Coles has rejigged its fresh produce discount planning

Coles is looking to ramp up the pressure on its main rival after recent wins, now restructuring fresh food promotions which could trigger a new fruit and veg price war.

Coles has had some recent wins over arch rival Woolworths. Picture: Jeremy Piper

Coles is looking to ramp up its pressure on arch rival Woolworths after recent wins in sales growth and consumer surveys, by now restructuring its fresh food promotions and discounting planning with a goal to offer the right produce at the right time and at lower prices.

The changes to its planning around pricing and promotions for fresh food – considered by many supermarket experts and analysts as the most important part of a supermarket’s offer – could spark a renewed price war between the major supermarket giants.

For decades Woolworths and Coles have fought it out over fresh food, covering produce led by fruit and vegetables which are the first thing a shopper sees when entering a store, with Coles now deploying a greater level of planning to its discounting.

Coles has decided to move from a 10-day promotion planning cycle – also known within the industry as “trade planning” – to a much longer and detailed 12-week cycle which it believes will give greater certainty to suppliers, enable it to better navigate seasonal fluctuations that dominate fresh food and ultimately deliver a better, cheaper offer for shoppers.

“Our current trade planning operates a 10-day cycle which often leads to volatility and unpredictability in our offerings,” said Coles general manager for fresh produce, Charlotte Gilbert.

“While the current process allows us to adapt and respond to the changing nature of produce it also embeds a reactive culture focused on the need to fill promotional locations in-store and restricting us from longer-term thinking.”

A supermarket’s fresh food offer is considered the most important category. Picture: Shae Beplate.

Ms Gilbert said Coles was in the process of moving to a 12-week cycle which should benefit suppliers and shoppers.

“With this longer-term approach we can expect to unlock significant benefits,” she said.

“This includes strengthening our customer offer around seasonality and key events, it enables us to work through our promotional allocations in stores with more clarity, our channel marketing and our promotional opportunities will be enhanced through the lead times. And we will also see improvements in our in-store messaging and opportunities.

“And ultimately this will deliver better value for our customers. Importantly in the long term this will also allow us to provide (suppliers) with earlier and more accurate order plans which is what we saw at Christmas and will enable us to be more agile in times of product (supply volatility).”

Promotions and discounting is playing out as a key weapon for Woolworths and Coles as they battle for shoppers amid the cost-of-living crisis.

But planning head in fresh produce can be difficult as available stock is shaken by weather events and other unexpected impacts to growing and harvests. This also places suppliers in a difficult position as they negotiate contracts with the supermarkets, an issue that has come up in recent inquiries into the supermarket sector.

Coles is now looking to improve that supplier relationship in fresh produce.

“We have listened to feedback provided by our fresh produce suppliers and made this change to our promotional plan to increase transparency, collaboration and planning for our promotions,” a Coles spokeswoman said.

“This is a great example of finding industry-led solutions to supply chain challenges as our suppliers have told us that the new 12-week plan provides them with more certainty on volumes and an ability to better forecast demand.

“Pleasingly, the increased efficiency will also allow us to offer more value to our customers while we continue to deliver high quality fruit and vegetables.”

Woolworths is also fully aware of the need to bring down prices.

In February Woolworths chief executive Amanda Bardwell announced $400m in savings, of which a large portion is expected to be invested in lower shelf prices to win over shoppers who have been taking their shopping baskets elsewhere of late.

It followed the recent reporting season where Coles reported supermarket sales growth of 4.3 per cent for the December half, easily eclipsing the 2.7 per cent sales growth for Woolworths supermarkets.

Woolworths is also facing a less happy shopper. A recent UBS Evidence Lab showed Coles leading Woolworths for the first time as the preferred grocery retailer. The UBS survey reported 38 per cent of those surveyed opting for Coles and 37 per cent for Woolworths.

Originally published as Coles has rejigged its fresh produce discount planning