Coles’ Strategic Shift to Compete in the Health and Home Market
Coles is intensifying its focus on the health, beauty, and household sectors, areas traditionally dominated by competitors like Chemist Warehouse, Bunnings, and Amazon. The supermarket giant has acknowledged a significant revenue loss—estimated at around $400 million—due to competition in these categories, prompting a strategic overhaul.
Leadership Changes and New Directions
Leanne White has been appointed as Coles’ new general manager for health and home. She highlighted the supermarket’s need to broaden its perspective beyond its traditional grocery framework. "We must lift our eyes," White stated, emphasising the importance of acting in response to market dynamics.
The health, beauty, and home categories encompass a wide variety of products, including cosmetics, supplements, and cleaning supplies. Coles has noted that competitors like Bunnings and The Reject Shop have successfully entered this market segment, often offering lower prices on household goods. Additionally, Chemist Warehouse’s beauty products have gained significant traction, with reports of consistently sold-out items.
Emerging Challenges and Competitor Analysis
Coles is also feeling pressure from online marketplaces such as Temu, which has significantly disrupted the household sector by providing products at much lower prices compared to traditional supermarkets. For instance, electric toothbrushes that might retail for between $25 and $50 at Coles can be found for just over $10 on Temu.
As part of its revitalised strategy, Coles has begun requesting suppliers in the health, beauty, and household categories to share their promotional strategies up to a year in advance. This proactive approach aims to optimise planning and ultimately enhance the supermarket’s offerings.
White expressed hope that extending the planning horizon to nine to twelve months will facilitate better coordination with suppliers and align Coles more closely with customer demands. "This enhanced planning will allow us to be agile to customer trends,” she noted.
Financial Insights and Future Aspirations
Coles’ analysis suggests that non-supermarket competitors have collectively realised about $100 million annually over the past four years in the health and home sectors. Acknowledging this landscape, Woolworths’ chief Amanda Bardwell admitted the supermarket is facing increased competition from alternative retailers, as consumers increasingly shop across multiple platforms to secure the best prices.
Coles believes that a stronger presence in the health, beauty, and household sectors could potentially recover as much as $1 billion in annual sales. This confident projection underscores the supermarket’s commitment to reclaiming its market share in these vital areas.
Conclusion
As Coles embarks on this strategic shift, it aims to expand its foothold in the competitive health and home markets. By harnessing effective planning, innovative promotions, and a keen awareness of market trends, Coles hopes to transform its approach and drive sales growth in sectors that are paramount to its future success.
