Newly listed supermarket giant Coles Group has cemented its position at the top end of town, announcing it will join the Business Council of Australia.
The company, which was demerged from BCA member Wesfarmers late last year, will also become the first major retailer to sign up to the lobby group’s Australian supplier payment code, which commits signatories to paying small business suppliers within 30 days.
Coles managing director Steven Cain said the group was looking forward to bringing its insights as a large retailer to the BCA’s policy discussions, particularly in areas such as skills development and training, given its status as one of the country’s largest employers.
“Coles embraces its responsibility to contribute constructively to policy development that will improve the wellbeing and prosperity of all communities across Australia,” Mr Cain said.
“As a leading investor in the food and grocery supply chain, including our recently announced investment of almost $1 billion in supply-chain automation with leading international logistics innovator Witron, Coles wants to help ensure our industries can achieve the necessary productivity gains to allow all Australians to share in the benefits of economic growth well into the future.”
Coles will join consumer-focused businesses Woolworths, Caltex, Tabcorp, McDonalds and Scentre on the BCA, whose membership also includes the big banks and resources houses.
Code commitment
However, it will be the first retailer to sign up to the BCA’s supplier payments code, which was launched in 2017 and has been endorsed by the Council of Small Business Australia and the Victorian government.
Coles agreed in March 2017 to pay small business merchandise suppliers within 14 days, but the BCA payments code goes further, requiring signatories to pay all small business suppliers within 30 days, and to pay all suppliers on time, regardless of size.
The code also commits members to working with suppliers to improve payments systems and processes to speed up the flow of cash, and creates a process for resolving payment disputes and complaints.
“Coles’ commitment to the Australian supplier payments code further demonstrates the importance we attach to making life easier for our small business suppliers,” Mr Cain said.
There are now more than 70 signatories to the payments code.
Coles’ decision to join the BCA comes a few months before a likely federal election campaign, during which relations with both sides of politics could become strained.
Coles shares rose 1 per cent on Friday, but closed the week down 2 per cent at $12.39.
On Wednesday, the company surprised the market by announcing a new fuel-supply agreement with Viva Energy, which will see earnings from the company’s convenience store division fall sharply.
Analysts reacted to the new deal by cutting Coles’ profit forecasts as much as 10 per cent. The new deal, which took about two years to negotiate, will have Coles take a commission on every litre of fuel sold and focus on building sales from its petrol station convenience stores.
But the agreement is also expected to reposition Coles-branded fuel from being one of the most expensive products in the market to being much more competitive,
“We think the change in price positioning is likely to be a positive for the Coles supermarket business,” Morgan Stanley analyst Thomas Kierath told clients.
Extracted from AFR