a 10.2 per cent rise on FY19 figures. Retail expert and QUT professor of marketing Gary Mortimer said it’s a good result for Coles considering that it was cycling the effects of panic buying in FY20, but he noted that supermarket sales are likely to remain subdued.  “Coles overall produced reasonably strong results, attaining just over $1 billion in net profit for the first time,” Mortimer told Inside Retail.  “Of all three divisions, supermarkets demonstrated slightly subdued sales increases, up only 2.6 per cent compared to liquor which rose 6.6 per cent and Coles Express Fuel up 7.7 per cent on 2020. I would expect supermarkets to remain subdued moving into FY22.” With 11 lockdowns over the course of the financial year, Coles chief executive Steven Cain said shopping behaviours were starting to normalise to pre-Covid levels in the fourth quarter, before the latest round of lockdowns hit.  “When a lockdown happens, we’re seeing shorter, less spiky panic buying which suggests that people are getting used to lockdowns. Then as we enter longer lockdowns, and particularly the five-kilometer rule, we see that move to more e-commerce and more local shopping,” Cain said on a conference call on Wednesday morning.  This ongoing trend towards local shopping is helping Coles Local stores, but hurting the larger shopping centre stores, particularly during tight restrictions. “We have seen neighborhood stores [sales] increasing by double digit, and we have seen shopping centres [sales] reducing by double digit,” Cain added.  E-commerce continues to grow E-commerce sales at Coles soared 52 per cent to $2.0 billion in the year, as shoppers embraced online during lockdowns. Mortimer called it the “shining light” for Coles in this year’s results.  “Supermarkets attained $2 billion in online sales, which is almost 6 per cent (5.8%) of Coles’ physical store sales. In 2020, it was just 3.8 per cent and in 2019 it was 3.4 per cent,” he said.  Similarly, online liquor performed strongly, with 79 per cent sales growth to $110 million. “It is clear there is ongoing strong demand for their online offer,” Mortimer said. “IBISWorld indicated 13.7 per cent growth in online groceries between 2021 and 2026. As their Ocado automated fulfilment centres come on line, we can expect greater growth and penetration of online.” Smarter Selling Initiatives that helped drive savings at Coles include data and technology solutions such as a ‘smarter forecasting tool’, artificial intelligence to optimise markdowns and reduce losses, the installation of electronic entry gates at the front of stores to tackle theft and self-service solutions such as customer bagging benches and trolley assisted checkouts.  “This enabled greater customer choice, learning and increases in team member productivity during the year,” Cain said.   Winning over shoppers With continued lockdowns placing greater stress on consumers, Coles is investing in health focused initiatives to facilitate healthier lifestyle choices for its shoppers, including an extended sports nutrition range, own brand products such as Coles Kitchen Balanced for You and a renewed focus on the pet and companion category. Jana Bowden, an expert in consumer psychology and consumer engagement at Macquarie University Business School, said these initiatives “tap into the heart of these newfound consumer value sets and give Coles a real unique selling proposition (USP) in the category”. “There has been a resetting of lifestyles and habits. Australians have adopted new shopping behaviours, they’re trying new things including new products and brands. The ABS reported that women for example are looking to spend more time cooking and baking – double when compared to 2020,” she told Inside Retail.   “That presents an obvious opportunity to target the rapidly growing health conscious consumer market and Coles has jumped on that by repositioning itself as the health and vitality leader.” Coles ranked as one of the most trusted supermarkets in Australia by Roy Morgan in their 2021 Risk Report, which Bowden attributes to strong alignment between brand and consumer values.  “Coles’ strategy is clear – they are delivering extra value by not only meeting consumers’ needs for convenience, affordability, and range, but by also empowering consumers to make better lifestyle decisions through product offerings that support self-care, nutrition, and living well,” she said. “The research tells us that when brand values closely align to consumers’ values then brand success follows.” Brighter outlook for 2022 While Cain said recent lockdowns have seen sales remain elevated in the first seven weeks of Q1 FY22, up approximately 1 per cent on a headline basis and 12 per cent on a two-year headline basis, the trend towards local shopping is likely to impact the business.  The retailer opened just four Coles Local stores during the year, but completed 65 supermarket renewals including 10 format As, its premium foodie store, and 36 format Cs, the lower cost model that focuses on self service. Four more Coles Local stores are set to open in FY22.  “Of course we expect more local shopping from the latest lockdown restrictions, particularly in New South Wales and Victoria, but it was pleasing to see that as restrictions eased in the fourth quarter our market share improved,” Cain said.  The Coles boss is optimistic about 2022 and hopeful that vaccinations will normalise consumer shopping behaviour and migration.  “In February, we said the short-term outlook would be dependent upon the efficacy and pace of the vaccination program. Six months on, government forecasts are pointing to a more normal outlook from early in calendar 2022 including the longer-term prospect of increased migration,” Cain said. “There’s light at the end of the two-year tunnel and I along with many others at Coles are looking forward to 2022.”