Coles, Australia's second-largest supermarket chain, is reintroducing its "Every Day Price" program in a strategic bid to win back customers amid increasing competition and tightening household budgets. The move comes as the company's stock experienced its most significant drop since early 2020.
Chief executive Leah Weckert announced the shift, noting that increased promotional activity from rivals such as Woolworths, Aldi, Chemist Warehouse, and Amazon has impacted Coles' profitability. Additionally, consumers are more actively comparing prices online, leading to a phenomenon described as "splitting of baskets," where customers divide their shopping across multiple retailers. While online sales growth remains strong, in-store sales momentum is a concern.
The "Every Day Price" program aims to lock in lower prices for thousands of products for at least six months, a direct appeal to consumers facing financial strain. Weckert acknowledged that this strategy will impact the company's short-term earnings but expressed confidence that it will foster long-term customer loyalty. The program replaces the "Down, Down" promotion, which was phased out following scrutiny from the Australian Competition and Consumer Commission (ACCC). The ACCC had alleged, and a court agreed, that Coles had previously manipulated prices under the "Down, Down" scheme to create a false impression of discounts.
Coles' stock fell 7.7 percent to $21.66 on Friday, trading around $21.28 on Monday, its lowest level since March 2020. This decline was also influenced by rising fuel costs affecting the supermarket's freight operations, exacerbated by the conflict in the Middle East. In comparison, rival Woolworths' stock was trading at $39.46 on Monday.
In addition to the pricing strategy, Coles plans to expand its "Exclusive to Coles" product range, particularly in anticipation of the upcoming Christmas season. The company operates 870 supermarkets and 988 liquor outlets. In the 13 weeks ending September 27, Coles reported a 2.2 percent increase in group sales, reaching $11.2 billion.
