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April, 2024

Coles CEO Leah Weckert challenged on customer value, supplier fairness and business efficiency in senate Supermarket inquiry

Following the contempt of court threats that pervaded the morning of the current Senate Inquiry into Supermarket Prices against Woolworths CEO, Brad Banducci, for his failed attempt to answer the first question on the return on equity, it was a slightly less heated but lengthy 3-hour grilling of Coles CEO, Leah Weckert yesterday afternoon.

The senate session covered a range of topics, including growing competition from Amazon, commitment to truck driver safety, supplier contracts, and the profitability of fresh fruit and vegetable sales.

In reference to some calls to split up the supermarket giants, Weckert warned of ‘unintended consequences’ from potential divestiture laws, including reduced economies of scale and possible store closures in regional areas.

“If reducing economies of scale and having stores that potentially are closing in regional areas, the customers in those towns would no longer benefit from statewide pricing,” she said.

In her opening remarks, Weckert highlighted Coles’ role in the Australian community and economy, employing 120,000 team members, operating over 850 supermarkets and 960 liquor stores nationally, and processing more than 17 million customer transactions every week. Coles partners with 8,000 suppliers.

According to Wecket, Coles makes $2.60 in profit for every $100 spent in its stores, a margin she claimed has remained consistent over the last five years and is in line with international supermarket profit margins.

“Compared to many other industries – this is a very small margin,” she claimed. “This margin has remained consistent over the last five years, it did not increase with the rise in inflation. And, it is consistent with profit margins made by supermarkets overseas.”

Addressing claims about Coles’ interactions with suppliers, Weckert acknowledged the giant doesn’t don’t always get it right but strive for fair and sustainable relationships.

“We acknowledge that we don’t always get it right but all our procedures seek to ensure fair and sustainable relationships,” she said.

Coles sources 100% of its own brand fresh beef, lamb, pork, chicken, turkey, duck, milk, and eggs from Australia, and around 96% of all its fresh produce. Weckert expressed Coles’ willingness to be part of a solution that would involve greater transparency for Fresh Produce growers.

Weckert also praised the efforts of Coles’ team members during the COVID-19 pandemic and welcomed competition in the Australian grocery sector. She also encouraged government investment in infrastructure and minimisation of regulation.