Wesfarmers is reportedly creating a new discount supermarket chain to replace the Coles Group’s Bi-Lo supermarkets, reports The West Australian.
Coles chief Ian McLeod told analysts last week that the new concept would be tested in pilot stores in Melbourne before being introduced nationally and could be bedded down by the end of the financial year.
Coles, which was acquired by West Australian conglomerate Wesfarmers last year, tried to phase out the Bi-Lo chain in 2006 by converting Bi-Lo stores to Coles stores. The move was a disaster, and alienated budget-conscious shoppers.
Retail analyst Rob Lake says the move to build a new discount chain “makes a lot of sense”.
“They left a hole in the market that was taken up by Aldi and IGA elsewhere, and that’s a mixture of the bargain supermarket shopper and people who like cheap goods,” he says.
“It absolutely makes sense. They made a mistake in closing them down.”
The new discount chain is part of several trials at Coles supermarkets, including testing to see if consumers accept a cut of about 30% in the product range, meaning fewer brands will be stocked within each product category.