportionately across all five players, shoppers will see lower prices, and suppliers, a greater choice of trading partners.
Coles will establish a Nurture Fund to help small Australian food and grocery producers, farmers and manufacturers to innovate and grow their business.
Coles will allocate $50 million over five years in grants and interest-free loans to fund the development of new market-leading products, technologies and processes.
Announcing the Nurture Fund with Coles ambassador and chef Curtis Stone at a vegetable farm in Victoria’s Werribee this morning, Coles managing director John Durkan said the Fund would be open to businesses with less than $25 million in annual revenue and 50 or fewer full-time employees.
“The Coles Nurture Fund is one way we can offer support and encouragement to small Australian businesses looking for assistance to take the next step in creating more productive and innovative ways of working,” Durkan said.
“Through investing in productivity driving activities we can not only provide better value to customers but also help set up small businesses to develop the products and platforms to expand their operations and, in some cases, export into global markets.
“Smart, energetic and agile small businesses can often be a launch pad for great product innovation and powerful new ideas on better ways of working.
“Coles wants to hear exciting and ambitious plans from smaller entrepreneurs about how they can deliver new and better product to customers, or about ideas they have for innovative business systems that will improve how they get product to market. Modest financial support can make the difference in getting great ideas up and running.”
Curtis Stone will join three Coles directors on a panel which assesses applications with the support of independent industry advice.
“Australia produces some of the highest quality food in the world and farmers, producers and manufacturers in Australia are continually demonstrating how innovative they are on their farms and in the factories. The Coles Nurture Fund will help drive innovation and growth for small businesses so they can take up more opportunities in Australia and on the world stage,” Stone said.
“I’m really excited to help support the industry by helping to assess applications from fresh food businesses.”
The Federal Court has ordered Coles to pay penalties of $2.5 million for its misleading "Baked Today" and "Freshly Baked In-Store" bread promotion.
The Federal Court has ordered Coles Supermarkets Australia Pty Ltd (Coles) to pay penalties of $2.5 million for making false or misleading representations and engaging in misleading conduct in relation to the promotion of its par baked bread products, in proceedings brought by the Australian Competition and Consumer Commission.
The products were promoted as “Baked Today, Sold Today” and in some cases “Freshly Baked In-Store”, when they were in fact partially baked and frozen off site by a supplier, transported and ‘finished’ at in-store bakeries within Coles supermarkets.
In imposing these penalties, Chief Justice Allsop said “The contravening conduct in this case is substantial and serious. Notwithstanding the absence of any specific evidence as to loss or damage by a consumer or a competitor, it is clear that the significant potential to mislead or deceive and thus to damage competitors, the duration of the conduct, and the fact that the goods in relation to which the impugned phrases were used were “consumer staples” indicate that the objective seriousness of the offending conduct was considerable.”
The evidence before the Court showed that Coles had engaged in the campaign with the clear purpose of improving its market share vis-à-vis its competitors, being bakeries such as Bakers Delight…It set out to do so by engaging in the conduct that, in fact, breached the Australian Consumer Law,” Allsop said.
“This penalty sends a strong message to companies that they should not use broad phrases in promotions that are deliberately chosen to sell products to consumers but which are likely to mislead consumers,” ACCC Chairman Rod Sims said.
“As the Chief Justice pointed out, it is important that sellers in the market recognise that consumers are entitled to reliable, truthful and accurate information”
“The ACCC took this action because it was concerned that Coles’ “Baked Today, Sold Today” and “Freshly Baked In-Store” claims about its par baked bread were likely to mislead consumers. The conduct also placed independently-owned and franchised bakeries that entirely bake bread from scratch each day at a competitive disadvantage,” Sims said.
Coles’ conduct was part of a nationwide campaign that was promoted in 637 Coles supermarkets. “Baked Today, Sold Today” was used extensively on packaging for par baked products over a three year period. During this time, Coles sold a significant number of par baked products and generated substantial revenue from these sales.
In September 2014, the Court declared that by using the phrase “Baked Today, Sold Today”, Coles represented to customers that certain bread products were entirely baked on the day on which they were offered for sale, when this was not the case, in contravention of the Australian Consumer Law (ACL).
The Court also declared that by using the phrases “Freshly Baked In-Store”, “Freshly Baked” and “Baked Fresh”, Coles had represented that certain bread products were baked from fresh dough, entirely baked on the day on which they were offered for sale and had been entirely baked in the Coles in-store bakery, when this was not the case and in contravention of the ACL.
