Coles unveils first Coles Local convenience store format

Sue Mitchell
November 13, 2018
AFR
Coles is aiming to take market share from independent food retailers including IGA and Harris Farm Markets by opening a network of convenience stores.
The first small format store under the Coles Local banner opened in the inner city Melbourne suburb of Surrey Hills on Tuesday and more stores are set to open in Victoria, NSW and Queensland over the next five years.
The first Coles Local store is half the size of a traditional full-service supermarket (1200 square metres) and carries about 8000 stock keeping units – one third of the usual range – but has twice the SKUs in Woolworths’ Metro convenience stores, enabling customers to do a full grocery shop.
More than half the floor space is dedicated to fresh foods including meat, 100 per cent Australian sourced fruit and vegetables, dairy and chilled ready-to-eat meals, including prepared meals and pre-cut produce under the Coles Local brand.
The range of packaged groceries is heavily skewed to the local demographic and includes a large selection of Asian foods, premium, vegan and vegetarian goods as well as local brands including meat from Melbourne chef Andrew McConnell’s Meatsmith, oils from MoVida, Noisette croissants, Brunetti panettone, Bizzarri Dolci biscuits and Laurent bread.
The store, which is part of Coles’ $120 million investment in Victoria over the next 10 months, also features a ‘foodie hub’, with a resident chef and in-store barista, and champions a zero edible food waste policy.
“Coles Local gives the Surrey Hills community the convenience of a supermarket with the character of a specialty store,” Coles chief executive Steven Cain said on Tuesday.
Mr Cain told journalists Coles would assess the success of the Surrey Hills store before rolling out the format, which enables Coles to open stores in areas unsuitable for a full-sized supermarket and which is expected to generate higher margins than a traditional store.
It is understood Coles has already earmarked sites for more Coles Local stores in Melbourne and other states.
The new format reflects Coles’ shift in focus from price to convenience as customer shopping habits change.
“The convenience opportunity is a big one,” Mr Cain said. “We have a strategy of making life easier for our customers and having more locations is a big part of that.”
“For the last decade Coles has been very focused on value and will continue to remain what we believe is the best value supermarket in Australia,” he said.
“However, consumer needs are changing and we are moving more towards convenience – that means convenience stores, convenience products, different things for different customer groups  –  and we have to supply that demand.”
“There’s a high appetite in Australia to eat out and have takeaway and high demand for good quality food …a  lot of the consumers in Coles ten years ago were buying groceries once or twice a week, they’re now buying fresh food three to four times a week and are very focused on what’s for dinner tonight,” he said.
“It is quite a significant change we’re seeing as far as consumers are concerned.”