Wesfarmers describes Coles turnaround as “the largest global retail turnaround in years”
- November 15, 2012
- Kate Carey
Wesfarmers chief executive Richard Goyder has acknowledged strong retail turnarounds in Coles, Kmart and Target during the annual general meeting held yesterday.
Mr Goyder said that it was “important to note that Coles turnaround had been the largest global retail turnaround in recent years” regarding recent improvements to the “quality, service, and value” offered at Coles. Goyder said that Coles now has around 2 Million additional customers visiting the store each week than it did in 2007.
“Coles is a very large and complex organisation and the turnaround has involved improvements to many aspects of the business,” Mr Goyder said.
During the annual meeting, Mr Goyder reported that Coles had closed 91 underperforming supermarkets and opened 93 “more profitable ones,” bringing the total to 270 supermarkets.
Although Mr Goyder said that prices had continued to fall in Coles’ food and liquor sectors, he said that sales had been growing strongly in volume. Coles has lowered food and liquor prices in 12 of the past 13 quarters.
“Coles’ investment in lower prices has delivered over $1 billion in average annual savings for our customers, saving $450 per annum for an average family,” Mr Goyder said.
In the first quarter, both food and liquor’s comparative sales growth of 3.7 per cent and Coles Express’s comparative fuel volume growth of 0.4 per cent have “outperformed their respective markets,” according to Mr Goyder. Growth in these businesses has also continued into the second quarter of 2012.
“Coles food and liquor sales density has increased nearly 20 per cent over the last four years, a market leading outcome. Wastage has been reduced by more than 50 per cent, saving Coles more than $400 million a year,” Mr Goyder said.
In other Wesfarmers retail businesses, “visible recovery” is present
Mr Goyder said that both Kmart and Target had experienced “visible recovery” over the year and that they were both in the process of a “strong retail turn-around.”
Mr Goyder reported growth in target since the first quarter, “indicating that the early stage of the turnaround is progressing to plan.” According to Mr Goyder, increased focus on product quality and service levels is driving growth in target.
“The development of an improved online model is a key focus area in Target’s turnaround plan. It is therefore pleasing that online sales have grown throughout this calendar year at more than 25 per cent per month, with improved profitability, as Target expands its online range, functionality and fulfilment capabilities,” Mr Goyder said.
Similarly, Wesfarmers also reported continued growth of customer transactions and products sold at Kmart, due to ongoing price discounting.
“Kmart’s outlook sees a continuation of the unrelenting focus on price leadership and customer value, sourcing at lowest cost, stock flow and availability, and network expansion and reinvestment,” Mr Goyder said.