Wednesday, February 16, 2011

Coles slashes price of milk, sells more

WESFARMERS Ltd says milk sales at its Coles supermarkets have risen by about 15 to 20 per cent since it began a price war on the consumer staple to achieve customer loyalty.

Coles last month slashed the price of its home brand milk to $2 per two-litre bottle.

It was immediately matched by rival Woolworths, drawing the ire of Australian dairy farmers who are already battling with the impact of floods following long years of drought.

Wesfarmers chief executive Richard Goyder today said the move was designed to bolster "price trust" in Coles shoppers and "was never about doing anything of any harm to primary producers".

"This hasn't been in place for long, but the reaction we're getting from our customers is incredibly positive and our milk sales are up very strongly since this was put in place," Mr Goyder told media after the company delivered a 33 per cent increase in first half profit.

"There has been some shift to the Coles brand milk, as you would expect, but overall milk sales are strongly up.

"Our milk sales were up by 15 to 20 per cent since we put this in place.

"The aim is get price trust and I can tell you, customers love it."

Mr Goyder said Coles' price cuts across various products had attracted more shoppers, who were buying more items.

"If you put that (milk price cut) in the context of 5,000 items that we've reduced, then what we're seeing is a lot more customers walking into our stores and we are now starting to see them increase their basket size with us," he said.

"That's all about giving our customers, many of whom are working families, a better deal at the supermarket.

"Milk is all about providing a core staple to our customers at great value.

"We would hope to increase the market for milk as a consequence as this."

Mr Goyder said there had been a move by consumers towards the Coles brand of milk, which accounted for about four per cent of all milk produced in Australia.

"There's been some shift, but in the scheme of things it hasn't been massive."

Mr Goyder said food inflation in Australia had reduced from about four per cent to two per cent in recent years.

"That's saving Australians significant amounts of money, as in a billion dollars a year or thereabouts."

Source http://www.news.com.au/business/breaking-news/coles-slashes-price-of-milk-sells-more/story-e6frfkur-1226007750622

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