Supermarket giant Coles once had grand ambitions to enter the elephant of Australia’s financial services industry: the $2.2 trillion superannuation industry.
Coles and rival Woolworths have piled into financial services over the years, lured by the prospect of selling more products to their huge customer bases, and making those customers more loyal.
“I doubt that there is really an opportunity here.”: Industry experts don’t expect the big supermarkets to get involved in superannuation. Photo: Jim Rice
Coles looked at challenging the not-for-profit or “industry” super funds by offering an inexpensive, no-frills product that could be sold through its massive store network, Fairfax Media understands.
The super plan did not proceed, and Coles quietly walked away from selling life insurance recently, just a few years after describing life insurance sales as a “natural progression” and amid suggestions it never had more than 5,000 policyholders.
Coles still sells car, home and landlord insurance, as well as credit cards. Woolworths sells seven types of insurance: car, home, landlords, pet, life, travel and funeral.
But with competition among grocery retailers pushing supermarket industry growth to near 30-year lows of 2.5 per cent, neither big chain has plans to go after super’s pot of gold.
Payments expert Mike Ebstein said he would surprised if Australian retailers selling superannuation gained traction.
“Super is generally related to employment and it is a relatively complicated product,” he said. “I doubt that there is really an opportunity here.”
Superannuation researcher Alex Dunnin said retailers in Australia had achieved “mixed results” for their insurance offerings and super was “still very much driven by the big shops.”
While financial planners have come under the radar recently for selling inappropriate products to clients, direct insurance sales are challenging, particularly for retailers.
Similarly, selling super instore is difficult because the vast majority of people go online to switch or join superannuation funds.