Australians buckling under cost of living pressures are being more picky about where they shop, putting pressure on the nation’s second-biggest supermarket group to ramp up its offers to fend off competitors.
Coles, which operates 870 supermarkets and 988 liquor outlets under brands like Liquorland and Vintage Cellars, on Friday reported sales for the first quarter of 2026/27.
Group sales rose by 2.2 per cent to $11.2 billion, mostly driven by its supermarkets.
The supermarkets generated a 3.6 per cent rise in revenue to $10.3 billion after excluding tobacco, compared to the prior corresponding period.
“While supermarkets sales growth remained in line with the prior quarter, we know household budgets are under pressure and customers are shopping more deliberately across retailers and channels,” chief executive Leah Weckert said.
“There is more to do to ensure we are front of mind for customers in this environment, and we are taking action to sharpen our offer over the coming months.”
Like Woolworths, which reported its first quarter sales earlier this week, Coles has noticed customers are very invested in grocery promotions, and its budget-friendly Coles Simply range of entry-level staples, which are designed to compete with harder discount chains like Aldi.
Supermarket price inflation was lower at 1.1 per cent in the quarter, compared to 1.6 per cent in the previous corresponding quarter.
“Inflation was primarily driven by cost price increases in dairy and meat, and moderating deflation in fresh produce, partly offset by continued deflation in non-food categories,” Coles said.
Coles also noted that fuel prices remained volatile due to the war in the Middle East, which affected transport costs.
Elsewhere, the group’s liquor sales fell 1.3 per cent to $831 million, with customers shifting to smaller pack sizes and ready-to-drink alcohol products.
Sparkling wine sales did well due to targeted promotions, Coles said.
The results come after rival Woolworths on Wednesday posted a 4.7 per cent rise in sales to $19.4 billion for the 14 weeks ended October 4.
Most of the first quarter growth was driven by Australian food sales, which rose 6.9 per cent to $14.8 billion, compared to the same period in the prior financial year.
In August, Woolworths reported a 2025/26 annual net profit of $1.1 billion, up 18 per cent on the prior year, which was comparable to a flat net profit of $1.1 billion by Coles.
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
