Panic-buying and unique work from home environment delivers massive sales jump at Coles

The supermarket giant recorded a strong jump in online business as consumers needed more cleaning products and relieved boredom through baking.

Coles booked an unprecedented 13.1 per cent growth in quarterly comparable sales across its supermarkets, but panic-buying consumers have already changed their habits as they stay indoors due to coronavirus restrictions.

It said total supermarket sales revenue for the third quarter rose to $8.23 billion — up 13.8 per cent on the same time last year — as shoppers stockpiled groceries in the face of looming COVID-19 restrictions.

For comparison, a successful 2019 Christmas shopping period yielded second-quarter comparative sales growth of 3.6 per cent across Coles’ supermarket network.

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Since the start of April, however, comparable sales growth has broadly trended back towards pre COVID-19 levels.

Chief executive Steve Cain said shoppers were packing their baskets with more food but shopping less, meaning less convenience and impulse products.

There has also been a move towards more cooking and baking from scratch, supported by the success of TV cooking programs such as MasterChef.

“(People) are eating more fresh food,” Mr Cain said. “Veg sales are the highest penetration they have ever been.”

Both Coles and Woolworths implemented various ways to limit exposure to the deadly virus. Picture Glenn Campbell

For the fourth quarter, Mr Cain said Easter trading was more subdued this year due to restrictions on traditional family and friends events and celebrations. He also expects higher costs in quarter four as a result of the company’s extra COVID-19 investments.

This includes paying staff for longer hours as well as remunerating extra staff members who were brought on deck to help with increased traffic. There will also be increased store cleaning costs and price pressures associated with the effects of the drought and bushfires.

The company’s liquor division — despite being hurt by bushfire smog and floods in January and February — managed comparable sales growth of 7.2 per cent for the third quarter as pubs, clubs, and hotels were shut.

Sales at the company’s Liquorland, First Choice, Liquor Market and Vintage Cellars stores rose 6.1 per cent to $740 million and is expected to continue to be elevated as long as restrictions on licensed venues continues.

Coles Online sales revenue grew by 14 per cent in the third quarter, despite Home Delivery and Click and Collect being temporarily suspended in March prior to the launch of Coles Online Priority Service.

Mr Cain said short-term supply issues for items such as flour and toilet paper would most likely continue as demand remains elevated.

He also said it could be weeks or months before stores are fully restocked with products such as disinfectant wipes and hand sanitisers, though they are still currently available.

Three pop-up distribution centres were opened in New South Wales, Victoria and Queensland as capacity increased while Coles put on an additional 12,000 team members to ensure improved stock replenishment during COVID.

Mr Cain said it was unclear how long the various impacts of COVID-19 outlined above may continue to impact the business, depending on the extent or timing of the existing or any future Government measures.

He said most Australians wanted the economy to be restarted as soon as possible. Coles shares fell by 2.9 per cent to $15.76 after 20 minutes of trade on Wednesday, but have still risen by 9.4 per cent in 2020 against 20.3 per cent drop for the wider ASX/200.