End of supermarket power? Wesfarmers decision to spinoff Coles

Posted by AFN Staff Writers on 19th March 2018

Wesfarmers decision to spinoff Coles into a separate business may just signal the end of supermarket power in Australia.

Where once supermarkets spelled out big dollars, the industry is changing and it is taking a toll on the traditional supermarket’s profit margins.

For one, a number of retailers have spoken out recently about rising rent and competition in shopping creating a difficult environment to operate successfully in.

In 2017, Sumo Salad for example announced it would be moving away from shopping centres because of the influx of other food retails into centres. SumoSalad said it was too hard for its business to make the high shopping centre rent with such stiff competition.

The Retail Food Group also attributed the recently announced closure of 160-200 of its Australian food outlets largely to costly rent and declining shopping centre performance.

Outside the shopping centres, Aldi has been busy snatching up supermarket shoppers for years, offering something different to the two big two supermarkets.

Things are only going to get worse in this department with Kaufland buying property in Australia and preparing to open up.

Lastly, the Australian entry of Amazon has signaled a start of a no doubt strong attempt to convert Australians over to online purchasing of everyday goods.

Although Australians are really yet to take up online grocery shopping at great numbers, new and enticing offers from Amazon, and other competitors, are likely to win over more customers.

Where once supermarkets were super businesses in Australia, times are changing. This is evident with Coles decision to spin-off Coles.


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