The Food and Grocery Industry Code of Conduct has been tabled in Parliament, in a move the AFGC has called “a step towards levelling the playing field.”
The voluntary code prohibits specific types of unfair conduct by retailers and wholesalers in their dealings with suppliers and provides a clearer framework for these dealings. It complements existing protections for suppliers under the Competition and Consumer Act 2010, including the unconscionable conduct provisions.
“Businesses that supply groceries to major retailers and wholesalers will have extra protections under the new industry code,” ACCC Chairman Rod Sims said.
“The code also provides new powers for the ACCC. Once retailers and wholesalers sign up to the code, we will be able to enforce it and take court action for breaches. We will also be able to audit retailers and wholesalers to check that they are complying with the code.”
“Coles, Woolworths and the Australian Food and Grocery Council worked closely to develop the code. We expect these retailers will sign up to it shortly,” Sims said.
The Australian Food and Grocery Council (AFGC) said the tabling in Parliament is a step towards levelling the playing field for food and grocery suppliers in their transactions with the major supermarkets.
AFGC CEO Gary Dawson welcomed the announcement by the Minister for Small business Bruce Billson as integral to achieving a meaningful and enforceable Code that will drive behavioural change to encourage fair and effective competition in the long term interests of consumers.
“We congratulate the Government for progressing the Code as an industry-led solution to problems impacting on suppliers and consumers,” Dawson said. “The Code was developed initially through negotiations with Coles and Woolworths, and it was their willingness to come to the table and develop a meaningful Code that made it possible.
“Signing onto the Code will be a mark of the retailers commitment to fair dealing and to improving the operation of one of the most dynamic and competitive sectors of the economy – the fast moving consumer goods sector.
“The Code will now be tabled in Parliament as a regulation under the Competition and Consumer Act 2010 to give it real teeth,” Dawson said.
Key aspects of the Code:
The requirement for retailers and wholesalers to act in good faith
The requirements of agreements between retailers or wholesalers and suppliers, including that they be in writing
Tough restrictions on retrospective and unilateral variations to grocery supply agreements and the requirement for any variation and the reason to be in writing,
Greater transparency on the basis of shelf allocation for branded and private label products;
Recognition of the importance of intellectual property rights and confidentiality in driving innovation and investment in new products; and
A low cost and fast track dispute resolution mechanism.
ALDI Australia has announced it will be signing up to the Code as a party.
A spokesperson for ALDI Australia said "ALDI Australia has always supported the principle of a strong and sustainable Australian grocery industry for both suppliers and retailers, with an emphasis on fairness throughout all business dealings.
"The provisions of the Code reflect ALDI’s current practice with suppliers: forging long term, stable, sustainable relationships and working closely in partnership to provide Australian shoppers with high quality products at permanently low prices."
The ACCC is seeking penalties of at least $4-5 million over Coles’ Australian consumer law breaches for its “fresh” bread claims.
In a penalty hearing in the Federal Court on Tuesday, Colin Golvan, SC, said a hefty fine was appropriate due to the size of the company, scale of conduct and consumer reach, Fairfax Media reports.
“This case is one in which consumers are led to the cash register on the basis of misconceptions about the manufacturing process,” Golvan said.
But lawyers for Coles debated the severity of the misleading conduct, saying continuing strong sales of partially baked bread, despite revelations it was not made wholly in-store, showed the consumer “doesn't care.”
Philip Crutchfield, SC, for Coles, said "just because we're big, we shouldn't get hit with a record fine".
In June 2013, The ACCC launched legal proceedings against Coles, accusing the supermarket of engaging in deceptive and misleading conduct, relating to the claims on various ‘Cuisine Royale’ and ‘Coles Bakery’ branded bread products.
Wesfarmers commercial director, Ian McLeod, has resigned after accepting an offer to become President and Chief Executive Officer of Bi-Lo Holdings in the US.
Bi-Lo Holdings is based in Jacksonville, Florida and is one of the largest supermarket operators in the United States through its Winn-Dixie, BI-LO and Harvey chains. It has more than 70,000 employees, 801 stores, 530 in-store pharmacies and 146 liquor stores in the south eastern states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
“Ian’s new role reflects the high regard in which he is held in the global retail industry,” Wesfarmers managing director, Richard Goyder said
“Under his leadership, Coles more than doubled its earnings before interest and tax, helped generate significant shareholder value for the Wesfarmers Group and delivered Australian consumers better prices, quality and stores, further enhancing Ian’s credentials as a world class retailer.
