Supermarket giant Coles has put the onus on its suppliers to justify future price hikes, challenging them to buy groceries on $150 a week to properly experience how 40% of Australian families live.
Speaking at the Australian Food and Grocery Council conference in Brisbane last week, news.com.au reports Coles merchandise director Chris Nicholas asked suppliers to “justify” further price increases and challenged them to try spending $150 a week on groceries.
“If you want to see what value means to more than a third of our customers who are limited to a grocery spend of $150 a week … give it a go,” Nicholas told the conference.
“We will facilitate it for you. Test yourself against the reality faced by millions of households in this country.”
Nicholas reinforced that Coles was “committed” to lowering prices for “struggling” Australian shoppers, claiming constant supermarket pricing wars not just to remain competitive against rivals such as Woolworths. Suppliers looking to increase prices can ”expect to be challenged”, he said.
“None of this is a threat or browbeating. Customers communicate this very clearly — when the prices of proprietary brands increase, the demand for Coles Brand increases. I’m just stating the fact,” he said.
“Recently, I did the $150 shop with Jenny, a low-income mum who has only $130 a week for her grocery shopping and she has three teenage sons. She wants the best for her family, she will not compromise on quality, but she has to make do with incredibly limited resources. It was a grind for her.”
Last year Coles managing director John Durkan issued a similar challenge to the company’s leadership team, reports news.com.au, inviting them to buy a week’s worth of groceries for just $150 to help with understanding “the challenge our customers face”.
At the end of the shop, the executives were met by a real Coles customer, who rated their performance on a scorecard.
“I actually had to put some groceries back. It is actually quite embarrassing, and yet this is reality for so many of our customers,” one executive told news.com.au.
Coles issues this challenge multiple times a year to executives and other leaders in the organisation and is extending the challenge to any suppliers who wish to give it a shot.
Get in the shoes of a customer
Bri Williams, customer behavioural specialist at People Patterns, believes it’s a good into to “get in the shoes of a customer”, and thinks SMEs can take a leaf out of the Coles’ playbook.
“Getting people out of the ivory tower and have them try to emulate the life of a customer is a good endeavour to force executives to face these real choices,” Williams told SmartCompany.
“The danger is they only have to do it for a week, so it’s more like parachuting into someone else’s reality. While they might always remember their week in the ‘trenches’, it might not be representative of an actual customer’s’ experience.”
Small business owners are already “close to the pulse” of what customers want, says Williams, but thinking about business issues and problems from a customer perspective can bring some unique observations.
Taking the Coles approach and actually imitating a shoppers’ purchasing habits might be a big undertaking for SMEs, but Williams says businesses should strive to understand customers where possible.
“Try to understand the patterns of customer behaviour and observe what they’re doing. Business owners tend to fixate on the product, whereas you’re often one decision of 2000 in the day of a typical customer,” she says.
“Customers are usually making decisions based on very small snippets of information, so trying to understand how those decisions are made can give you a perspective that isn’t your own.”
“Another way would be to go to a competitor’s store or other environments where your customers go that aren’t your own business, as this can get you out of your bubble and freshen your perspective.“