Coles boss says supermarkets at point of discounting “madness”
Coles’ outgoing managing director John Durkan says supermarkets have reached a point of discounting “madness” and believes customers would rather consistently lower prices than aisles that are littered with discount tags.
Speaking to Fairfax, Mr Durkan said shoppers would rather trust they were getting good value on everyday essentials, rather than hunting for discounts every time they shop.
“Customers are saying they’d like to see the same price everyday, every week, and that’s our drive - to lower the price, so you don’t have to think about it," Mr Durkan said on Thursday. "It’s much easier not to have to think about it.”
Mr Durkan also believes discounting has wreaked havoc on supermarket’s supply chain, but artificially causing spikes in demand for discounted products.
Fairfax Media reports about 40 per cent of sales across Australian supermarkets comes through promoted products, and while Mr Durkan has driven the figure at Coles down to 30 per cent, he was hoping to bring that number even lower.
"We’ll always give great promotions to our customers - we just don't need to be giving them at the size and level that we are at the moment," he said.
Mr Durkan is set to hand the reigns of the supermarket over to new managing director Steven Cain in October. Coles is set to be spun off into a separately listed company from Wesfarmers later this year and faces challenges from new market players Kaufland and Amazon, but Mr Durkan remains optimistic about its immediate future.
"Wesfarmers is going to be an owner of stock in this business and they want to see it successful," he said.
"All the conversations ... suggest that it's going to be the right level of debt."
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