Less is more as Coles takes punt on ‘local’ stores

Coles will focus on premium food from suppliers such as MoVida and Brunetti and fresh, local produce in a new style store opening in Melbourne.

Coles is betting less will deliver more as it unveils a new upmarket small store format in its latest push for a bigger share of the nation’s grocery spending.

The supermarket heavyweight has opened its first “Coles Local” store, which provides a range of premium food items targeting health-conscious shoppers who are willing to pay for convenience and quality.

In Melbourne’s affluent Surrey Hills neighbourhood, the store is half the size of a regular Coles and carries half the number of goods. But it stocks 1000 products that are not available in regular stores, including items sourced from speciality suppliers such as pantry items from MoVida, cakes from Brunetti and meats and ready-made meals from Meatsmith, backed by Cutler & Co’s Andrew McConnell.

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Coles chief Steven Cain in the Surrey Hills store. Picture: Jake Nowakowski

More than half the floor space is dedicated to fresh foods that are 100 per cent Australian, meaning if a fruit or vegetable is not in season, it won’t be found on the shelves.

It also sells a new range of Coles Local convenience meals and has a Foodie Hub with an in-store chef providing product samples as well as cooking advice and recipes to customers.

The new format is the latest indication the nature of the supermarket wars is changing as both Coles and Woolworths increasingly focus on convenience and service rather than just price.

“Consumer needs are changing,” new Coles chief Steven Cain said. “We are moving towards convenience and that means convenient stores and convenient products.

“It means different things to different customer groups and we have to supply their demand.”

Coles will monitor the success of the pilot store before deciding how many it will roll out, although other locations in Melbourne and Sydney are under consideration.

Up-market food offerings on a large scale have previously failed to find financial success.

The new Coles Local pilot store at Surrey Hills. Picture: Supplied

Woolworths pulled the plug on its Thomas Dux gourmet grocery chain last year.

David Jones has dived back into gourmet food and ready-to-eat meals — opening some stand-alone food halls — having blown more than $120 million on its Foodchain concept a decade ago.

“This is a high-growth channel wherever you look in the developed world,” Mr Cain said.

“There is a high appetite in Australia to eat out and for takeaways and there is a high demand for good quality food.

“Ten years ago people were shopping once a week. They are now buying fresh three or four times a week and are very focused on what they are having for dinner tonight.”

The new store format comes as Coles prepares to be spun out of conglomerate Wesfarmers and start life as a new company listed on the stock exchange in its own right.

Wesfarmers shareholders will vote on the demerger tomorrow.