Where are Australian retailers investing next?

Australia's two leading grocery retailers enter FY27 from different positions. Woolworths won the FY26 topline battle; Coles is positioning to contest the next one. 

Woolworths regains topline advantage 

Woolworths Australian Food sales grew 4.6% to $53.9 bn in FY26, ahead of Coles Supermarkets' 3.7% growth to $41.5 bn (5.1% excluding tobacco).  

It's a reversal of the last two years, in which Coles had been the share-taker. 

Woolworths’ investment in value, fresh and convenience pays off

Coles supermarkets (store-originated, excluding online) grew FY26 sales by 0.9%. Exclusive to Coles sales revenue growth of 6.1%, with Coles Finest, its premium-tier private label delivering 9.2% growth. There was also expanded ranges, partnering with leading brands, including M&S, Grill’d (foodservice) and Gami (Korean cuisine). 

Both retailers are leaning harder into private label as shoppers become entrenched with value shopping. Woolworths’ is picking up more momentum as the foundations reset in the last couple of years are paying off, with improvement in pricing perceptions translating into more sales.

Online is splitting into two different strategies

Both retailers are growing ecommerce far faster than their physical networks, but for different reasons. 

Coles is growing online faster in percentage terms. Online grew 26.4% to AUD5.6 bn, with penetration hitting a record 13.6% year-on-year. Its automated Customer Fulfilment Centres reached EBITDA-positive in their second year. This is a genuine milestone after years of capital outlay. There will be further investment to scale up online capacity and introduce more AI-enabled features to simplify operations and improve digital customer experience. 

Woolworths is growing online steadily, gaining 18.6% to AUD8.7bn, and reaching 16.4% penetration for FY26, also hitting a new high. Woolworths On Demand delivery and Milkrun offerings continue to expand rapidly. Almost half of delivery orders now arrive in under two hours, and digitally engaged customers spent 2.4x more than in-store-only customers in Q4.  

Coles is still chasing online scale while Woolworths is turning speed of delivery and digital engagement into higher customer value.

New Zealand growth remains subdued

Woolworths New Zealand delivered sales growth of 2.5% to NZD8.5bn. Online sales increased by 10.8% in F26 to $1,365 million with penetration of 16.1%, with 25% of online delivery orders fulfilled within two hours. 

Woolworths expanded its Member Pricing program to cover 1,500 products. The Everyday Rewards program continues to grow, reaching 2.3 million members, successfully extended to FreshChoice stores. 

The retailer aims to restore sales momentum by offering lower prices, improving product ranges, and expanding convenient pick-up options. There is more room for growth, but outlook is positive.

Coles accelerates store transformation, leaning on liquor co-location to fix a weak spot 

Both retailers opened 13 new stores in FY 26, but their strategies for what comes next look very different. 

Woolworths opened 13 new stores and renewed 67, from an already-dense base, with its network reaching 86% of the population within a 10-minute drive. Its is looking for optimisation: using existing stores as fulfilment nodes and sharpening range, with new openings expected to stay in a steady 10–25 per year band. 

Coles, by contrast, is entering a phase of structural transformation. Supermarket openings are set to nearly quadruple the recent run-rate, with roughly 45 new stores planned across FY27–28. Critically, this expansion is increasingly integrated with its liquor business.  

Coles' standalone Liquor fleet has been shrinking (16 openings vs. 26 closures in FY26, taking the network from 998 to 988 stores, with a further 20 openings and 30 closures planned for FY27). Coles is folding liquor into the supermarket growth story rather than running it as a separate, underperforming channel: new-format supermarkets increasingly co-locate Liquorland, letting Coles capture liquor spend through the stronger footfall economics of the food business instead of propping up weaker standalone liquor sites. 

Woolworths is optimising a mature, high-density network from a position of same-store strength. Coles is rebuilding its network architecture, expanding supermarkets aggressively while using co-location to convert a liquor weakness into a shared-traffic asset. The two could converge on topline growth in FY27–28, but for opposite reasons, one from density and retention, the other from expansion.

What to expect in FY27

Woolworths reported Australian Food total sales up 7.6% for the first eight weeks of FY27, a clear acceleration on FY26's pace. The retailer attributed part of this to a one-off promotional boost: sales momentum was strengthened by the Disney Ooshies collectibles program, estimated to have added approximately 1.5–2 points of incremental sales growth. New Zealand Food sales rose 4.2% for the same period, an improvement on Q4, also helped partly by Ooshies. 

Coles gave a more muted, comparative update: sales growth for the first eight weeks of FY27 was consistent with the fourth quarter of FY26, and it flagged the same Woolworths promotion as a headwind: sales momentum was well ahead of previous Q4 levels initially, with a temporary moderation during the competitor's collectibles campaign in late July/early August, before recovering quickly to levels consistent with Q4 FY26 once the promotion ended. 

Both retailers enter FY27 with sales momentum intact. Both companies are pointing to the same medium-term themes: cost-of-living-squeezed, value-seeking shoppers; rising wage costs; and continued investment in e-commerce/automation as the main lever for margin growth, with the toughest cost pressures (wages, supply chain) still to be absorbed through the year.