Signs shoppers returning to old habits

One of the nation’s biggest supermarket chains says shopping habits are returning to normal after the chaos caused by the pandemic.

Supermarket giant Coles says consumer buying patterns have started to normalise from the rampant hoarding that occurred during the coronavirus pandemic.

In its March quarter sales results on Wednesday, Coles reported a 6.1 per cent drop in supermarket revenue compared to the same period last year, when panic buying was rampant, significantly elevating sales of essential products.

Coles said customers were starting to return to regular shopping habits of frequent visits and big weekend shops.

“Early signs of normalising consumer behaviour were observed, including improved transaction growth, a recovery of COVID-19 impacted categories such as impulse, convenience and food-to-go, Sunday returning to be the busiest trading day of the week and positive indicators of the unwind of local shopping as customers returned to shopping centres and CBD stores,” Coles said.

Coles has more stores in shopping centres and CBDs than larger rival Woolworths, which benefited along with the Metcash-owned IGA network during lockdowns, as shoppers sought their nearest, least busy grocery retailers.

Analysts at Morningstar predicted in a recent research report that the tide was about to turn for all three companies, with the unwinding of unusually high food and liquor sales to weigh on their core businesses for the remainder of 2021.

They also noted Coles had lost market share in food retailing, which increased the risk of intensifying price competition – just as the retailer relaunched its “Down Down” specials campaign, with discounts heavily featuring higher-margin own-brand offerings.

The company launched 260 new own-brand products during the quarter.

Coles chief executive Steve Cain said he was pleased to report “the beginnings of a return to normality for Australians’ everyday lives” and the ongoing successful execution of the chain’s “refreshed” strategy, with 18 existing stores renewed.

The report also showed liquor sales revenue during the March quarter rose 2.6 per cent, with spirits and ready-to-drink products the main drivers for growth, while Coles Express recorded a 7.4 per cent sales revenue lift.

“Sales growth was driven by core convenience categories, such as food-to-go, drinks and confectionery,” the company said.

Commenting on the result, Citi said Coles supermarkets had lost market share during the period.

In the December quarter, it was slower to pivot out of the stockpiling period in terms of reinstating promotions and returning supply chain and stock levels to more normal levels, Citi said.

The analysts have a $19 price target on Coles shares, which are currently around $15.79.

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