Coles posts healthy profits as measures against shoplifters pay off
By Jessica Yun
Coles has reduced the amounts of groceries lost to shoplifters, but staff are continuing to face threatening situations as retailers around the country grapple with an industry-wide issue of theft and organised crime.
Chief executive Leah Weckert said stock loss volumes had fallen back down to 2015 levels after the company rolled out theft prevention measures such as camera monitoring (“skip scan”), automated security gates (“smart gates”), and “bottom of trolley” technology in hundreds of stores.
Coles has reduced theft at a time when other retailers are grappling with an industry-wide crisis.Credit: Eamon Gallagher
“During that period, as we have improved on loss, the market has not,” said Weckert.
“Despite the investments that we’ve made in safety initiatives for our team, we are continuing to see increases in threatening situations in store. And it is definitely the case that in Victoria, retail crime is escalating more than what we are seeing in other states.”
Retailers are increasingly saying that rising theft is punching a hole in sales and putting the safety of workers at risk. Dan Murphy’s and BWS have implemented body-worn cameras and augmented technology to help train staff, while Rebel Sport’s margins have been dented by persistent thievery.
Coles’ group sales rose 3.6 per cent to $44.35 billion, with underlying net profit rising 3.1 per cent to nearly $1.2 billion. Its grocery business increased sales by 4.3 per cent to nearly $40 billion as Coles focused on fewer, but deeper, promotions and said it locked in everyday low prices on a broad range of products during the year.
Weckert said a focus on quality, value for money, availability and customer experience improved customer experience metrics, resulting in bigger basket sizes and numbers of transactions. Australians were also continuing to buy more groceries online, with Coles’ e-commerce sales climbing 24.4 per cent to $4.5 billion.
Investors welcomed the result, sending Coles’ share price 8.1 per cent higher. Rival Woolworths, which is due to report on Wednesday, went along for the ride, gaining 2.4 per cent.
As interest rates fall, Weckert is watching to see how cost-conscious customers will respond, with behaviours like cutting back on treats, shopping around supermarket chains to find the cheapest deals, and using loyalty points currently still very much “in play”.
“I think we’re seeing those green shoots around sentiment. The question is going to be, when do we start to see some of the behaviour change and catch up with that? The timing on that is a bit unclear on this,” Weckert told reporters on Tuesday morning.
Coles chief Leah Weckert said stock loss volumes are down to 2015 levels. Credit: SMH
“As we head into the summer months and into Christmas, that will be something we’ll keep a strong eye on because I think that will be the pull for customers to start to return to some of their behaviours around going out a bit more and catching up with friends at the park or at a restaurant.”
Private label and exclusive products continued to be a key area of focus and growth for Coles, which added 970 new products to its range. This category contributed $13.7 billion in sales.
Over the year, inflation across the supermarket rose 1.5 per cent. Chocolate and egg prices are still at elevated levels, with the commodity price of cocoa near record-highs and egg supply impacted by outbreaks of avian flu.
Coles’ liquor sales rose 1.1 per cent on a comparable basis, in contrast to Dan Murphy’s and BWS parent company Endeavour, which saw retail alcohol sales slide 1.2 per cent. Over the year, Coles simplified its liquor offering by rebranding its Vintage Cellars and First Choice banners to the umbrella Liquorland brand.
As illicit tobacco sales climb, Coles’ tobacco sales slumped 30 per cent, now representing less than 3 per cent of its sales, down from 8 per cent in fiscal 2019.
More to come
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