Coles supermarkets recorded 13.1 per cent comparable sales growth in the third quarter, driven by unprecedented demand for groceries amid the COVID-19 outbreak.
On a media call on Wednesday morning, Coles CEO Steven Cain said the result is “the highest quarterly comp sales growth in Coles’ history”.
Total supermarket sales revenue for the third quarter rose to $8.23 billion, up 13.8 per cent on the same time last year.
During an “extraordinary March sales spike” in which the supermarkets saw the biggest surge, Cain said the priority of the Supermarket Taskforce, convened by the Department of Home Affairs, was to “curb demand”.
“I never thought I would ever be on a government call asking them for help to try and reduce sales, hopefully it will never happen again,” Cain said.
This month, the retailer has seen sales return to normal.
“Sales at supermarkets in April have returned to pre-COVID levels as consumers, working and staying at home, do more home cooking and baking from scratch,” he said.
This week, the retailer lifted restrictions on toilet paper and paper towels, but items such as pantry staples and antibacterial products remain under a two item limit. Cain said it could take weeks or months for disinfectant wipes stock levels to be fully restored.
He noted that the pandemic has changed consumer shopping behaviour with customers shopping less frequently, but buying more.
“People are shopping less times per week, and they’re buying more when they shop, and so with less trips you get less impulse items being purchased,” he said.
And with consumers doing more home cooking and baking, convenience meals are taking a hit.
“[Home cooking is] a more economic way to feed the family then buying convenience meals or impulse items,” Cain said.
“[Consumers] are eating more fresh food… Veg sales are the highest penetration they have ever been in our business.”
The supermarket boss also pointed to increased demand for online groceries and expects this to continue into the future. Coles Online sales revenue grew by 14 per cent in the quarter, even with Home Delivery and Click and Collect temporarily suspended.
“I expect that there will be more customers shopping from home in the future, and I think we will be in a great position over the next three years particularly when Ocado fulfillment centres arrive here in New South Wales and Victoria.”
Three pop-up distribution centres opened in New South Wales, Victoria and Queensland during the quarter and an additional 12,000 team members came onboard to help replenish stock.
Own brand products performed strongly, with sales growth of 15 per cent in the quarter as customers felt the economic hit of COVID-19. Own brand products accounted for 30 per cent of sales over the period.
“We expect own brand sales to continue to grow,” Cain said. “[Coles is] doubling down on endeavouring to grow the own brand offer.”
“We’re very conscious that value will be very high on the public agenda.”
Alcohol sales at Liquorland, First Choice, Liquor Market and Vintage Cellars stores rose 6.1 per cent to $740 million and is expected to continue to be elevated as restrictions on licensed venues continue.
“People are trading down a bit on things like wine… buying bigger pack sizes [of beer]… whether that’s here to stay will remain to be seen.”
Cain said it is unclear how COVID-19 will impact the business in the long-term and said it will be dependent on future Government measures.