Coles Group Ltd. · ASX:COL
Coles — Investor Day (November 2024)
90 slides from Coles's investor day presentation, Nov 14, 2024
Slide 1: Coles Group 2024 Investor Day ASX announcement
14 November 2024 The Manager Company Announcements Office Australian Securities Exchange Dear Manager, For personal use only COLES GROUP 2024 INVESTOR DAY Following is a presentation that will be given today, Thursday 14 November 2024 at Coles’ Investor Day in Melbourne which is scheduled to commenc
Slide 2: Coles Group Investor Day Presentation
Coles Group For personal use only Investor Day Presentation 14 November 2024 1
Slide 3: Disclaimer
Disclaimer This presentation contains summary information about Coles Group Limited (ACN 004 089 936) and its controlled entities (collectively, ‘Coles’, ‘Coles Group’ or ‘the Group’) and Coles’ activities as at the date of this presentation. It is information given in summary form only and does not
Slide 4: Acknowledgement of Traditional Custodians
Coles wishes to acknowledge the Traditional Custodians of this land We recognise their strength and resilience and pay our respects to their Elders past and present. Coles extends that respect to all Aboriginal and Torres Strait Iskander people, and recognises their rich cultures and their continuin
Slide 5: Agenda
Agenda Topic Presenter For personal use only Introduction and overview of 3D strategy Leah Weckert Destination for food and drink Anna Croft Accelerated by digital Ben Hassing Loyalty and Coles 360 Amanda McVay Morning tea break Delivered consistently for the future Matt Swindells Liquor Michael Cou
Slide 6: Q&A
For personal use only Q&A Join at slido.com #ColesID
Slide 7: Introduction
Introduction For personal use only Leah Weckert Chief Executive Officer 6
Slide 8: Years of Australian grocery retailing
110 years of Australian grocery retailing For personal use only 1914 1960-1969 1970-1979 1990-1999 2024 7
Slide 9: Our vision is to become the most trusted retailer in Australia
Our vision is to become the most trusted retailer in Australia and grow long term shareholder value Strong and mutually beneficial relationships with all our stakeholders are key to achieving this For personal use only Customers Team members Suppliers Community Shareholders ~18m 115,000+ >8,000 $38.
Slide 10: Our purpose
Our purpose For personal use only We focus on We inclusively serve We provide We offer better We focus on solving customer everyone living in leading food, drink food that is more delivering a problems, in all Australia & home solutions delicious, easy consistent areas of their and experience for sh
Slide 11: Our strategy is informed by customer preferences and behaviours
Our strategy is informed by customer preferences and behaviours For personal use only Value without compromising quality Convenience, health & inspiration Digital engagement increasing rapidly Sustainability 10
Slide 12: In FY24 we launched our 3D strategy
In FY24 we launched our 3D strategy Our strategy flywheel For personal use only • Deliver delicious, easy, affordable customer solutions • Enhance value across the customer offer Destination for • Differentiate through fresh and exclusive brands food and drink • Inspire customers through tailored ra
Slide 13: Destination for food and drink is what we aspire to be known for
Destination for food and drink is what we aspire to be known for For personal use only Delicious, easy and Value Fresh and affordable Exclusive to Coles Tailored ranges Strong supplier Integrated and relationships convenient Liquor offering 12
Slide 14: Accelerated by digital creates a seamless omnichannel experience
Accelerated by digital is how we create a more seamless and enjoyable omnichannel shopping experience For personal use only Customer experience Personalisation eCommerce Retail Media New ventures 13
Slide 15: Delivered consistently makes operations simpler and more efficient
Delivered consistently focuses on making our operations simpler and more efficient, and improving customer experience For personal use only Customer focused Simplify and Save Sourcing and supply teams to Invest chain Store network Sustainability 14
Slide 16: Win Together and our Foundations underpin our 3D pillars
Win Together and our Foundations underpin our 3D pillars For personal use only Team Community Suppliers Financial discipline Technology Data 15
Slide 17: Our values
Our values are what guide us and are essential to our success For personal use only 16
Slide 18: Our vision
For personal use only Our vision is to become the most trusted retailer in Australia and grow long term shareholder value 17
Slide 19: Strategy outcomes to date
