Coles: from a Collingwood variety store to supermarket giant

Walk down Smith Street in Collingwood today and you'll find the usual churn of cafés and rental agencies. But in 1914, at a modest storefront on that same strip, George James Coles opened a variety store trading on a simple promise: nothing in the shop cost more than a few pence. It was a formula borrowed loosely from the American five-and-dime tradition, and it worked well enough that within a couple of decades "Coles" was a household name across Victoria, long before it sold a single tomato.

I've spent a fair bit of time in the State Library of Victoria's business archives chasing this story, and what strikes you first is how unremarkable the beginning looks. No grand vision statement, no manifesto. Just a bloke from a retailing family — his father ran stores in Wilcannia and Melbourne — who reckoned Melbourne's working suburbs wanted cheap goods sold with a bit of theatre. The famous "3d and 6d" pricing (threepence and sixpence, for anyone under seventy) wasn't Coles' invention, but he executed it with a discipline that outlasted most of his imitators.

The variety store years and the Coles family expansion

By the 1920s the single Collingwood shop had become a chain, spreading through Melbourne's inner suburbs and then into regional Victoria and interstate. G.J. Coles & Coy Ltd listed on the stock exchange in 1927, which is worth pausing on — this was still, fundamentally, a variety store business, selling haberdashery, crockery, stationery and confectionery, not groceries. The supermarket pivot was decades away.

What made the Coles stores distinctive in this era was less the merchandise than the retail experience itself: bright signage, self-selection displays where customers could handle goods before buying (radical for the period), and a relentless focus on turnover. Coles' brothers joined the business and it remained, in character if not always in shareholding, a family concern well into the mid-twentieth century.

The shift into food retailing came gradually after the Second World War, as Australian consumer habits changed and American-style self-service supermarkets started appearing as a genuine template. Coles opened its first supermarket-format store in the 1960s, and the variety-store DNA — pile it high, price it low, let people browse — translated surprisingly well to groceries. By the 1970s Coles was a serious grocery retailer, competing hard with Woolworths, the rival that would define Australian retail duopoly for the rest of the century.

Coles Myer: the merger that built a conglomerate

The defining corporate event of Coles' twentieth-century history came in 1985, when Coles merged with the Myer department store group to form Coles Myer Ltd. This wasn't a supermarket buying a rival supermarket; it was a horizontal empire-building exercise that brought together grocery retailing, department stores, discount variety (Kmart and Target both sat under the Coles Myer umbrella at various points) and a sprawling portfolio of specialty retail brands.

Coles Myer became, for a stretch, the largest retail employer in Australia and one of the largest companies on the ASX. It's easy to forget now, when Coles operates as a lean, single-focus supermarket and liquor business, that for close to two decades it sat inside a conglomerate structure with genuinely disparate businesses under one board. That structure had obvious advantages — shared property, shared logistics, cross-promotional muscle — but it also meant supermarket strategy sometimes competed for capital and management attention against department-store turnaround projects that had nothing to do with groceries.

The Coles Myer era wasn't without turbulence. Governance disputes among the founding families, well documented in contemporaneous business reporting through the 1990s, and a series of high-profile boardroom disagreements gave the conglomerate a reputation for internal friction that occasionally overshadowed its retail performance. By the early 2000s, with department stores under pressure from category killers and online retail beginning to nibble at the edges, the case for a demerger of the sprawling group was building.

Wesfarmers takes control in 2007

The move that reshaped Coles most dramatically arrived in 2007, when Perth-based conglomerate Wesfarmers, a company with roots in Western Australian agricultural co-operatives, acquired Coles Group in a deal reported at the time to be worth in excess of twenty billion dollars — one of the largest corporate takeovers in Australian history. It was, by any measure, an audacious move for Wesfarmers, whose existing businesses ran from hardware (it already owned Bunnings) to coal and industrial chemicals. Wesfarmers' rationale was straightforward: Coles' supermarket business had underperformed against Woolworths for years, weighed down by ageing stores and inconsistent execution, and Wesfarmers management believed disciplined capital allocation and operational rigour could close the gap. What followed was a decade-long, multi-billion-dollar refurbishment programme — new store formats, supply chain investment, a renewed private-label push — that gradually did narrow the performance gap with Woolworths, even if Coles never quite overtook its rival on market share.

I'd argue the Wesfarmers years are underrated in the popular telling of the Coles story. There's no single dramatic moment — no rebrand, no scandal — just a long, unglamorous grind of store-by-store improvement. But it's arguably the period that saved Coles from permanent also-ran status in the supermarket duopoly.

The 2018 demerger and Coles as a standalone company

By the mid-2010s, Wesfarmers' own conglomerate logic was being questioned in much the same way Coles Myer's had been a decade earlier. Investors and analysts increasingly argued that a mature, cash-generative supermarket business didn't need to sit inside a diversified industrial group, and that its valuation was being obscured by that structure.

Wesfarmers demerged Coles in November 2018, listing it as an independent company on the ASX. It was a neat historical bookend: the business that had itself been assembled through merger (1985) and then absorbed through acquisition (2007) was finally set loose to trade on its own supermarket fundamentals, under chief executive leadership focused squarely on groceries, liquor and convenience — the businesses that had made Coles a household name in the first place, minus the department stores and industrial distractions that had come and gone along the way.

Since the demerger, Coles has operated as a fairly conventional, if enormous, supermarket group — competing on price, loyalty programmes (Flybuys), home delivery infrastructure, and increasingly automated distribution centres. The Australian Competition and Consumer Commission's recurring scrutiny of supermarket pricing and supplier conduct, most visibly through its 2024 inquiry into the sector, is a reminder that Coles' scale now attracts the kind of regulatory attention a Collingwood variety store owner could scarcely have imagined.

What the Coles story says about Australian retail

What I find genuinely interesting about tracing this arc — variety store, conglomerate, industrial subsidiary, standalone giant — is how little the underlying retail proposition actually changed. George Coles built a business on cheap, accessible goods sold at volume with a bit of showmanship. A century later, Coles' entire marketing apparatus, from "Down Down" pricing campaigns to shelf-price wars with Woolworths, is still fundamentally the same pitch dressed in modern supply-chain clothing. The corporate structure around that pitch, though, has been remarkably restless. Few Australian brands have been merged, absorbed and spun off quite so many times while keeping the shopfront basically recognisable. Woolworths, by contrast, has had a comparatively linear corporate history — which perhaps explains why business historians find the Coles story the more interesting one to tell.

For readers who like this sort of corporate archaeology, it's worth comparing Coles' journey to other Australian brands that have weathered ownership changes without losing their identity — our pieces on R.M. Williams and Blundstone both cover businesses that went through private equity and multinational ownership while somehow staying recognisably themselves on the shop floor. You'll find more of this kind of thing at the Iconic Brand Histories hub.

A century on from Smith Street

There's a certain symmetry in the fact that Coles today, post-demerger, looks structurally more like the standalone retailer George Coles ran than at any point since the 1985 Myer merger. It took a conglomerate, a mining-and-industrials group, and one of the largest takeovers in Australian corporate history to get there. Whether that's efficient corporate evolution or just the market taking a hundred years to work out what worked all along, I'll leave to the economists. Either way, the shopfront on Smith Street is long gone, but the pricing instinct that built it is still, in some recognisable form, on every Coles shelf in the country.

— Doug Kirby, Brands & business heritage, Adelaide