Coles defends its supplier squeeze
‘‘What should we do?’’ he asked. ‘‘Challenge it, or turn a blind eye?’’
The key to Coles’ turnaround over the past five years has been to hold prices down, Mr McLeod told a business luncheon on Tuesday.
‘‘When Coles keeps prices down, competition, affordability, ethical sourcing, community support, farm sales, food manufacturing, jobs and job security all go up. We think that is a good thing, so we’re going to keep on doing it,’’ he said.
‘‘It’s all about affordable food for our customers and helping Australia grow ... It means challenging the status quo, and sometimes challenging suppliers where we believe Australians deserve a better deal.
‘‘Many of [our multinational suppliers] are bigger than Coles and make far larger profit margins. Prices are higher than overseas and that’s why we challenge it. These examples include products made overseas and sold overseas at lower retail prices, much lower.
‘‘It also includes examples of products made in Australia but still sold cheaper overseas.’’
Mr McLeod said Coles had worked increasingly with suppliers to boost products sourced locally, which included lending to some suppliers to help them upgrade their businesses – for example, to milk processors.
‘‘Politicians that attack Coles should remember that 18 million [Coles] customers support lower prices – and they vote,’’ he said. .
‘‘Coles is in the business of keeping the cost of living down, so it is more than a little frustrating when some politicians criticise us for doing just that.’’
Australian consumers were among the least loyal customers in the world, he said. At the same time, new competitors such as Aldi, which had about 300 outlets, was planning to double its presence within a decade, which would give it the same number of outlets as Coles, after a century of investment, Mr McLeod said.
Frequently Asked Questions about this Article…
Coles boss Ian McLeod says the retailer challenges suppliers because some — especially multinationals — make larger profit margins and sell products cheaper overseas than in Australia. He argues pressing suppliers helps keep local retail prices down and gives everyday shoppers a better deal.
McLeod says when Coles keeps prices down it boosts competition and affordability and supports ethical sourcing, community programs, farm sales, food manufacturing, jobs and job security. He frames the supplier pressure as part of keeping the cost of living down for customers.
McLeod pointed to examples where multinational suppliers are bigger than Coles and have much larger profit margins, and where identical products are sold overseas at lower retail prices. He also noted some goods made in Australia are still sold cheaper overseas.
Yes. The article says Coles has worked with suppliers to boost locally sourced products and has even lent money to some suppliers to upgrade their operations — for example, lending to milk processors to help them modernise.
According to McLeod, holding prices down has been a key part of Coles’ turnaround over the past five years. He says the company will continue the strategy because it benefits customers and the broader supply chain.
McLeod says politicians who attack Coles should remember that around 18 million Coles customers support lower prices and can vote. He finds it frustrating when political critics target Coles for attempting to lower the cost of living.
McLeod highlighted that Australian consumers are among the least loyal in the world and noted Aldi — with about 300 outlets — plans to double its presence within a decade. That growing competition adds pressure on Coles to keep prices low and challenge suppliers where needed.
Yes. McLeod says Coles will keep challenging the status quo and sometimes suppliers when the company believes Australians deserve a better deal, because the goal is affordable food for customers and helping Australia grow.
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