Strategy outcomes to date WE SAID WE WOULD FOCUS ON… WHAT WE DELIVERED IN FY24… For personal use only ✓ ‘Great Value, Hands Down’ campaigns, every day low prices, weekly specials Destination for • Delivering Value ✓ Launched >1,100 Exclusive to Coles and 244 Exclusive Liquor Brand products Food and
Slide 20: Destination for food and drink
Destination for For personal use only food and drink Anna Croft Chief Commercial & Sustainability Officer 19
Slide 21: Destination for food and drink: focus for today
Destination for food and drink is what we aspire to be known for For personal use only Focus for today Fresh quality Value Exclusive to Coles Range and space 20
Slide 22: Step change fresh quality
Step change fresh quality For personal use only Long term Innovation and Localised manufacturing End-to-end partnerships differentiation network operating model • Building strong long term • Partnerships with farmers to • Aligned processing and store • Reduced lead times in Fresh multi-generational
Slide 23: Continue to invest in value
Continue to invest in value For personal use only Trusted prices Make specials special Personalised value 22
Slide 24: Differentiate through Exclusive to Coles
Differentiate through Exclusive to Coles For personal use only ~6,000 Products 33.5% of total sales1 Notes: (1) As at 4QFY24. 23
Slide 25: Exclusive products that are great quality and great value
Exclusive products that are great quality and great value For personal use only Quality Innovation Affordable value Update image 24
Slide 26: Extensive range of exclusive own brands
Extensive range of exclusive own brands For personal use only 25
Slide 27: Leveraging data to tailor range and space
Leveraging data to tailor range and space to improve the customer experience For personal use only • Simplify range • Store specific range & space • Optimise store renewals 26
Slide 28: For personal use only
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Slide 29: Accelerated by digital
Accelerated For personal use only by digital Ben Hassing Chief Digital Officer 28
Slide 30: Accelerated by digital delivered by five foundations
5 For personal use only 1 Accelerated by Build Profit Pools & Innovation Great eComm Foundations digital will be delivered by Accelerated 4 2 focusing on five Digitise by Digital Customer foundations In-store Experiences Digital Adoption 3 Personalised Experiences 29
Slide 31: Strong growth in eCommerce sales over the last five years
Strong growth in eCommerce sales over the last five years For personal use only Contribution to eCommerce eCommerce market supermarkets sales1 NPS share2 10.8% 9.4% 7.9% 7.5% 5.8% 3.8% FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 FY20 FY21 FY22 FY23 FY24 FY25Q1 FY25Q1 FY25Q1 Jul-23 Oct-23 Apr-2
Slide 32: Customers that engage digitally are more valuable
Customers that engage digitally are more valuable For personal use only 96% 4.6x 2.2x of Coles Online customers larger basket size than in store spend from omnichannel shop in Coles stores shop shoppers 31
Slide 33: Physical and digital assets serve three key shopping missions
Our physical and digital assets serve three key customer shopping missions For personal use only COMPREHENSIVE SHOPPING WEEKLY STOCKUP WEEKLY TOP UP IMMEDIATE NEED OMNICHANNEL NETWORK MISSION Full shop for the week Supplementary shop for essentials Urgent shop for immediate needs POPULATION COVERAGE
Slide 34: CFCs deliver an unmatched weekly stock up proposition
CFCs deliver an unmatched weekly stock up shop proposition For personal use only >2x ISF1 CFC Industry leading perfect Improved Expanded product order rates freshness range Notes: (1) In-store fulfilment. 33
Slide 35: CFCs drive efficiencies through global innovation
CFCs will continue to drive efficiencies through global innovation For personal use only Extended Automated Automated on Automated Same day range bagging station grid pick frame load delivery 34
Slide 36: Transforming store fulfilled customer experience
For personal use only We will continue $15 to transform our $11 store fulfilled Click & Collect Rapid delivery customer experience ▪ ▪ <5mins wait time ambition Real-time order status ▪ ▪ On demand ordering Extended hours of service ▪ Simpler arrival notifications ▪ Store pricing, full range, loyalt
Slide 37: App and website also drive in-store sales
Customers who Research Online and Bought In-Store (ROBI) For personal use only Our App and Website also drive in-store sales 30%+ 19% 23% 10% Less than Before After Today Future COVID COVID 36
Slide 38: Adding features to assist customers seeking value
Adding features to assist customers seeking value For personal use only Weekly specials Product Suggestions Shopping Lists Surfacing personalised Recommending relevant Allowing customers to build, weekly specials products in display pages engage and share lists 37
Slide 39: Enabling a seamless in-store shopping experience
