Coles Local, the new small store format, could make up 10 per cent of all Coles supermarkets

Coles has set itself an ambitious goal for its new Coles Local store format to make up as much as 10 per cent of all its supermarkets across the country.

Coles chief sustainability, property and export officer Thinus Keeve in the new Brighton Coles Local.

Coles has set itself an ambitious goal for its new Coles Local store format to make up as much as 10 per cent of all its supermarkets across the country within a few years as shoppers embrace the specially curated neighbourhood stores that focus on local produce, ready-made meals and premium foods.

Launched only three years ago with its maiden Coles Local store in Melbourne’s eastern, moneyed suburb of Surrey Hills, it has now opened its 13th store in the equally affluent Melbourne suburb of Brighton and plans to have 17 sites in the fleet by the end of the current financial year.

And Coles is putting its foot down on the accelerator to push ahead with more Coles Local openings, with Coles chief sustainability, property and export officer Thinus Keeve revealing on Thursday that it was aiming for “high double-digit” store numbers that could result in Coles Local eventually representing 10 per cent of the more than 830 Coles supermarkets in its portfolio.

“They are fulfilling a role within our store network – between 5 per cent and 10 per cent of our network,” Mr Keeve said. “By the end of the financial year, we will have 17 Coles Local stores … and I would say (the store target) is a high double digit number. They are very bespoke for the local community, very bespoke for their offer.”

At its most recent financial results, Coles unveiled an accelerated capital expenditure plan in which it will spend as much as $1.4bn in 2022. Part of this higher investment will go towards the continued rollout of its Coles Local stores.

The firstColes Local store at Surrey Hills in Melbourne.

The supermarket giant has already backed its belief in Coles Local with cash, with the rollout contributing to an increase of more than 50 per cent in capex on store renewals in 2021.

This has resulted in the opening of a first Coles Local in Brisbane, a recent Coles Local in Sydney’s CBD (the first Coles opening in the Sydney business district in 15 years) and on Friday the ribbon being cut at the Brighton Coles Local.

The Coles Local format has gone from an idea to a proven winner and cornerstone of the Coles business.

“This Brighton Coles Local store is number 13 and, having the 13 stores, it is no longer a trial and we are very happy with the performance of the brand. We are very proud and very happy on the commercial returns we are achieving with Coles Local,” Mr Keeve said.

“It is becoming a sizeable business in itself.”

Coles Local is typically half the size of a standard Coles supermarket and has about a third of the products. Although it still delivers a “full shop” offer for customers, it is tailored to meet the interests of locals through artisan and premium foods featuring international cheeses, fresh pasta and breads and, in the case of the Brighton store, Vietnamese rice paper rolls from the brand new Roll’d kiosk.

The Coles Local format is also a handy and nimble answer to the recent shift in consumers preferring local neighbourhood shopping as the pandemic spread, with rival and smaller independent stores that specialise in catering to locals such as IGA, Ritchies and Harris Farm performing strongly in the past few years.

Coles Local has also been given its impetus from it becoming increasingly difficult to find enough space to open full-line Coles supermarkets in areas where the retailer could see population growth in those inner suburbs.