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Highlights
- Coles expresses disappointment over politicization of cost-of-living issues.
- Company assures cooperation with inquiries into alleged discounting practices.
- Coles introduces brand initiatives to improve operations and customer appeal.
At Coles' (ASX:COL) annual general meeting, Chairman James Graham addressed shareholders, expressing disappointment over the politicization of cost-of-living issues impacting the company. He underscored Coles' commitment to earning and maintaining customer trust despite these challenging circumstances. Over the past year, escalating household budget pressures and rising costs from suppliers have created a tough environment for the supermarket industry.
Reflecting on recent legal challenges, Mr. Graham emphasized that Coles remains sensitive to the financial health of Australian households. However, he expressed frustration at how cost-of-living concerns have increasingly been directed at supermarket operations. Graham contrasted this environment with the cooperative support supermarkets received from governments and regulators during the COVID-19 lockdowns, where supermarkets were essential in ensuring communities had access to necessities.
Coles, alongside competitor Woolworths (ASX:WOW), has been under considerable political pressure to keep grocery prices affordable. The Australian Competition and Consumer Commission (ACCC) has been directed by the federal government to examine the market influence of both supermarket chains, and in September, the ACCC initiated legal action alleging misleading promotions by both Coles and Woolworths. These "illusionary" discounts, as termed by the ACCC, have raised questions regarding transparency in pricing practices. Coles has stated that it is cooperating fully with ongoing investigations, although Graham hinted that these inquiries are addressing complex issues, including inflation, that extend beyond the control of any single company.
The impact of inflation on household expenses is not isolated to Australia. An ACCC report revealed that from 2019 to June 2024, a basket of food and non-alcoholic beverages in Australia saw an average price increase of 24%. This figure is reportedly lower than price hikes in several other countries, including New Zealand, Canada, the UK, and the US, with OECD countries averaging a 39% increase.
During the meeting, a shareholder voiced concerns about Coles’ reputation amid recent scrutiny. Graham responded by reiterating the company's dedication to trust and sustainability as fundamental to shareholder value. Additionally, he highlighted ongoing efforts to revitalize Coles’ liquor business, which has been underperforming relative to rivals like Dan Murphy’s, owned by Endeavour Group (ASX:EDV). Coles is currently trialing a unified brand umbrella to boost the attractiveness of its liquor offerings, aimed at improving operational efficiency and customer experience.
As Coles and Woolworths face increased scrutiny from the ACCC, industry observers will be watching closely to see how these companies navigate the challenges of balancing consumer trust, competitive pricing, and business sustainability in the face of rising costs and political pressures.
