The one trend in Coles’ latest sales results that spells trouble for Aldi

Coles sales revenue rose four percent in the March quarter This was reported by the supermarket giant today.

The results echo the strong performance shared by Woolworths earlier this week, proving that both retail giants are successfully navigating the current market.

In today’s announcementColes reported that supermarket sales rose to $9.8 billion in the three months to March.

Coles also reported 7.3 percent growth in its own brand ranges, which now represent 33.5 percent of total sales.

These private label products, which offer a cheaper alternative to big brands, have also seen a boost at Woolworths.

However, the aggressive expansion of its own brand range at Coles and Woolies appears to be taking a bite out of Aldi’s market share.

The bargain supermarket reported slower-than-expected sales growth earlier this week.

“Customers are making every store count,” said Coles Group CEO Leah Weckert, presenting today’s sales results.

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Pressure on the cost of living and a volatile fuel market due to the conflict in Iran have led to an increase in shoppers’ “value-seeking behavior,” she added.

This included fewer trips to the supermarket, combining shopping trips with other outings to reduce petrol consumption, more dinners at home and a focus on maximizing loyalty points benefits through things like Coles’ Flybuys programme.

Coles is currently running a KitchenAid cookware promotion, where Flybuys customers can earn points to get free pots and pans at the checkout.

Weckert also reported that Coles shoppers are stocking up on pantry staples and frozen items during larger stores.

Items customers stock up on include “pasta, rice, canned food.”

“Discretionary spending” such as tobacco and liquor sales has weakened, but seasonal items such as Easter products remain stable.

When asked by nine.com.au about Easter sales and the impact of higher chocolate prices on shoppers, Weckert said shoppers were still buying items for Easter but were choosing cheaper brands and “smaller bunnies”.

Coles e-commerce sales, including online collection and delivery options, have increased by 28 percent, accounting for 13.3 percent of total supermarket sales.

Woolworths’ e-commerce growth slowed to 11.3 percent.

Both companies reported a sharp decline in tobacco sales due to new legislation, with Coles reporting weak spirits sales.

“We know that value and availability will be important to our customers in the coming months and we are well positioned to respond with our extensive own brand portfolio, our leading e-commerce platforms and the strength of the infrastructure and capabilities within our supply chain,” Weckert said in the ASX announcement published today ahead of the results presentation.

Red meat prices have continued to rise, Coles and Woolworths report.

The abundant supply of fresh fruit and vegetables, such as avocados, has led to some deflation in fresh produce.

Both supermarkets signaled future price pressure as a result of the conflict in Iran.

“In recent weeks we have seen an increase in requests for cost increases from suppliers and increased costs within our own operations, particularly in the areas of fuel, freight and packaging,” Coles said in the statement to the ASX.

“We are actively managing these and will mitigate the impact where possible, whilst balancing the needs of customers and suppliers.”

Woolworths also warned that rising petrol prices and rising logistics costs were starting to eat into margins, which could see the price of groceries rise even further this year.

“Looking ahead, the conflict in the Middle East is creating greater uncertainty for our customers, suppliers and team, at a time when cost of living pressures are already acute,” said Amanda Bardwell, CEO of Woolworths.

“While the impact on the group has been limited to date, higher fuel costs and secondary impacts are likely to have an increasing inflationary impact as we progress through the calendar year.”

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