Liquorland to get a fresh look

Coles is working on a refresh of its co-located supermarket bottle shops Liquorland - its first rebranding in decades.

A shopper inside the new concept Liquorland store in Oakleigh. Picture: Aaron Francis/The Australian

Coles is working on a refresh of its co-located supermarket bottle shops Liquorland to give the fleet of wine, beer and spirits outlets its first rebranding in decades — that will also take the chain slightly up-market as consumers increasingly turn to premium beverages when selecting a drink.

The supermarket giant has recently opened a newly rebadged Liquorland in the south east Melbourne suburb of Oakleigh, where it is using the store as a pilot. If proved successful it could be rolled out to other Liquorlands in its portfolio that numbers almost 800 stores.

It comes as Coles unveils its full-year results on Tuesday, which are expected to show a 5 per cent lift in underlying profit, with food sales booming and up almost 7 per cent for the fourth quarter as consumers stripped the shelves to prepare for COVID-19 lockdowns and home isolation.

The transformation for the Liquorland pilot store in Melbourne began in May 2020, with the trial elements including more up-market and modern black and white “topography” design throughout store, which is a significant departure from traditional red-and-yellow livery that has been in place for decades in Liquorland stores.

The newly refreshed Liquorland also has more clear pricing – with whole bays marked out by single price, a more spacious layout and a range emphasis on local producers which has been a focus for Coles’ liquor arm recently.

The initiative is also the first branding strategy launched by the recently appointed boss of Coles liquor businesses, Darren Blackhurst, who came to the group late last year with over 25 years’ experience in international retailing, including 18 years at British retailer Tesco.

The Coles liquor division — which includes outlets Liquorland, First Choice, First Choice Liquor Market and Vintage Cellars — has improved its performance of late, taking the fight to arch rival Woolworths and its Dan Murphy’s and BWS chains.

The new Liquorland being trialled in Melbourne is seen internally at Coles as the latest generation of store formats that are co-located with a supermarket, and is removed from the traditional supermarket bottle shop that is tightly packed and reflecting a lower price point, or more down-market offering.

The new Liquorland design has a store format that focuses on simplified signage and seamless navigation to demonstrate specialist credentials (such as for whisky, or rum) and help customers find what they are looking for under stations such as “Wine region”, “Beer district” and “Spirits trail”.

Depending on customer feedback, Coles will trial the model in a number of additional locations to further refine the concept. It marks the first new store concept since First Choice Liquor Market, which began in 2018 as a combination of the existing First Choice Liquor and the Liquor Market concept, which was launched in 2016.

Results

Coles will release its full-year results on Tuesday, with analysts expecting a statutory net profit of $939m, down from $1.43bn in 2019. However missing from 2020s earnings are Target, Kmart and Officeworks, which were part of Coles accounts before it demerged from Wesfarmers.

Once stripping out the impact of the demerger and the loss of earnings from the three Wesfarmers retail units, analysts are tipping an underlying profit for Coles from its supermarket operations of $961m, up 5.6 per cent.

Coles is expected to also report a strong uplift in fourth-quarter sales, driven by panic buying in the wake of the coronavirus pandemic, with like-for-like sales for the quarter to be stronger by around 6.4 per cent — although some analysts are tipping closer to 8 per cent.

Jefferies analyst Michael Simotas expects modest supermarket margin expansion for 2020, with Woolworths’ recent trading update revealing that despite very strong sales growth on the back of COVID-19 and what is believed are gross margin tailwinds, its supermarket margins in the second half had declined as a result of additional cost requirements.

The analysts is expecting Coles’ convenience arm to post a loss of around $36m as a result of volume pressure stemming from the COVID-19 lockdowns. Coles should also report a strong trading update. “We expect a strong update, with our channel checks suggesting food sales are tracking at around 10 per cent on the back of increased in home consumption,” Mr Simotas said.