Woolworths Limited (ASX: WOW) could beat arch-rival Coles – owned by Wesfarmers Ltd (ASX: WES) for the first time in 30 quarters in the December quarter.
Coles has trumped Woolworths for twenty-nine consecutive quarters when it comes to same-store sales growth in its food & liquor division, but the latter may be heading for its first win since September 2009.
There are signs that Woolworths has turned around its same-store sales growth, recording a better-than-expected rise of 0.7% in the September quarter of 2016, compared to a fall of 1.1% in the June 2016 quarter.
Coles, on the other hand, is heading backwards. Same store sales growth was 1.8% in the September quarter, down from 2.8% in the June quarter and a relatively large 4.4% growth in the March quarter.
The gap between their relative same-store sales growth is also the smallest it has been since the March 2014 quarter – when both retailers recorded 3.5% same-store sales growth.
But Coles isn't just standing still waiting to be overtaken. According to the Australian Financial Review (AFR), Coles is offering its loyalty card (Flybuys) members discounts of up to 15% on big basket shops to reinvigorate sales.
Investment bank Morgan Stanley reckons Coles same-store sales growth in the month of September was flat, compared to Woolworths' growth running at 1.2%. If the trend continues, the AFR suggests that Woolworths is on track to beat Coles for the first time since 2009.
Coles' managing director John Durkan has told the AFR, "We know our customers have long shopping lists this month, so it's more important than ever that we deliver great value across our stores."
That makes it an ideal time to offer loyal customers extra discounts for bigger Christmas shopping orders. Whether it makes a difference, we won't know until the retailers report their quarterly sales early in the new year.