Goyder said McLeod had done an outstanding job in more than six years with the Wesfarmers Group, including leading the turnaround and transformation of Coles following its acquisition by Wesfarmers in 2007.
“We are disappointed to be losing an executive of Ian’s calibre and passion but understand the attraction of taking on a major new challenge in the world’s biggest retail market.
“Since leading the turnaround strategy at Coles and handing over to his successor, John Durkan, last year, Ian has continued to provide leadership and highly valued guidance on growth opportunities for Wesfarmers as Commercial Director. His contribution will be greatly missed and we wish him well on his return to the Northern Hemisphere.”
McLeod will take up his new role at the beginning of March.
Coles is in “fresh” trouble over pink lady apples that were picked in April, but advertised as “Spring fruit”.
A complaint was made to the Advertising Standards Board over a “Feed Your Family Better” advertisement, where Curtis Stone makes reference to the Tasmanian grown apples being fresh at Coles right now and says “feed your family better, fresher, with spring fruit and veg from Coles…”
The complaint to the Board said “This is wrong and not possible, I live in Tassie and my apple tree is dormant! These apples would have been in storage for MONTHS, they are not fresh.”
Coles decided not to re-publish or re-broadcast the particular advertisement, but argued the advertisement is not misleading or in breach of the AANA Food and Beverages Code.
Despite being harvested in April, Coles maintains that the apples were fresh.
The apples were placed in a controlled low temperature and reduced oxygen (not frozen) environment, which the supermarket said preserves their freshness.
In its response to the complaint, Coles said it “considers apples can remain fresh, even if placed in cold storage. ‘Freshness’ is determined with regard to the quality of the produce, not whether it has been stored or not
“Coles’ view that produce can remain “fresh” despite storage is consistent with the Macquarie Dictionary, which defines ‘fresh’ as retaining the original properties unimpaired; not deteriorated; not canned or frozen; not preserved by pickling, salting, drying, etc”
The supermarket cited its decision to place the fruit in cold storage facilities as a way to avoid sourcing apples from outside Australia to fulfil demand and “support local growers by only selling in Coles stores Australian apples grown by local growers.”
But it was not the use of the word “fresh” that got Coles into trouble this time, rather, the mention of “Spring fruit”
The board considered “it is common practice for food bought in its natural state to be described as fresh and that the use of the word ‘fresh’ in relation to apples is not of itself misleading or designed to be misleading.”
The Board said “in the current advertisement there is a reference to ‘Spring’ fruit and considered that these additional references to Spring change the context of the word ‘fresh’ to imply that the advertised apples are Spring fruit and have been freshly picked during the Spring season ready for immediate sale.
“The Advertiser’s response that apples are generally harvested in Australia during autumn and considered that the average consumer would be used to seeing apples available in supermarkets all year round and may not be aware of this fact.
“The Board considered that the likely interpretation of the advertisement by the average consumer would be that the Tasmanian apples being promoted as fresh this Spring would have been freshly picked in recent weeks and not over 3 months ago.”
The federal court ruled in June that the supermarket misled shoppers by claiming that its bread, together with a range of other baked goods were “freshly baked” or “Baked Fresh” when it had actually been par baked months earlier in factories overseas.
A study has found the majority of consumers consider seasonal food to be tastier, more cost effective and convenient to purchase than non-seasonal food.
The Good Business Sense National Eating Habits Study 2014 involved 800 participants in NSW, VIC, QLD and WA (the sample of which was representative of the age and population distributions in Australia), and also involved input from a number of expert nutritionists, Traditional Chinese Medicine practitioners, and food companies.
