Coles’ clever new checkout plan
COLES is set to launch a major new marketing promotion featuring miniature versions of popular products like Nutella, Vegemite, Weet-Bix and Tim Tams.
Customers will receive one of 30 random toys in the collection for every $30 they spend. There are also 1000 miniature Coles Big Red Hand toys to be found, and these come with a $100 shopping voucher.
The campaign was largely funded by suppliers and developed by marketing company Unga, which successfully rolled out the idea in overseas markets including The Netherlands, New Zealand and South Africa.
"We know our customers love collectables so we have worked with our suppliers to launch a new collectable campaign in our supermarkets across Australia from Wednesday," Coles managing director John Durkan said.
"We have designed them together with our suppliers to be miniature replicas of some of the most loved products on our supermarket shelves. Little Shop features 30 iconic, household brands - including Vegemite, Nutella and Weet-Bix - which are shrunk down into a mini collectable for customers to collect and swap.
"We are aiming to give our customers something fun - a miniature to collect and enjoy. To make collecting even more fun for customers, we have a range of additional items for sale including collector cases, miniature shopping baskets and trolleys, and a miniature shopfront."
Mr Durkan said Coles would also be holding a "Swap Day" at selected stores to help customers complete their collections before the six-week promotion ends.
Citi analyst Brian Raymond predicted the Little Shop promotion could boost Coles' first-quarter like-for-like sales by 50 to 100 basis points, narrowing the gap to Woolworths further.
"Little Shop is a collectable campaign which has been run successfully in several countries, including The Netherlands in 2012, New Zealand 2013 and 2014, and South Africa in 2016 and 2017," he said in a client note.
"From mid July until the end of August, Coles will give away a miniature branded product for every $30 spent. Suppliers have funded a large portion of this program, with minimal incremental investment by Coles, as funding is redistributed from other sources."
Mr Raymond said collectable programs could be "effective short-term sales drivers" but "strong execution" would be needed to sustain the sales uplift in the second quarter of the financial year and beyond.
"Woolworths and Coles are experiencing sales weakness following the elimination of single-use shopping bags, a significant change which has not been well executed by either retailer," he said.
"Based on supplier feedback, Woolworths is experiencing a slowdown in sales momentum. We forecast a drop from 4.5 per cent in the third quarter of FY18 to 3.3 per cent in the fourth quarter, as the company laps 6.4 per cent like-for-like sales growth in the fourth quarter of 2017.
"We expect Woolworths to deliver like-for-like sales ahead of Coles (1.7 per cent like-for-like sales growth) in the fourth quarter of 2018, however Coles' execution has stopped deteriorating.
"The gap between Woolworths and Coles like-for-like sales growth is likely to halve, from 320 basis points in the third quarter of 2018 to 160 basis points in the fourth quarter."