Customer can expect Coles’ shelves to look very different over the next two years as its product range goes Down, Down.
The supermarket is planning to cut the number of products on its shelves by 10 to 15 per cent of the next two to three years, according to news.com.au
But the actual number of items removed may be much higher, as Coles continues to replace branded products with its own-brand versions.
Coles managing director John Durkan revealed the plan at the Wesfarmers annual results briefing on Wednesday.
“You should expect over the next two to three years we’ll take our SKUs [stock keeping units] down somewhere from 10 to 15 per cent net,” Mr Durkan said.
“We’ll be bringing new (products) into the business, both Coles brand and branded, therefore removing the tail of the underperforming (products).”
Taking items off the shelf will provide efficiency
Wesfarmers boss Richard Goyder said too much variety on shelves cost Coles and customers.
“I’d still argue you can go into a Coles and find too many options in some product ranges and we’re working our way through that because we want our customers to come with us,” he said,
“We don’t want to do what Coles did prior to the acquisition, which is to just unilaterally take products off the shelf — that gets customers off-side. That’s why it takes a bit longer but as a consequence we’ll be more efficient.”
Mr Durkan said reduction in product lines to date had been crucial for delivering productivity gains throughout the company.And further reductions would be done one category at a time, and on a store-by-store basis. The savings made will be be used to lower prices on the products kept on the shelves.
Coles continues to ‘rationalise’ its product range. Picture: Tara Croser
Do shoppers like private label products?
According to market research firm IRI, private label brands were a key driver of Coles growth last year, even drawing customers away from Aldi.
Earlier this year, it was revealed customers were warming to Coles private label brands in a way they never had before, with Coles’ own brands taking top spots in long-life milk, toilet paper and dishwasher detergents.
Private label products make up about 25 per cent of all supermarket sales, according to market research firm IBISWorld. That figure is expected to grow to 28 per cent in the next five years.
Coles did not reveal breakdowns of the proportion of its private label to branded products, and a spokesman wouldn’t say whether the supermarket intended to increase that figure.