For personal use only Digital Enabling a Wayfinding Receipts seamless in-store shopping experience augmented by Digital Digital Payments Launched FY24 38
Slide 40: Embarking on new ventures
Embarking on new ventures Swaggle QuiteLike For personal use only 39
Slide 41: Testing and innovating
Testing and innovating Electronic Shelf- Smart Trolleys edge Labels For personal use only Availability Cameras 40
Slide 42: Loyalty & Coles 360
Loyalty & For personal use only Coles 360 Amanda McVay Chief Customer Officer
Slide 43: Loyalty
For personal use only Loyalty 42
Slide 44: Loyalty and personalised value increasingly important
Loyalty and personalised value are becoming increasingly important to customers For personal use only ~75% of consumers say they want more personalised, seamless omnichannel experiences 43
Slide 45: Flybuys reaches more than 9 million Australians
Our Flybuys loyalty program reaches >9 million Australians For personal use only Largest retail network in Australia with a portfolio of more than 20 trusted retail brands, including Coles, Kmart, Bunnings, Officeworks, Velocity Frequent Flyer and Shell Reddy Express “Most Satisfied Customers” award
Slide 46: Paid subscriptions provide additional benefits
Our paid subscriptions provide customers additional benefits 21.5% For personal use only growth in Coles Plus members over the past 12 months Our paid monthly subscriptions reward customers with a range of benefits provides members with free delivery on online Coles orders over $50, free access to R
Slide 47: Loyalty is a win-win; what is next
Loyalty is a win-win for our customers and Coles, and there is still more that we can do For personal use only What is next for loyalty? Highly engaged customers • More personalised offers basket size • Increased focus on the right message, the right channel, at the right time visits per week • Crea
Slide 48: Coles 360
For personal use only Coles 360 REPLACE WITH HIGH RES IMAGE 47
Slide 49: Retail media is a growing industry globally
Retail media is a growing industry globally US$153 billion For personal use only Retail Media: Digital advertising’s Third Big Wave1 Global retail media ad spend in 20242 Key drivers of growth Growth in eCommerce Increasing customer insights and personalisation Shift to targeted advertising Advertis
Slide 50: Australian retail media market expected to grow rapidly
The Australian retail media market is estimated at >$1 billion and is expected to grow rapidly, in line with international trends1 For personal use only Strong growth projected at ~23% CAGR1 Aus Retail Media spend ($m) 89% of Australian brands are already investing in or ~2,800 experimenting with re
Slide 51: Connecting with customers across the path to purchase
DESIRE Digital Landing homepage AWARENESS Pages For personal use only Entry screens Social Video media Coles App Connecting Digital Destinations SHOPPING with customers Flybuys LIVING across the Coles Radio path to purchase Coles magazine Sampling In-Aisle Digital Checkout Health & Digital Aisle bea
Slide 52: Instore – inspiring customers as they shop
Instore – inspiring customers as they shop For personal use only • Point of sale • Coles magazine Extensive range of in-store point of sale formats • Health & Beauty magazine • Digital screens • Coles radio #1 ~500k 600+ most read magazine copies distributed Entry screens in Australia1 monthly2 in s
Slide 53: Onsite – discovery, inspiration and amplification
Onsite – providing discovery, inspiration and amplification through our online digital channels For personal use only • Website & App • Online Coles magazine • Digital home page • Product & recipe landing pages • Digital aisle & search • Flybuys direct marketing 52
Slide 54: Offsite – targeting specific audiences
Offsite – ability to target specific audiences, based on shopping behaviour, across the digital media landscape For personal use only Social Video 53
Slide 55: Performance measurement solutions
provides a range of performance measurement solutions to cater for different campaigns For personal use only Greater visibility over return on investment than traditional mass media Test and control Matching household Sales and customer Impact of audiences Sales and audience stores based on level ex
Slide 56: Coles is well positioned
Coles 360 is well positioned For personal use only • One of the largest pools of first party data in Australia • Effective channels of communication with customers both in-store and online • Ability to build unique targeted audiences • Extensive suite of in-store and online formats with growing capa
Slide 57: Morning tea
For personal use only Morning tea 56
Slide 58: Delivered consistently for the future
