Coles sales skyrocket on Little Shop success

A SIMPLE yet effective campaign has helped deliver a boost to Coles’ first-quarter sales numbers — to the tune of billions of dollars.

COLES has reported comparable sales growth of 5.1 per cent in the first quarter of the financial year off the back of the highly successful Little Shop campaign.

Headline supermarket sales for the 13 weeks from June 25 to September 23 were up 5.8 per cent to $7.66 billion. Including liquor and convenience, Coles’ total sales were up 5 per cent to $9.84 billion.

“Strong growth in basket size, transaction numbers and units sold, as well as improvements in fresh market share supported the sales result,” Wesfarmers managing director Rob Scott said in a statement on Monday.

“The result for the first quarter was pleasing as it demonstrated the ability of the Coles team to continue to focus on improving in-store execution while preparations continued for the proposed shareholder vote on the demerger of Coles.”

The 5.1 per cent increase in like-for-like sales compares with 1.8 per cent, 0.9 per cent, 1.3 per cent and 0.3 per cent in the prior four quarters.

Coles noted additional costs were incurred during the quarter as a result of the plastic bag ban, including investments in service, Flybuys and reusable bag giveaways to assist customers to transition to the change.

A new enterprise bargaining agreement introduced in April also added costs.

Prices increased by 0.6 per cent in the quarter as a result of “supply-side cost pressures in key fresh categories”. Bakery and meat prices increased as a result of the higher cost of grain and lower supply of livestock as a result of drought.

Fresh produce prices also increased, “reflecting heavily deflated prices” in the same quarter last year due to favourable growing conditions.

“Coles continued to focus on improving the quality and range of fresh products within the business which supported further growth in fresh market share for the quarter despite inflationary headwinds from the drought and seasonal impacts,” Coles managing director Steven Cain said.

Coles Little Shop promotion, which awarded customers a random miniature product for every $30 they spent, was credited with boosting sales of participating brands including White King and Messy Monkeys by up to 50 per cent.

The campaign will be back in 2019.

Wesfarmers earlier this month announced details of the planned $20 billion demerger of the supermarket chain, under which the Perth-based conglomerate will retain 15 per cent of Coles and 50 per cent of Flybuys.

Eligible shareholders will receive one share of the new separately listed Coles for every Wesfarmers share held at the demerger record date.

The shareholder vote is scheduled for November 15. Subject to shareholder, regulatory and court approvals, Coles shares would commence trading on the ASX on November 21.

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