Defending the un-defendable
The AFR reported Coles’ claim that it intends to expand its private label range because “customers are demanding” this. It’s easy to see how it works: Coles removes branded stock from the shelf and its sales drop to zero. The customers then have no choice but to buy the only ‘brand’ available, i.e. Coles, which is then definitely in higher demand. The real reason behind the rush to cheap home brand stems from Coles’ inability to reduce its operating costs. So, the only option left to keep the business profitable is to buy cheaper stock and sell it for less, but with a higher margin. The bad news: even this won’t make Coles competitive when compared to Aldi. In the meantime, Coles must have started to realise that some of the local suppliers have disappeared because they now intend to look for branded merchandise overseas.