Why 2500 products will be disappearing from Coles’ shelves

You had better stock up on your favourite brand of Himalayan pink rock salt from Coles. Range-slimming is the new salvo in the supermarket’s fight to preserve profit in the midst of sustained attack from all sides thanks to the cost-of-living crisis.

Australian supermarkets are caught between a rock and a hard place when it comes to profits. They are under intense pressure from politicians to cut shelf prices and simultaneously pay Australian suppliers more.

Coles’ 2025 salt cull: which ones will go?Credit: iStock

Meanwhile, any number of surveys or Uber driver chats makes it clear enough that the big supermarkets are on the nose with consumers who put them in the responsibility frame for the pain they feel making ends meet.

Coles’ answer to this conundrum is to reduce its product range by 10 per cent – that’s 2500 products that will disappear.

It isn’t a new tactic for supermarkets – it was employed by Coles for a while about 10 years ago.

This time around, the strategy comes off the back of months of work by management consultants Bain.

The Himalayan rock variety may survive the great Coles salt cull of 2025. But there are 13 different salt categories on offer, and the lion’s share will disappear from the shelves as will, for example, some pack sizes in shampoos.

Reducing product range in major packaged goods will probably remove some suppliers and increase the shelf space and volumes for others.

The idea is that this will allow Coles to cut a better deal with suppliers whose products remain.

As such, it’s a margin game, or as Coles describes it, efficiency.

But Coles needs to tread carefully. There is too much political attention on local and particularly fresh food suppliers to cut any from the list.

These smaller growers, such as zucchini farmers, are not the kind of business partners that Coles wants to see turning up on the Today show complaining of being done over by the big supermarkets.

The National Party jumps on this kind of publicity to bolster its bona fides as a regional protector and farmers’ friend.

Meanwhile, an increase in shelf prices is picked up and amplified on social media, and then scrutinised by all sides of politics and the competition/consumer regulator.

Shoppers will have less choice after Coles’ range-slimming. Credit: Oscar Colman

This supermarket squeeze is already putting pressure on profits. Woolworths warned investors in October last year that “promotional activity” increased – code for discounting.

In the next breath, Woolworths boss Amanda Bardwell said earnings from Australian food would come in below expectations for the first half of the 2025 financial year, and below that which it reported in the first half of 2024. Woolworths was also hit by supply chain and industrial relations issues.

Coles and Woolworths are feeling the heat of last year’s action by the Australian Competition and Consumer Commission accusing them of misleading customers on discounting pricing claims.

The only group of stakeholders that politicians care little about is the large, often overseas, supermarket suppliers that comprise much of the package product found on the shelves.

These big international brands have plenty of power and arguably more leverage than the supermarkets they supply.

And then there is the other risk for Coles – that consumers won’t be happy if choice is reduced with a smaller range of products.

JP Morgan analyst Bryan Raymond warned last week that reducing range provides a short-term benefit to margins but is not sustainable long term.

Better grab some of your favourite salt now to sprinkle on your eggs – if you can get them.

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