Coles to launch new discount supermarket chain to replace Bi-Lo

Coles chief Ian McLeod says the group will replace failing discount chain Bi-Lo with a new supermarket chain.

Coles chief Ian McLeod says the group will replace failing discount chain Bi-Lo with a new supermarket chain.

McLeod says the new stores will be introduced in selected areas by the end of the year. If the trial is successful, it will be followed by five or six more, with others to come in 2009-10.

A new name for the chain is yet to be revealed.

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 to 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.

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