Coles has kicked off a major relaunch of its unforgettable “Down Down” specials campaign, likely reigniting its price war with fellow supermarket giant Woolworths.
The campaign has been quietly under way since the beginning of this calendar year and is set to continue for some time, but it’s yet to be determined if old-school British rockers Status Quo will again be part of the future advertising strategy.
Coles chief operating officer Greg Davis noted Australians were still eating more meals at home and were looking to get better value from their weekly budget.
“Since the start of the year we’ve lowered more than 250 prices – and we’re not finished yet, which is why we say prices are ‘down and counting’,” he said.
“Over the past 10 years customers have come to recognise Down Down and the Big Red Hand as indicators of trusted value at Coles, and our rollout of further Down Down prices lets them know that we are more committed than ever to lowering the cost of their weekly shop.”
Prices have been lowered across the entire product range, Coles says, including breakfast cereals, pasta, tinned tuna, fresh convenience foods, healthcare, pet food, poultry, seafood, tinned fruit, smallgoods and bakery cakes.
The chain’s higher-margin own-brand offerings feature heavily in the line-up.
It’s also targeting school lunch-box favourites and big families, bringing back its Big Pack Value Sale, with 40 products available in bulk sizes, including family dinner staples, condiments and baking products.
Coles says buying Bega peanut butter in a colossal 2kg jar saves 37 per cent compared with the usual price for the standard 375g jar, while Milo is more than half price when bought in a whopping 1.32kg tin compared with a 200g tin.
Analysts at Morningstar noted in a research report this week that competition in the supermarket sector would likely heat up as the pandemic sales boom waned.
“Consumer staples retailing sales at supermarkets and liquor stores were elevated in January 2021,” Morningstar said.
“But the tide is about to turn.
“From March 2021, we expect the unwinding of unusually high Australian food and liquor sales to weigh on the core businesses of Woolworths, Coles and Metcash (IGA) for the remainder of 2021.
“This view is shared with management at Woolworths and Coles, who alerted investors to the potential for negative sales growth.
“Coles has recently lost market share in food retailing, which increases the risk of intensifying price competition.”
Even Coles shares are a cheap buy, with Ord Minnett saying the Wesfarmers-owned chain is among the worst 20 performers in the index of Australia’s top-200 listed companies in the past 90 days, dropping more than 16 per cent over the period.
Coles shares were more than $19 in August but were about $15.80 in intraday trade on Friday – not far from its 12-month low of about $15 in May.
Shares in its bigger rival Woolworths, on the other hand, were about $34 in May but are currently around $41.20, close to the group’s 12-month closing high of $41.87 in January.
As a whole, however, Morningstar views the consumer staples sector as fairly valued.