Coles looks to answer rise in ‘cross-shopping’ with better weekly specials

Coles (ASX:COL) is well aware Australians have been “cross-shopping” to cut costs, with the average shopper visiting as many as three or four supermarkets to find bargains amid the cost-of-living pinch – and the staple supermarket giant sees better weekly specials and value campaigns as the answer.

Speaking after the chain shared its first-quarter sales on Thursday, Coles CEO Leah Weckert identified “cost-of-living challenges” as the reason for cross-shopping.

“Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys, and exclusive brands,” Ms Weckert said.

The objective for Coles will be convincing customers its sales are enough to only shop at one store. And, it has be legal – Coles is being investigated over alleged fake discounts.

“We are constantly adapting our promotional program over time and making changes. We are always looking for how can we simplify the experience of finding value in our stores for customers,” Ms Weckert continued. (The supermarket boss didn’t address recent allegations from the ACCC in Thursday’s update.)

“If you look over the last 12 months, we certainly honed in on promotions which are bigger and more effective for customers,” she added at the meeting.

Coles seems to be navigating the crisis well either way – taking nearly the opposite track to Woolworths (ASX:WOW) yesterday – with the consumer company reporting a 2.9 per cent jump in sales to the end of September.

The supermarket division in particular had strong growth, accounting for $9.5 billion in sales as its online sales continued to hike upwards with a 22.4% climb.

Coles also reported price deflation for meat, dairy, health and beauty, and homecare.

Alcohol sales were a laggard, with no reported growth in-store or online.

The Coles share price stayed relatively stable on Thursday, slipping just 0.9% to $17.54 by the end of trade – though it likely dodged the hammering Woolworths took all day because, unlike its arch-rival, Coles didn’t share profit margins.

Investors may have also been mildly impressed by Coles’ plan to inject $880 million into a third automated distribution centre in Victoria.

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