Key findings from the Good Business Sense National Eating Habits 2014 study include:
76 percent of Australian shoppers consider seasonal food to be tastier than non-seasonal food
69 percent of Australian shoppers agreed that seasonal foods were more cost effective
55 percent of Australian shoppers thought seasonal foods were more convenient to purchase than non-seasonal food
Only 26 percent of Australian shoppers thought that seasonal food was better for the economy
45 percent of Australian shoppers would not pay extra for seasonal food
41 percent of Australian shoppers would pay up to 25 percent more for seasonal food
42 percent of Australian shoppers think there is a suitable range of organic and seasonal food on the current market, 33 percent think there is not enough
33 percent of Australian shoppers do not consider there to be enough seasonal or organic food on the market
62 percent of Australian shoppers believe that markets have a good range of seasonal food, with 54 percent believing that Woolworths and 50 percent for Coles have a good range. Thomas Dux only rated 15 percent and IGA 17 percent
Woolworths was the most popular response for stocking a good range of seasonal food amongst the youngest age group 18-20, with 75 percent compared to the overall average of 54 percent
66 percent of Australian shoppers said “no” to the belief that seasonal food needs to be organic to have seasonal benefits, while 34 percent said “yes”
Individuals place less emphasis on organically grown seasonal food as their age increases
‘Seasonal food fills 50 percent of my shopping basket’ was found to be the most popular answer among Australian shoppers
79 percent of Australian shoppers prefer seasonal food over non-seasonal food
27 percent of those earning under $27K have no preference for seasonal food
The study also measured consumption patterns of pre-packaged foods finding that yoghurt was the most purchased at 70 percent, frozen foods were at 54 percent and instant noodles 39 percent
62 percent of Australian shoppers said that artificial flavours in pre-packaged foods was the top reason for not purchasing them
57 percent of Australian shoppers said nutritional labels were the most attractive packaging feature when buying a product for the first time
When it came to food labelling, “Easy to read and understand” got 45 percent of Australian shoppers, 32 percent for “size”, and 32 percent for “recipe ideas”
“Texture” of labels and packaging only received 14 percent, while “smell” and “illustrations” were each at 17 percent
Comments on packaging and labelling revealed: price, visibility of contents, and the origin of ingredients were attractive features
Good Business Sense founder and Managing Director Anne Roze said, “We found that consumers are not educated enough to understand that seasonal food could be better for the economy and environment. This offers huge potential from an educational perspective, with only around 25% of respondents currently recognising all the benefits of eating seasonably.”
Coles’ 2015 first quarter retail sales results have indicated a food and liquor sales growth of 5.8 percent to $7.3 billion.
Excluding liquor, comparable food store sales increased 5.0 per cent while comparable store sales of food and liquor grew by 4.3 percent.
Food and liquor price deflation eased to 0.5 per cent for the quarter, supported by ongoing investment in value which was partially offset by tobacco excise increases and fresh produce inflation as a result of cooler weather and tougher growing conditions.
Coles Managing Director, John Durkan, said that the comparable sales growth achieved during the quarter was pleasing.
“Coles is focused on being ‘a little better every day’ and we believe that Australians deserve world-class quality, service and product choice, with strong supplier relationships a key enabler of this focus. During the quarter, both Murray Goulburn and Norco commenced supplying Coles branded milk under long-term arrangements,” Durkan said.
Coles opened four larger supermarkets and closed one smaller supermarket during the quarter, taking the total number of supermarkets to 765. A further 22 stores were refurbished during the quarter, taking the total number of supermarkets in the renewal format to 444, which represents 58 per cent of the network.
While Liquor continued to underperform food in the quarter, transformation activities commenced during the quarter. These activities included key leadership changes, a store support centre restructure and the development of detailed plans to accelerate store closures and reset the range.
Coles opened 16 new liquor stores, the majority of which were stores co-located with Coles supermarkets, and closed nine stores during the period, resulting in a total of 838 liquor stores.
RANGEme, an online platform connecting FMCG businesses and retail buyers, has launched a new National Award to reward excellent pitching skills.
Named The Big Product Pitch, the initiative is designed to encourage FMCG businesses to sharpen their pitching skills, which are fundamental to getting their product signed on by a retailer.
To enter, suppliers need a valid RANGEme subscription to submit a 90 second or less video selling the benefits of their products and their company for a chance to win $10,000 cash for their business.
The top five finalists will be judged by a panel of industry experts including Jon Haggett, General Manager for Dairy and Bakery at Coles Supermarkets; Pamela Curtin Head of Buying at Blooms the Chemist; Simon Gillies, National Merchandise Manager Coles Express; Scott Carrodus, Senior Buying, at Harris Farm Markets; David Zivkovik, Head of Buying at Healthy Life Group and Andrew Reitzer, RANGEme Advisor.
Each pitch video will also be available for viewing by all retail buyers in to RANGEme.
RANGEme CEO Nicky Jackson said: “Before RANGEme, suppliers would pitch to buyers over the phone or email in a very cluttered and competitive environment where it is difficult to get the pitch 100% right. With RANGEme, the message delivery is in the supplier’s control, offering the product the best shot at a ranging. We’re excited to see product pitches as they are uploaded into RANGEme.
