Australian shoppers appear to have calmed down from the manic heights of their hoarding and panic-buying ways.
Coles’ long slog to topple Woolworths as Australia’s biggest supermarket chain still appears a distant dream after achieving modest sales growth in the fourth quarter, when pandemic-driven pantry-stuffing became less panicked.
Booking a 7.5 per cent rise in full-year net profit to $1.005bn on Wednesday, the group revealed supermarkets comparable sales growth over the three months to June 30 was just 2.1 per cent, but 9.6 per cent over two years.
Notably, liquor sales growth was minus 7.1 per cent in the fourth quarter, compared to plus 15.1 per cent on a two-year basis.
Coles was still pleased to have made some ground, noting the most elevated sales came in the fourth quarter last year – the first months of Covid-19 seriously taking hold, sparking a national lockdown.
“Growth was driven by strategic initiatives that resonated with customers and customers spending more time living and working at home during Covid-19,” the company said.
“Consumer behaviours demonstrated a trend of normalising to pre-Covid-19 levels during the fourth quarter, until the last few weeks when lockdowns were experienced across Victoria, in Darwin and parts of Sydney.
“Sales contributions from shopping centre and CBD stores increased relative to neighbourhood stores in the fourth quarter which had previously benefited from ‘local shopping’ trends.
“Furthermore, Sundays returned to be the largest trading day of the week and transaction trends improved with growth in the convenience, food-to-go and impulse categories, while basket size moderated.
“Despite normalising consumer trends, e-commerce sales continued to grow strongly with penetration reaching 6 per cent in the fourth quarter.”
Macquarie Research said the result was largely in line with its expectations, noting Coles’ progress with lifting online shopping rates, which the retailer hopes to boost with ongoing technology investments.
In its inaugural Australian supermarkets analysis released on Tuesday, UBS said Woolworths had driven its grocery market share gains with online efforts, where Coles had lagged.
“Coles has spent less than Woolworths on capex in recent years as a percentage of sales and this has contributed to performance,” UBS said.
Coles took a hit during the Covid-19 ‘local shopping’ trend, given its store network is more skewed to shopping centres and CBDs, UBS noted, saying it more broadly continued to trail Woolworths “across in-store, strategic and cultural areas”, ranking third in Australian liquor retailing.
On outlook, Coles says it expects the vaccine roll out – and in turn fewer lockdowns – will help return consumer behaviours to normal over the rest of this calendar year.
It expects to renew about 50 stores and to open about 20 stores this financial year, subject to conditions around the health crisis.
Woolworths is expected to deliver its full-year results on August 26.
Originally published as Coles’ modest supermarket sales growth shows Aussie shopping behaviour ‘normalising’ from Covid frenzy
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