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New supermarket war: Coles goes bulk-size like Costco

MADRID, SPAIN: Spanish chefs serve a giant paella. (STR/AFP/Getty Images)

Coles has started rolling out Costco-like giant packs of groceries to restart a supermarket price war that experts thought had subsided.

The supermarket will begin selling bulk-size ‘Big Pack Value’ products and ‘Mix Match ‘n’ Save’ bundles of everyday items – like tea, coffee, tomato sauce, olive oil, rice and baby food.

It was only two months ago when price studies showed both Woolworths and Coles were winding up heavy discounting to bring the market back to a "more rational" state.

But Coles' latest campaign, to be applied on mostly in-house brand items, is expected to prompt Woolworths to come up with a counter offensive.

The giant-sized sales started on Thursday, although the move was first flagged back in May, along with more than 300 discounted meal staples.

“We are helping to lower the cost of dinner, lunch and breakfast solutions with a focus on own brand fresh products and branded big value packs in grocery,” Coles chief marketing officer Lisa Ronson said.

Some examples include:

  • Uncooked whole chickens: $3.90 per kg

  • Chicken thighs: $11 per kg

  • Crumpets: $1 per 6-pack

  • Lunch wraps: $2 per 6-pack

“Chicken is the number one dinner protein, so we’ve made a big investment in lowering the price and giving customers a whole RSPCA-approved chicken to feed their family for less than $4 per kilo,” said Ronson.

Coles, after separating from former parent Wesfarmers last year, had an 8.1 per cent drop in earnings in its first year as a standalone company.

In June, Coles chief executive Steven Cain announced a $1 billion cost-cutting drive based on reducing headcount and using more technology. He said the program was necessary to survive in a cut-throat industry that was preparing for German discount challenger Kaufland and online giant Amazon.

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