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'Putting out fires': Coles' new plan to beat Woolies

Coles will focus on "putting out the fires" in its business while shifting its strategy to focus more on pleasing wealthier customers and meeting the demands of tech-savvy millennial shoppers, the supermarket's boss says.

Managing director John Durkan said it could "never give up" being competitive with its rivals but had to do more than just trying to attract shoppers on price as it attempts to regain momentum lost to Woolworths.

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Mr Durkan said Coles was in the early stages of rolling out an "evolution" in its corporate strategy - the third such pivot during his 10 years at Coles - to ensure the supermarket remained relevant as the market and its customer base changes.

A priority for the first two years is "putting out the fires", which Mr Durkan said referred to getting retail basics right such as stock availability, staff levels, and making sure car parks were freshly painted and pothole-free.

“We want to make sure that all of our fresh departments are full and available in the evening for our evening customers. For a customer, doing that would be putting out a fire," he told Fairfax Media.

"We’re determined to make sure we’ve got those basics right because they’re the building blocks for our business."


The Wesfarmers-owned supermarket, which has been lagging behind major rival Woolworths on sales growth and earnings, revealed the first public signs of its new strategic direction yesterday in an advertising push that departs radically from its long-running "Down Down" campaign.

The "Good things are happening at Coles" ads make no mention of price and instead focus on the supermarket's policy of sourcing Australian produce, its support of charities and community groups, and sustainability efforts.

Retail analysts had previously criticised Coles' marketing efforts, saying they had become too focused on price and neglected other issues such as quality.

Mr Durkan said Coles would start doing more to encourage middle- and high-income customers to do more of their shopping at the supermarket, with plans to roll out new targeted products over the next few years.

"We’ve definitely got it right in terms of fulfilling the basket for the $150 shopper... but we’ve got to make sure that we fulfil all the other baskets as well,"  he said.

It will soon launch a home-brand range of artisan bread produced with Melbourne bakery chain Laurent, Mr Durkan said, while meal kits were emerging as an essential category for Coles.

He said millennials, or those born from the early 1980s onwards, were becoming a larger part of its customer base as demographics shifted, and so it was meeting their demands for more shopping options - including home delivery, collection in store, or from its Coles Express outlets.

The strategy refresh for the next five years comes as Coles tried to regain momentum from Woolworths, which has outstripped it on sales growth for each of the past five quarters - jumping 5 per cent in the most recent quarter compared to Coles' 1.4 per cent.

Executive reshuffling is also going on at Coles, with Fairfax Media able to reveal that chief financial officer Chris Nicholas will leave the business in April to take up a job with US giant Walmart.

Mr Nicholas was previously Coles' finance and merchandise director, and was promoted to CFO in a reshuffle last year.