The RANGEme video specs are purposefully very low-tech so that SME suppliers don’t have to incur a great expense.
The RANGEme website suggests the video to be no more than 90 seconds, be recorded on a smart-phone and then uploaded to a secure YouTube channel.
Entries open today (30th October) and closes 7 December at 23:59. The winner will be announced 15th December by 17:00.
The WA Great Southern region will exclusively supply Coles with its “Coles Finest” free range pork under a deal with Milne AgriGroup (MAG).
As part of the deal, MAG farmers will supply the Coles brand pork to over 700 supermarkets around the country, ABC Rural reports.
Under the new deal, MAG will increase free range pork production threefold, with eight Great Southern pork businesses signing up to supply around 1,200 pigs for slaughter each week by mid-2015.
“We've developed a model that's ideally suited to the Great Southern region. There are very few areas in Australia that have this sort of climate and soil type,” said MAG managing director Graham Laitt.
The Great Southern region of Western Australia, which is predominantly a grain growing area, runs south-east of Perth down to the coastal city of Albany.
“Let’s face it, traditionally the big supermarket chains source from the east coast where there's larger volume produced and Coles has actually moved its entire production of free range pigs into Western Australia and sourcing it exclusively from this region,” Laitt said.
“It gives them (farmers) an access route to market for a differentiated branded product.”
This is the first time in Australia where pork from local WA suppliers, accredited by the Australian Pork Industry Quality Assurance Program and endorsed by the RSPCA, will be sold nationally.
General manager of production at Coles, Allister Watson, said the retail giant has a “great relationship” with farmers.
“We've got a four-year contract with MAG and options to extend that.
“We want to put more farmers on the ground in WA and want to produce more Australian pork.
“It's all based on consumer demand and requirement. We're seeing a lot more demand from consumers for an understanding where their product comes from, how it's grown and the animal welfare aspects of growing livestock before it becomes meat.”
Coles and Ben & Jerry’s are among the 2014 Fairtrade Award winners recognised for helping create a better future for farmers, their families and communities in developing countries.
Now in their second year, the Fairtrade Awards recognise businesses that have helped grow Fairtrade in Australia. Australian consumers voted for their favourite Fairtrade products and cafes, and an independent judging panel consisting of representatives from NAB, Salvation Army and the Victorian Department of Environment and Primary Industries awarded prizes to two retailers.
The winners of the 2014 Fairtrade Awards include:
National Retailer of the Year – Coles Supermarket
Specialty Retailer of the Year – Oxfam Melbourne
Product of the Year (National) – Ben & Jerry’s Choc Fudge Brownie ice-cream
Product of the Year (Specialty) – Etiko’s This Shirt Frees Slaves t-shirt
George Dymond, Coles merchandise director, said, “Coles is delighted to have been recognised for a second year as Fairtrade Retail Chain of the Year, recognising our long-term commitment to a strict Ethical Sourcing Policy. For our customers, this means a wide-range of Fairtrade Certified products available at Coles – all supporting the critical work of Fairtrade in supporting producers in the world's developing regions.
Julia Sumner, general manager, Oxfam Trading said “we are so excited for our Oxfam Shop in the Walk Arcade [in Melbourne CBD] to be named 2014 Specialty Retailer of the year. The team in the Walk Arcade are such a passionate group of people who work tirelessly to campaign for fairer working conditions for Oxfam’s producers, it’s great to see their hard work be publicly recognised.”
Molly Harriss Olson, chief executive officer, Fairtrade Australia & New Zealand, said, “We congratulate the exceptional winners of the Fairtrade awards who show that it is possible to source their products fairly, be successful and have a life changing impact on farmers and workers in developing countries. We are delighted that Australian shoppers are continuing to reward companies for their ethical leadership and we hope that this inspires more businesses to look at their own supply chains.”
Other winners included San Churro who were awarded Fairtrade Café Chain of the Year and Fresh St@art Organic Cafe who won Fairtrade Café of the Year.
The ACCC has called for issues around enforceability and coverage to be addressed in the proposed grocery code of conduct, before a conclusion is reached.
Addressing the Australian Food and Grocery Council’s Industry Leaders Forum in Canberra, ACCC Chairman Rod Sims said a code of conduct that provides clear rights and legally enforceable norms of conduct would be of considerable assistance to food and grocery industry participants.
