Coles trials 'big box' booze format
The supermarket chain, owned by Perth-based conglomerate Wesfarmers, has opened a "Liquorland warehouse" in Sydney which is two to three times larger than the usual Liquorland format and offers a wider variety of wines, beers and other alcoholic drinks.
Situated in Sans Souci, south of Sydney, the Liquorland warehouse will use its larger buying power to offer lower prices.
"Liquorland warehouse in Sans Souci has been developed as a trial store that will provide us with an active retail space to test new innovation in liquor retailing," a Coles spokesman said.
The warehouse format trial, which began last week, is part of a wider strategy to improve Coles' liquor operation which has remained behind the pace of rival Woolworths and its Dan Murphy's stores for at least five years.
It's a problem that Wesfarmers boss Richard Goyder has highlighted, in several sales and profit updates in the past year, for acting as a drag on the turnaround of the Coles supermarket group and its sales momentum.
While Coles is still outperforming Woolworths in supermarket patronage and revenue growth, its liquor division remains the problem child of the business. Last quarter it shaved off 0.6 percentage points from Coles' supermarket sales growth. That was an improvement from the previous quarter when the drain from liquor on total food and liquor sales was 1.2 percentage points.
The weakness in Coles' liquor offering is in contrast to the continued expansion and success of the big-box Dan Murphy's store network.
When Wesfarmers bought the Coles business in 2007 it installed former Dan Murphy's boss Tony Leon to run its liquor operations. Last month it was announced Mr Leon would step down to be replaced by Brendan Sweeney, who joined Coles last year as head of multi-platform operations.
Andrew Charlton, a one-time staffer for Kevin Rudd, was shifted from his role of chief financial officer at Coles liquor to become head of the liquor retail network.
Frequently Asked Questions about this Article…
Coles has opened a Liquorland warehouse in Sans Souci, Sydney as a trial store to test new innovations in liquor retailing. The larger format—two to three times bigger than a typical Liquorland—is designed to offer a wider variety of wines, beers and other alcoholic drinks and use greater buying power to offer lower prices.
The trial store is in Sans Souci, south of Sydney. It is significantly larger than standard Liquorland outlets, stocks a broader range of alcoholic products, and aims to leverage larger buying power to compete on price with big-box rivals.
The warehouse format is part of a wider strategy to improve Coles' underperforming liquor operations—including First Choice, Liquorland and Vintage Cellars—after the division fell behind competitors such as Woolworths' Dan Murphy's network.
Coles' liquor division has been a drag on the supermarket group's sales momentum; Wesfarmers' CEO Richard Goyder has repeatedly flagged the issue. The liquor business reduced Coles' supermarket sales growth by 0.6 percentage points last quarter (and 1.2 percentage points in the prior quarter), so improvements could matter for future revenue and group performance.
According to the article, Coles' liquor division has lagged behind the continued expansion and success of Woolworths' Dan Murphy's big‑box network for at least five years, prompting Coles to trial new formats to close the gap.
Yes. Tony Leon, the former Dan Murphy's boss who ran Coles' liquor operations after the Wesfarmers takeover, stepped down and was replaced by Brendan Sweeney. Andrew Charlton was moved from his role as chief financial officer at Coles liquor to become head of the liquor retail network.
Investors may want to watch whether the warehouse format drives higher liquor sales, improved price competitiveness versus Dan Murphy's, and a reduction in the negative drag on Coles' overall supermarket sales growth—as these were the key issues highlighted in the article.
The article describes the Sans Souci store as a trial to test innovations and does not promise immediate fixes. It is one element of a broader strategy to address long‑standing underperformance versus rivals, so any turnaround is likely to be gradual and will depend on the trial's outcomes.
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