Delivered consistently For personal use only for the future Matt Swindells Chief Operations & Supply Chain Officer 57
Slide 59: Delivered consistently: focus for today
Delivered consistently focuses on making our operations simpler, more efficient and improving customer experience For personal use only Focus for today Track record of delivering efficiency benefits Transformation programs Unlocking the benefits of integrated end-to-end data driven operations 58
Slide 60: Proven track record of delivering efficiency benefits
Proven track record of delivering sustainable efficiency benefits For personal use only Efficiency benefits • 4-year program established in FY20 Smarter Selling • Key benefits included: SSI − Service transformation in store Smarter Selling (Year 1) $1 billion > $1.25 bn − Waste and markdown benefits
Slide 61: Technology, data and automation transforming our supply chain
Technology, data and automation investments are transforming our supply chain For personal use only Automated distribution centres Automated customer fulfilment Transport management system (ADCs) centres (CFCs) (TMS) 60
Slide 62: ADC program delivering significant cost efficiencies
ADC program is delivering significant cost efficiencies at the same time as improving availability, safety and sustainability For personal use only Efficiency benefits QLD & NSW operational, VIC site announced in October 2024 Half the footprint, double the capacity and two-thirds the Once our Victor
Slide 63: Automated CFCs increase network capacity and productivity
Automated CFCs increase network capacity and improve inventory control, productivity and freshness For personal use only Capacity • Equivalent to approximately 40 supermarkets • Ability to service ~10,000+ orders per day Inventory control • Improved availability • Pick accuracy Productivity • >2x in
Slide 64: Transport management system results in fewer, fuller trucks
Our transport management system results in fewer, fuller trucks For personal use only • Centralised logistics platform • Optimises physical movement of product and goods across the supplier, distribution and store networks • Utilises both incoming and outgoing flows • Enables growth of Coles Collect
Slide 65: Investing in technology to transform our stores
We have also invested in technology, data and automation to transform our stores For personal use only Replenishment Store activity Team Front end Theft Fresh easy ordering Future store inventory Advanced workforce Service Loss (EO) (FSI) management system transformation technology Leveraging new sy
Slide 66: Network assets combine to create a multiplier effect
Our individual network assets combine to create a multiplier effect For personal use only CASE STUDY Improved availability for customers • Entire ambient range within ADCs and improved pick accuracy • Higher delivery frequency • Increased replenishment forecasting accuracy CFCs Transport efficiency
Slide 67: Next wave – integration of data across supply chain and stores
The next wave – integration of data across our supply chain and stores For personal use only Distribution Store activity Automated Future store distribution inventory (FSI) centres (ADCs) eCommerce Replenishment Team Theft Automated Fresh easy Advanced Loss customer fulfilment ordering (EO) workforc
Slide 68: Liquor
Liquor For personal use only Michael Courtney Chief Executive Liquor
Slide 69: Liquor market context
Market context ABS Liquor market sales growth1 YoY % Ave % For personal use only 20% Cyclical headwinds are constraining growth in the short-term 15% • Cost-of-living pressures and post COVID normalisation of 10% 7% alcohol spending 5% 0% • FY25 YTD market growth remains challenging, and cost (5%) i
Slide 70: Strategy focuses on meeting evolving customer needs
Our strategy focuses on meeting evolving customer needs For personal use only Stable per capita Economic Digital engagement Convenience as consumption, growing headwinds continues to grow key mission population Cyclical Structural • Compelling offers across • Product innovation will • Personalise pu
Slide 71: Coles Liquor Group 3D Strategy
Coles Liquor Group 3D Strategy For personal use only • Evolve customer value proposition Destination for food & drink • Serve the right range, in the right location • Deliver integrated food and drink solutions To serve the drinks you • Enhance personalisation & loyalty Accelerated by want, when dig
Slide 72: Destination for food & drink that surpasses customer needs
Destination for food & drink that surpasses customer needs E LV For personal use only O EV Evolve customer value proposition Banner simplification pilot underway consolidating selected Vintage Cellars and First Choice Liquor Market stores under Liquorland brand, creating a single SE R customer value