“However, many of the protections of the proposed Code are qualified and retailers and suppliers are able to agree to ‘contract out’ of Code provisions,” Sims said.
“This raises an issue of whether the Code will address the problems which industry has identified if norms of conduct in the Code are able to be traded away, rather than always enforceable.”
Sims also backed recent comments made by the Chairman of the Productivity Commission that Australia should stick with its successful strategy of favouring the many over the few by focusing on removing barriers to competition generally, rather than pursuing policies that favour particular sectors.
“I agree with him completely. So, it seems, does the Harper Panel review.
“We strongly agree with the review panel that there is a need to reinvigorate Australia’s competition policy, and ensure that it evolves.”
Sims welcomed the Harper Competition Review Draft Report and discussed proposed areas of microeconomic reform where the food and grocery sector stands to benefit.
“On road infrastructure provision and pricing, we support the panel’s recommendation on introducing cost-reflective road pricing linked to road construction, maintenance and safety,” Mr Sims said.
“Importantly, more effective road user charges can be offset by lower fuel taxes which currently account for one quarter of fuel prices.
“The ACCC also welcomes the draft recommendations to deepen competition in liner and coastal shipping services. This will also reduce your production costs."
In discussing proposed microeconomic reform, Sims rejected the notion all the low hanging fruit has been picked, and that all the really important reforms have been made.
“The reforms to shipping are low hanging fruit, and can be implemented quickly. And the road reforms are fundamental to our economy.”
Sims also welcomed the review panel’s consideration of Australia’s competition laws.
“In doing so, they have clearly had regard to established international approaches to setting the appropriate boundaries of such laws. Australia’s competition laws are behind international best practice in important respects.”
Sims broadly welcomed the Panel’s recommendation on “concerted practices”, the misuse of market power, and in relation to merger assessment.
In reporting on the ACCC’s recent compliance and enforcement activities, Mr Sims listed outcomes in area of credence claims including beer, pork, honey and free-range eggs.
“When making promotional claims about food or grocery products, the ‘who’, ‘what’, ‘where’ and ‘how’ must be accurate.”
Coles, Woolworths and ALDI have all pushed the cost of a 650g store-brand loaf to 85¢ – about 4 cents per sandwich slice.
Woolworths lowered the cost of its Homebrand white bread last Thursday, and Coles dropped the price of its Smart Buy white bread on Friday. ALDI followed suit and lowered its price on Saturday.
Woolworths' media spokesman Russell Mahoney said the new price will not impact upon suppliers.
The price reduction is the lowest ever price on Homebrand white for Woolworths, which the supermarket said is in response to customer demand for value on everyday staples.
George Weston Foods supplies Woolworths' store-brand bread, which is baked in Australia.
According to Goodfood, Baking Association of Australia executive officer Tony Smith said the cheap cost of supermarket bread came at a cost to Australian bakeries. “Basically it's a disgrace. All they're doing is bastardising the industry. Bakers can't make a loaf for under $1.50,” he said.
“It puts the local baker out of business and people out of jobs. Small business doesn't need this at the moment.
For Coles, the 85¢ cost is a further reduction on the $1 price tag on Smart Buy bread from the Coles' “Down Down” campaign in 2011.
Coles communications manager Jasmine Zwiebel said there had not been any supply problems with the discounted Smart Buy bread. “Bread is a staple in Australian households and will always be a popular item on the shopping list. Therefore, we will continue to ensure we have the quantities required to meet customer demand.”
Tom Godfrey, head of media at Choice, said getting consumers into the supermarket is the primary purpose of these types of discounts, but that another possible reason for the discounting is the growth of Aldi supermarkets.
“Particularly in the eastern states, Aldi is increasing its market share, with more people getting very cheap items from the 1500 product lines they stock,” he said.
Godfrey also suggested that consumers should ensure they are getting value for their money. "Price is one thing but you've also got to look at quality of the products," he said.
The Senate inquiry into supermarket giant Coles’ decision to slash the price of milk to $1 a litre has found the dairy industry has not suffered as a result.
Similarly, in 2011 Coles, then Woolworths lowered the price of store-branded milk to $1, and experienced a backlack from dairy farmers, who said they will be pushed out of business, through “unsustainable” prices.
A senate inquiry, into Coles’ decision to slash the price of milk has found the dairy industry has not suffered as a result and the ACCC concluded there was no problem with Coles’ decision.