Coles is intensifying its investment in the supply chain, from the farm to consumers’ front doors, announcing plans to allocate $880 million toward a new, technologically advanced distribution centre. This comes on top of the $1.4 billion Coles has already invested in its food and grocery supply chain.
In its first-quarter sales report, Coles revealed a 2.4% increase in supermarket same-store sales, reaching $9.507 billion. As part of its growth strategy, the company will partner with Witron once again to build an additional automated distribution centre (ADC) in Truganina, Victoria, expanding on the two Witron-built centres already in operation. This new robotic facility will handle packaged goods, including canned foods and essentials like toilet paper, and aims to boost capacity and speed across Coles’ supply network.
Despite facing competitive pressures, with Woolworths reporting a 3.8% increase in comparable sales, Coles held steady in response to economic challenges without issuing a profit warning. Coles CEO Leah Weckert acknowledged that rising living costs are affecting customers’ buying behaviours, prompting Coles to emphasise value through weekly specials, targeted value campaigns, Flybuys, and exclusive brands.
While Woolworths hinted at a slower sales growth, Coles continued to invest in lower prices and promotions to drive sales and stay competitive. Ms. Weckert noted that sales momentum has stayed consistent in recent weeks, bolstered by Coles’ value-oriented efforts, especially as families prepare for the holiday season.
Construction of the new ADC is set to begin next year, with completion expected in five years. This Victorian centre will be larger than the existing facilities in New South Wales and Queensland, with approximately 15% more capacity and the ability to process up to 4.6 million cartons weekly. It will support stores across Victoria and Tasmania, while also integrating with Coles’ supply chains in South Australia and Western Australia, enhancing product availability nationwide. Along with the existing ADCs, this new addition will enable Coles to fully automate its ambient distribution network along Australia’s eastern seaboard.
As part of this expansion, Coles expects a $35 million pre-tax provision in the first half to cover site closures and reconfigurations necessary for the project.
In its sales update, Coles highlighted the ongoing influence of cost-of-living pressures on customers’ choices, with shoppers seeking value through winter and spring promotions, sports giveaway campaigns, and robust e-commerce growth. Sales in Coles’ exclusive-brand items rose 4.5% to $3.3 billion, driven by strong food category volumes. However, some supply challenges in egg availability due to Avian influenza had a minor impact on overall growth.
Supermarket price inflation held steady at 1.5% for the quarter, with a slight moderation excluding tobacco. Coles also saw significant growth in e-commerce, with online sales rising 22.4% to $1 billion, reaching a 10.8% penetration rate.
In its liquor segment, Coles experienced a 4.4% decline in comparable sales, totalling $851 million.
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