Coles claims suppliers will gain from new price-cuts

Posted by AFN Staff Writers on 14th January 2013

Coles merchandise director John Durkan has assured Australian suppliers that they will benefit from the latest round of price cuts on everyday Coles products – in spite of mounting criticism by producers of the Coles campaign.

Coles last week cut prices for 100 products such as bread, juice, and dairy products in its supermarkets, and Coles Brand milk in its Coles Express stores.

Coles Brand milk remains at the Down Down price of $2 for 2 litres or $3 for 3 litres and Smart Buy bread remains at $1 a loaf in all Coles supermarkets. The Coles Express stores will also feature $1 for 1 litre Coles Brand milk, set to start a price-war with independently-owned convenience stores and supermarkets.

The Queensland Dairyfarmers Organisation has called for consumers to support small convenience stores over the cheap Coles Brand milk, but Mr Durkan said that suppliers stood to benefit from increased orders “as lower prices drive higher sales.”

“Helping Australian families make ends meet is our top priority but we know that customers want to know that lower prices for them does not mean suppliers get squeezed,” Mr Durkan said.

“Coles has invested tens of millions of dollars in these price cuts which should benefit Australian suppliers as orders increase,” he added.

IBIS anticipates convenience store consolidation

Research group publisher IBISWorld’s recent convenience stores market report suggests that the traditional convenience store may suffer further as Coles extends its supermarket price-cutting campaign into its Coles Express convenience stores.

IBIS reports that the Australian convenience stores sector is rapidly changing, with industry sales rising by an annualised of only 0.8 per cent in the five years through 2008-13.