British supermarket titan J Sainsbury plc (LON: SBRY) have struck a deal with Australian retailer Coles (ASX: COL) for a wholesale partnership, as they look to expand wholesale business.
This expansion comes at an important time for Sainsbury, where the supermarket reported a fall in profits last week amid tough competition from overseas firms such as Lidl and Aldi.
Other supermarkets have also felt the hit, as Marks and Spencer (LON: MKS) planned to close many UK stores, and Tesco (LON: TSCO) reported a fall in their profits leading to the release of the ClubCard plus.
The UK firm’s biggest wholesale deal yet will see it supply own brand products to Coles supermarkets across Australia, as well as online, from early next year. The products will be sold under the Coles brand.
Coles trades from over 2,400 retail outlets, including 800 supermarkets and 200 convenience stores.
Sainsbury’s commented : “The partnership will also investigate Australian groceries and alcohol which Sainsbury’s could source through Coles to bring a distinctive proposition to UK customers.”
No financial details have been released on the deal, however investors do seem optimistic about the new partnership as shares rose.
Shares of Sainsbury jumped 1.39% on the announcement to 203p, whilst Coles shares jumped 1.25% to AUD15.44. 11/11/19 12:54BST.
Sainbury’s have stepped up the efforts to expand into the wholesale business after their proposed takeover of Walmart owned Asda (NYSE: WMT) for £7.3 billion was thrown a curveball.
Bosses at Sainsbury’s said the company is exploring options to “bring a distinctive proposition to UK customers” as they signed up to a new wholesale arrangement with its rival.
Sainsbury’s said: “The agreement with Coles marks a key milestone in Sainsbury’s strategy to build its wholesale business, with a number of partnerships already in place in Asia, Europe and the UK.
Greg Davis, Coles chief executive of commercial and express, said: “We want to accelerate the introduction of innovative products to Coles own brand, and this partnership allows us to do that with a range of food and groceries that are already proven in the international market but not yet available in Australia.”