Supermarkets Losing Sales to Non-Grocery Retailers

Australia’s biggest supermarkets are losing ground in the health and home product market, with as much as $500 million in sales shifting to other retailers.

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Pick & Scroll News
March 04, 2025

Australia’s biggest supermarkets are losing ground in the health and home product market, with as much as $500 million in sales shifting to other retailers. Coles' internal analysis suggests it has lost around $100 million annually over the past four years, with sales flowing to competitors like Chemist Warehouse, Amazon, and Bunnings. The trend reflects a growing consumer preference for specialty stores and online marketplaces, leaving supermarkets struggling to compete.


Supermarkets like Coles and Woolworths have traditionally dominated grocery sales, but non-grocery retailers are now expanding into categories such as skincare, cleaning products, and personal care. Chains like Chemist Warehouse have added household essentials to their shelves, while online retailers offer competitive pricing and bulk deals. The shift has been worsened by the arrival of international eCommerce platforms like Temu, which focus on aggressively undercutting prices.


Coles acknowledges that its approach to health and home categories may have contributed to its sales slump. Executives within the company have pointed out that their focus has been too much on a traditional “supermarket lens,” rather than adapting to changing consumer shopping habits. With more shoppers turning to competitors offering everyday low prices and bulk purchasing options, Coles now aims to rethink its strategy to regain lost market share.


The broader supermarket sector has reportedly lost 2% of market share in the past four years, signalling how competition from non-grocery retailers is intensifying. Factors like fast shipping, larger product ranges, and competitive pricing from online giants are making it harder for supermarkets to retain customers. Industry leaders are now looking to invest in category improvements to better compete.


Coles is planning an aggressive strategy to win shoppers back, considering a revamp of its pricing structure and bulk purchase offers. The retailer believes it could add $1 billion in extra sales through such initiatives, though no definite timeline has been set. With increasing competition from both local and international players, the fight for dominance in essential household categories looks set to escalate.