The retail giant is changing its stores depending on, among other things, the affluence of local shoppers. But some customers aren’t impressed.
AUGUST 24, 2020
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“It’s the best Coles; I love it,” says Vesna Temelkos as she pokes around the DIY pizza station at the supermarket giant’s store at Eastgardens in Sydney’s east.
Here, she can choose from fresh dough, tubs of mozzarella, bocconcini or Fior di latte cheese, and a sauce base to make an Italian masterpiece at home.
“I usually make my own dough, but this dough is the best. There’s more variety of everything here,” Ms Temelkos told news.com.au. “All Coles should be like this.”
Not all Coles will be like this – but about 25 per cent might, in affluent suburbs. Equally another quarter, aimed at less moneyed-up customers, could look very different with the retailer part way through a plan to radically reshape its branches.
Depending on where you live, your local store will end up being reconfigured to either a Format A, Format B or Format C supermarket.
Coles told news.com.au the plan was about “reducing waste” and was “guided by customers”.
Coles is refurbishing its stores to one of three formats – Format A, B or C.Source:Supplied
Eastgardens, as well as the Tooronga store in Melbourne, is squarely Format A. Up to 200 other Coles could convert to this too. Coles has described Format A as “a premium, foodie and convenience offer with extended range” aimed at a “mid to high affluence” shoppers and for stores with high numbers of customers.
Half of stores will be Format B, the “standard” Coles offer. The remaining 25 per cent will be the new Format C. This is a “low cost, self-service operating model” that’s “simple to shop” aimed at “mid to low affluence shoppers” in quieter stores. If you’re grouped in Format C, you can kiss goodbye to the deli and it’s likely you’ll see fewer staff to reduce the store’s operating costs.
A retail watcher says Coles’ plan is a “risky” move that could delight some shoppers – but seriously disappoint others.
Coles Chief Executive officer Stephen Cain at the Coles store in Tooronga, Melbourne, one of the firm’s fancy ‘Format A” supermarkets. Picture: Wayne Taylor.Source:News Corp Australia
‘AFFLUENT’ FORMAT A STORES
During its full year results last week, where Coles announced a 7 per cent rise in its underlying profit to almost $1bn, the firm gave an update on the plans and said it had opened or converted 10 stores to Format A and 31 to Format C. The various formats are separate to the new Coles Local smaller stores, three of which are now open.
If Eastgardens is anything to go by, shoppers at Format A will get a cheese “nook” with a variety of fancy fromages; a larger range of takeaway salads, sandwiches and ready meals and an expanded bakery offer with a large selection of takeaway cakes and treats.
When news.com.au visited, staff were busy crushing nuts to make jars of fresh peanut butter while flatbreads were being flipped and bagged for customers to take home straight away. At least five employees were beavering away in the bakery with some loaves still warm to touch.
Food to go, delis and a wider range, are hallmarks of Format A. No deli, fewer staff and shipped in baked items are likely in Format C stores.Source:Supplied
Ms Temelkos took news.com.au to the meat counter where she said the instore butcher will marinate or crumb your protein to order.
“I don’t like my local supermarket. I drove from Rockdale [10kms away] to come to this Coles.” But there was a sting in the tail for Coles – it was preferable to her local but still not the best supermarket she’d been to.
“Woolworths at Marrickville Metro is better than this place. I only came here because they had a COVID case at Woolies.”
Woolworths’ store at Marrickville Metro shopping centre, in Sydney’s inner west, is its flagship. It boasts many of the same features as Coles in Eastgardens – even down to the fresh flatbread – but looks very different with lighting in some parts of the fresh produce area so spotlit it’s probably the closest a supermarket has ever got to a nightclub.
‘NOTHING FANCY’
Unfortunately for Coles, another Eastgardens’ shopper, Tracey Fanning from nearby Botany, also ranked the Marrickville Woolies ahead of Eastgardens and, yes, that was partly because of the lighting.
“The Woolies just looks nicer. This Coles doesn’t seem very top of the range to me. They’ve tinkered with the deli and the bakery but when you’re in the middle of the store it’s just a normal supermarket with these high shelves and really bright lighting.
“There’s nothing fancy about it.”
Ms Fanning she was surprised there was no sushi bar or takeaway hot food like pizzas at Coles’ schmick store.
Some customers at Coles Format A store in Eastgardens said Woolworths’ flagship at Marrickville Metro (above) was more impressive. Picture: Dallas Kilponen/PPR.Source:Supplied
‘LOW COST’ FORMAT C COLES
But Format A is a long way from C. Billed as a value format, Coles has these stores in locations including Ardeer, in Melbourne’s west, and Clayton, in the city’s south east.
Staffed delis have been stripped out and replaced by a wall of pre packed meats; there’s no bakery with baked bread shipped in from elsewhere and there are less products to choose from. Some bulky items, like loo roll, are sold straight from the pallet to cut down on staff time that might otherwise being spent piling the product onto shelves, reported the AFR.
All the essentials are there at Format C Coles, from fresh food to packaged, but far fewer frills can be found in its shed-like interior.
Swinburne University marketing lecturer Jason Pallant told news.com.au that modifying local stores to local communities was not uncommon, but it came with a risk.
“The benefit really depends on how this thinking is applied. If it is used to tailor specific products to local markets then it can be valuable for both the retailer and customers.
“Often though it’s about cost savings which can create a problem for consumers in some areas who are offered a sub-par experience or don’t have access to some products”
Format A stores have plenty of theatre, such as in the bakery, while Format C are stripped back.Source:News Corp Australia
Different store formats was also becoming more popular with Coles Local and Woolworths’ Metro smaller format stores and the rebranding of some Target Country branches to Kmart’s streamlined KHub brand.
But whether you were in a Format A, B or C store, the name above the door would still just be “Coles” and that could pose a problem, said Mr Pallant.
“Consumers are more connected and have better information than ever before. The risk is consumers in areas that are receiving a lesser experience are able to see that easily, which can lead to negative perceptions of a brand for not offering them the same as others.
“If consumers start needing to go elsewhere for some product categories, they may shift more of their shopping across as well,” he said.
WOOLIES ROLLING OUT ‘VALUE’ FORMAT
Coles isn’t alone in looking at swerving from a one-size-fits-all approach to stores.
Woolworths told news.com.au it refurbished up to 70 of its 1000 plus supermarkets each year.
“Our long-term goal is to deliver a tailored offering to every community we serve and we’re well into this journey, “ a spokeswoman said.
The company said its Marrickville store was a “blueprint” for the rest of the network and while it had introduced many of the “popular elements” for that store to others, not all made it through.
“At Marrickville we’ve seen strong support for the ready-to-go section at the front of the store and dinner-tonight solutions.
“Our recent renewal of Mt Druitt store in Sydney’s west was a different proposition, with value at the heart of the renewal and a layout that put a focus on products and specials that matter most to families.”
RELATED: Woolies removes deli from some stores
Woolworths has removed delis from a number of inner city stores such as Green Square in Sydney (above) replacing them with walls of fridges.Source:Supplied
In recent months, Woolies has removed delis from a number of inner city smaller stores that it has rebranded to the Metro name.
Coles would not answer further news.com.au questions about its Format A, B and C stores but in its results presentation last week Coles said the new formats were ”resonating” with customers.
A spokesman told news.com.au: “New format decisions are about reducing waste and have been guided by what consumers want and don’t want”.
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