Why Coles is following David Jones into food halls

Pushing forward with its larger goal of bringing greater convenience to customers, Coles unveiled a new food hall concept in its refurbished Tooronga Village store in Melbourne last week.

The store serves as a template for more than 100 existing Coles locations, which will be converted to the new Fresh Convenience format prior to Christmas, and has created more than 65 jobs for the local community. 

According to Coles’ head of convenience, Louis Eggar, the food hall concept is “all about making life easier for our customers by solving the problem of what to eat – for everyone, any time of the day”.

“At Coles, we want to win together with our suppliers, so we’re excited to work with the best in the business for premium quality, quick and easy meal solutions that appeal to our urban and time-poor customers in Hawthorn East and surrounds.”

The refurbished food hall holds over 450 product lines, including Coles’ expanded range of fresh kitchen salads, ready-to-go breakfasts, pre-cut fruit and veg and ready-made meals.

The offer also continues Coles’ strategy of partnering with other retailers to provide a more specialised service – with the hall including on-site offers from Melbourne cafe Earl Canteen and Japanese-style food chain Sushi Sushi. 

Earl will provide an on-site team to provide freshly made sandwiches, coffee, salads, sweets, made-to-order breakfasts and “wholebowls” – hot food bowls exclusive to Coles.

Sushi Sushi’s general manager for commercial partnerships, Gavin Meadows, said its offer would be a “store-in-store concept”, and would feature its whole range.

Shrinking shopping baskets

KPMG head of retail Matt Darby told Inside Retail Weekly the evolved offer signalled Coles’ recognition of the changing wants and needs of modern shoppers. 

“Essentially, this is a move from Coles recognising the consumer’s needs for more convenient, fresh propositions,” Darby said. 

“Particularly in urban environments, we are moving to smaller and more frequent shops, and looking to buy what we need to satisfy the next few meals versus the next week.”

The food hall, according to Darby, serves to balance value, convenience and experience for time-poor consumers who “need it now”. 

“There is a reduced need for the large baskets and weekly family shop… But we are still looking for healthy, fun, fast and good-quality meal propositions that are readily available.”

Staying on-brand

Dr Jason Pallant, an assistant professor of marketing at Swinburne University, told IRW the offer makes a lot of sense for Coles – more so than for other retailers, such as David Jones, that have included food halls within its stores.

“One of the key differences here is the fit with the core brand,” Pallant said. 

“While David Jones has had an increasing focus on food in recent years, it is still somewhat separate from the core brand – most consumers go to DJs to shop, and the food halls are an added benefit.

“With Coles, the entire offer is centred around food, whether that be fresh groceries or the restaurant meals.”

David Jones’ recently announced partnership with BP service stations to expand the reach of its food offer has quite a bit of potential, Pallant said, but the positive for DJs is its entrance into the convenience space. Coles is already a convenience leader, and food halls will go along way to keep that streak going.

Side-stepping price wars

“Many Australian retailers are realising that it is increasingly difficult to compete purely on price, particularly as more international players come to our shores,” Pallant said, signalling the effect Aldi and the incoming Kaufland, has had on the Australian grocery industry. 

According to Pallant, retailers are refocusing their offer either based on better knowledge of their customers, enhancing convenience, or through offering additional services and experiences within their core brand. 

“This is a lot to ask of any one retailer, so strategic partnerships like Coles are trying is a great strategy,” Pallant said. 

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