Slide 73: Accelerated by digital to unify the omnichannel experience
Accelerated by digital to unify the omnichannel experience NCE A For personal use only H EN Enhance personalisation & loyalty Create a simplified experience with relevance and clear value to members LEV under one loyalty program ER AG E Leverage Coles 360 retail media business Leverage digital and p
Slide 74: Delivered consistently for the future for sustained growth
Delivered consistently for the future for sustained growth OW For personal use only GR Grow and improve our network Expand and renew our footprint; with a focus on unlocking more small SIM format opportunities by tailoring our footprint to drive better returns P LIF Y Simplify & Save to Invest Focus
Slide 75: Strategy outcomes to date
Strategy outcomes to date WE SAID WE WOULD FOCUS ON… WHAT WE DELIVERED IN FY24… For personal use only ✓ Won 538 Exclusive Liquor Brand awards • Right range, right store Destination for ✓ Strong growth in premium sales as a result of expanding range across the network • Deliver food and drink solutio
Slide 76: Store network & financial framework
Store network & For personal use only financial framework Charlie Elias Chief Financial Officer 75
Slide 77: Store network
For personal use only Store network 76
Slide 78: Store network remains key to the success of our strategy
Our store network remains key to the success of our strategy For personal use only Destination for food Accelerated by Delivered consistently and drink digital for the future • Store space • Omnichannel • Consistent optimisation to customers spend experience for our meet the needs of more customers
Slide 79: Current store network of supermarkets and liquor stores
Our current store network consists of 857 supermarkets and 991 liquor stores across Australia For personal use only 830 Coles Supermarkets 27 Coles Local 991 Liquor stores 78
Slide 80: Space growth targeted at long term average of >1.5% pa
Space growth is targeted at a long term average of >1.5% pa For personal use only • New stores have consistently delivered strong and reliable return on investment • New space supports both in-store shopping and store fulfilled eCommerce sales • Key areas of focus: – Growth corridors and greenfield
Slide 81: Store renewals enable us to optimise our fleet
Store renewals enable us to optimise our fleet • Our renewal program is designed to ensure we: For personal use only – Improve our customer experience and consistency across stores – Maintain critical infrastructure and improve the efficiency and effectiveness of store operations (e.g. refrigeration
Slide 82: Financial framework
For personal use only Financial framework 81
Slide 83: Our financial priorities
Our financial priorities For personal use only Sustainable top line growth supported by macro trends and customer proposition Profitability underpinned by range and space, productivity and efficiency gains (Simplify and Save to Invest program) and new earnings streams Deliver shareholder returns und
Slide 84: Earnings pathway
Earnings pathway For personal use only Investment Disciplined Cost control approach to investment with Track record of risk adjusted Gross margin strong cost control return hurdles above WACC Initiatives underway to Customer support gross proposition margin Macro trends Deliver through Supportive ma
Slide 85: Topline growth supported by positive macro trends
Topline growth supported by positive macro trends and customer proposition For personal use only Macro trends Coles High population growth Transition to in-home dining Customer proposition • Australia has one of the highest • Food service market share remains Become a destination for food and foreca
Slide 86: Profitability underpinned by range, space, productivity and efficiency
Profitability underpinned by range and space, productivity and efficiency gains and new earnings streams For personal use only • Right product offering delivered through an efficient and GIN Range and space AR effective use of space M SS GRO • Decline in tobacco sales driving favourable margin rate
Slide 87: Shareholder returns underpinned by cash flow and capital allocation
Deliver shareholder returns underpinned by strong sustainable cash flow conversion and disciplined capital allocation For personal use only Coles’ capital management framework Sustainable operating cash flow 100% cash conversion Group sales revenue3 ($bn) Reported Group EBIT3 ($bn) Investment grade
Slide 88: Our vision
For personal use only Our vision is to become the most trusted retailer in Australia and grow long term shareholder value 87
Slide 89: Q&A
For personal use only Q&A Join at slido.com #ColesID
Slide 90: Closing comments
Closing For personal use only comments Leah Weckert Chief Executive Officer 89