Coles online sales continue to soar as liquor sales exceed expectations

Supermarket giant Coles continues to enjoy online sales growth, surprising analysts with the ongoing strength of one of its revenue streams.

Online shopping from Coles supermarkets continued to soar across Australia during the September quarter, more than doubling in Victoria as the state endured strict lockdown measures amid a second wave of COVID-19 infections.

The retail giant’s first quarter figures released on Wednesday showed a rise of almost 10 per cent in supermarket sales compared with the same period last year, while online sales revenue leapt by 57 per cent, contributing 6 per cent of overall supermarket sales.

Online sales grew by more than 100 per cent in Victoria, prompting investments including more delivery vans.

That was partly offset by lower sales to local businesses, with many closed.

Coles said liquor sales remained elevated across all states despite the relaxation of restrictions at licensed venues in some jurisdictions, with comparable in-store sales growth of 17.8 per cent and 80 per cent online.

“The trends in buying patterns experienced in the latter part of the prior financial year continued, with customers purchasing value-oriented larger pack sizes in beer and spirits,” the group said.

“The contribution from First Choice Liquor Market also increased as customers preferred shopping in larger format stores.”

First Choice Liquor Markets are contributing more to Coles Group as drinkers favour big format stores.

Sales at Coles Express stores also jumped by more than 10 per cent, which the company attributed to “reduced CBD footfall and the COVID driven shift in customer behaviour towards the convenience channel”.

Fuel volumes in all states excluding Victoria began to recover compared with the June quarter but, on an annual basis, were down more than 19 per cent.

Wealth management group Ord Minnett said Coles’ strong food sales growth was broad as expected but liquor figures were much greater than anticipated.

It said the convenience store sales growth was impressive given the decline in fuel volumes, which were broadly in line with Ampol.

On the second quarter outlook, Coles said online supermarket sales growth for the first four weeks was lower at 45 per cent as demand eased in Victoria.

But increased levels of at-home activity and entertaining would likely continue to underpin food and liquor sales, and as interstate borders opened up, domestic travel and fuel usage would probably rise towards pre-COVID levels, Coles said.