Coles, the country’s second-largest supermarket chain, is closing the gap with its larger rival Woolworths, extending a run of better performance that emerged earlier this year, according to a survey of suppliers by UBS analysts.

The investment bank’s brokers said the outlook for the major supermarkets was positive – “albeit not as buoyant as in prior years” – as margins grew. “Company-specific performance is becoming an increasing driver and favours Coles and Metcash, with Woolworths less well placed, having led the market over recent years,” they said.