Wesfarmers CEO Richard Goyder says Coles preparing for Amazon entry

Julie-anne Sprague
Nov 28 2016
Wesfarmers managing director Richard Goyder says Coles needs to be just as prepared to battle Amazon as Bunnings was when first threatened by Woolworths.
Mr Goyder recently addressed about 120 staff at a leadership event in Melbourne, and told them that Coles had strength of locations, distribution and fantastic sourcing.
“I said I think we did a great job in Bunnings by being prepared for the entry of a new competitor,” Mr Goyder said.
“I think we have done well on south Australia and WA with (the expansion of) Aldi and we need to be just as prepared when Amazon or others come in.”
Mr Goyder said Coles should have “lower distribution costs than anyone”.
Amazon is expected to launch in Australia next year, including offering its online fresh food delivery service Amazon Fresh.
Amazon has said it expects to take market share from Coles, Woolworths and Aldi.
Many analysts are concerned that increasing competition in the grocery sector will hurt Coles, including a resurgent Woolworths, the growth of Aldi and Costco and the threat of new entrants.
Coles is Wesfarmer’s biggest business, generating about half of group earnings.
But after years of double-digit gains, earnings growth has slowed. Earnings rose 4.3 per cent to $1.86 billion in 2016.
Same store sales grew at their lowest level in seven years in the September quarter.
Some analysts are tipping Coles to suffer its first decline in earnings since Wesfarmers bought the supermarket chain in 2008 as it comes under pressure to cut prices amid fierce competition.
But Wesfarmers is no stranger to successfully fending off competition.
Woolworths failed spectacularly trying to take on Wesfarmers’ Bunnings hardware empire, a decision that cost it billions.
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