Coles is reducing its product range by at least 10%, a move aimed at boosting profits but raising concerns among suppliers. The supermarket giant has been working with consultants from Bain for months to streamline its offerings, potentially increasing sales for remaining products.
The decision comes amid rising scrutiny of major supermarkets over grocery prices. Both Coles and Woolworths have blamed suppliers for price hikes, while the ACCC investigates their market power and pricing influence.
JPMorgan analyst Bryan Raymond noted that Coles is confident the ACCC inquiry won’t bring major changes. Coles’ Chief Commercial Officer, Anna Croft, previously stated that while product variety is being reduced, the company is reinvesting in key areas for customers.
Coles outperformed Woolworths in sales growth last year, benefiting from external factors such as Woolworths’ Australia Day controversy and supply chain strikes. Woolworths also increased discounts under political pressure, impacting its margins.
Raymond warned that while reducing product variety may provide short-term financial gains, it could limit consumer choice in the long run. He noted that Coles, under Croft’s leadership, is aggressively focusing on margin growth.
Nationals leader David Littleproud criticised Coles’ strategy, arguing it reduces competition to boost profits. He called for stronger ACCC powers, including potential store sales and stricter penalties. Meanwhile, Assistant Minister for Competition Andrew Leigh highlighted upcoming reforms to protect suppliers, addressing concerns over a fear-driven culture.
A Coles spokesperson stated the company is working with suppliers to enhance value and selection. However, the Australian Food & Grocery Council warned that supermarkets ultimately control pricing and may use product removals to pressure suppliers into less favourable terms.
For the latest retailer news and information, check out the IndiHub website or to speak to us about how we can help your business contact us.
