Coles To Source More Home-grown Products – Expert Warns Producers To Be Wary: Strategy

Coles pledges to stock “hidden local gems” in stores

By Michelle Hammond
Thursday, 07 June 2012

Boutique food producers could soon find it easier to stock their products in Coles, after the supermarket giant announced its plan to sell more “hidden local gems” in certain stores.


In a bid to meet growing demand for more locally sourced products, Coles has unveiled plans for a series of local sourcing “road shows”. The first event will be held in August in South Australia.


Coles’ buyers will tour the country meeting local suppliers, food manufacturers and farmers in search of “new and innovative products” for its shelves.


According to Coles, almost 70% of Australian consumers place a “high” or “very high” level of importance on choosing products made in their own country.


“Australia has some of the best food producers in the world,” said Coles’ general manager for grocery Richard Pearson, who will lead the push to find more Australian products for Coles.


“Australian consumers are also among the most passionate supporters of home-grown products.”


“There is a huge opportunity for Coles to meet increasing demand for locally sourced products and that, in turn, creates a massive opportunity for local suppliers of all sizes across Australia.”


The move by Coles can also be attributed to the rise of independent supermarkets, according to food consultant Dr David McKinna.


McKinna told The Australian that Coles and Woolworths are losing market share to independent supermarkets such as IGA, local farmers’ markets, and fresh food grocers and delicatessens.


“My feeling is that Coles is starting to feel a bit of customer resistance,” McKinna said.


“Our focus groups with Generation Y in particular, and some Gen Xers, show that they don’t like the power of Coles and Woolies.”


Pearson said Coles’ new “Meet the Buyer” events will attempt to find the “hidden local gems” in every Australian state to bring customers “new exciting products produced on their doorstep”.


In essence, Coles will start sourcing and selling more local food brands, even if the producer can only supply volumes of product to two or three regional stores, which is often the case.


According to Pearson, the strategy will be rolled out first in the three most parochial states – Tasmania, South Australia and WA – after being trialled in Adelaide.


The trial features well-known local labels such as Bickford’s cordial and Balfours baked goods.


Retail expert Debra Templar, of The Templar Group, thinks it’s a great move by Coles, providing small producers “use their brains” and don’t rely on Coles as their only store.


“They cannot put their eggs in one basket. That’s just asking for problems, and yet brand after brand has done that in the past,” Templar says.


Templar says producers need to come up with a strategic plan, which includes maintaining relationships with other sellers.


“I would hate to see Coles utilise these products and then go and get it made into their own home brand, and that is always a possibility,” she says.


Under Coles’ “Australia First” sourcing policy, more than 90% of Coles Brand grocery products are Australian-made, along with all fresh meat, fruit and vegetables when in season.


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