👉 Background: Coles is the second-largest supermarket chain in Australia, wit roughly 28% of the overall grocery market - behind Woolies with 35% market share.

‍👉 What happened: For the last few months, Coles has been working with external consultants on a strategy to ‘simplify’ its range. While Coles claims this is to enhance the customer experience, it's a fancy term for cutting-its-range-by-10%.

‍👉 What else: The theory is that with fewer products on the shelves, the stocked products will generate more sales — a bit like the Aldi model. And with a smaller range of products on shelves (and suppliers), it gives Coles more leverage in negotiating better prices (and ultimately profit margins).

‍

‍What's the key learning?

💡Product rationalisation is when a retailer cuts down the number of products it sells. It's often positioned as a positive for customers by ‘simplifying’ the offering. No need for 13 table salts on the shelf - 5 should be enough!

💡Aldi has proven that a simple range of around 1,800 items with cheap prices in their supermarkets can work, compared to Coles’ 20,000 items. But for Coles, this is also to strengthen their leverage with suppliers.

💡Following the ACCC and Senate inquiries into supermarkets, Coles has been reluctant to strong-arm suppliers - but this product rationalisation is a way to indirectly apply pressure on suppliers without a direct threat. So it’ll be interesting to see how the ACCC and Senate look at this.