COLES cut prices and increased its market share across the first quarter to safeguard its dominant market position and drive food and liquor sales 4.7 per cent higher to $7.6 billion.
Food sales for the same period grew by 4 per cent, supported by the strongest price deflation the supermarket chain has reported in two years.
The growth was achieved despite Woolworths' efforts to match Coles on price and rebuild a competitive profile with shoppers.
Chief executive Richard Goyder said good momentum in Wesfarmers' retail portfolio continued through the first quarter.
"Our retail divisions remain focused on delivering increased value, better service and improved ranges to customers and actions for the Christmas trading period well advanced," Mr Goyder said.
Prices at Coles fell by 1.3 per cent in the first quarter of fiscal 2016, driving growth in volume, transaction and basket size for the supermarket chain, according to managing director John Durkan.
He said shoppers responded to the "continued strong price investment."
"Customers are unwavering in their feedback that they want great prices, not just on key lines but across the product range," Mr Durkan said.
"Our absolute focus remains on delivering trusted value to Australian households through Every Day low prices, compelling promotions and innovations in Coles brand."
The Bunnings juggernaut continued in the first quarter, with total sales up 11.6 per cent to $2.5 billion and total sales on a comparable store basis up 8.2 per cent.
This result will maintain the pressure on Woolworths over its loss-making Masters business, which analysts report Bunnings is keen to see liquidated so it can snap up a number of sites.
Three Bunnings warehouses opened during the quarter as well as one smaller format store and a further 14 sites were under construction as at the end of September this year.
Home improvement and office supplies managing director John Gillam said the extension of the Bunnings brand portfolio was hitting the right note with customers.
"Our work creating more value, improving experiences and extending our brand reach is resonating well with customers and commercial customers," Mr Gillam said.
Kmart was the star of first quarter result, busting through the billion dollar mark after its sales jumped 12.5 per cent to $1.1 billion on purchases of kidswear, homewares and apparel.
Kmart managing director Guy Russo said the sales result was supported by growth in transactions and items sold.
"In July we completed a Price Drop campaign to reduce prices on everyday products across the range and notwithstanding the challenge of the Australian dollar we invested in dropping prices again in October," Mr Russo said.
online sales at Target jumped by 53 per cent in the first quarter supporting a 3.1 per cent increase in total sales to $776 million.
Target said it was making 'satisfactory' progress with its transformation but there was still more to do, according to managing director Stuart Machin.
Lower fuel prices dragged sales at Wesfarmers' convenience operation down 7.8 per cent to $1.8 billion but convenience sales at Coles Express increased by 9.1 per cent over the quarter.
Officeworks sales increased by 6.5 per cent to $429 million with strong sales growth in store and online.
