Coles makes digital acceleration a core strategic pillar

Coles Group has named customer experience and digital enablement as one of four "immediate areas of focus" under an evolution of its business strategy.

One of its business strategy pillars is 'accelerated by digital', which will support high levels of digital engagement with customers through personalisation, unification of our digital experience and our focus on being omnichannel."

Managing director and CEO Leah Weckert said the retailer wanted to offer greater tailoring and personalisation of online experiences.

Outside of digital enablement, other immediate focus areas include more programs targeting savings, "investment in our store network, modernisation of our supply chain, resilience to security and outsourcing arrangements, and driving sustainability," Weckert said.

It hopes to find “efficiencies of over $1 billion over the next four years", citing cost headwinds and wage pressure as factors driving its cost-out focus.

The fresh efficiency drive also comes as Coles wraps up its four-year 'smarter selling' program, which similarly targeted - and reached - $1 billion in cumulative benefits across the four years it ran.

Weckert said the “program has been important over the last 12 months as it has contributed to offsetting cost inflation we have seen in areas such as wage cost and fuel”.

“Key initiatives which delivered benefits included service transformation at front-of-store, advanced analytics to optimise markdowns, energy saving initiatives and productivity improvements in online and in-store," she said.

Digital innovation so far

Weckert said Coles has made “significant investments into our digital business” over the last years resulting in customers shifting to a single website Coles.com.au.

The retailer had also "expanded and optimised" delivery and pickup options.

The Coles app was augmented to include digital receipt capabilities and FlyBuys integration.

FlyBuys recorded “over 9 million active members and a 30 percent increase in points redemptions, supported by activities to improve customer experience.”

“Our subscription service in Coles Plus has also seen a 30 percent increase in contribution to ecommerce sales," the company said.

“Coles 360, our media business which we launched in October last year, achieve growth of 27 percent”.

Supply chains and timelines

Providing further details for its supply chain automation transformation, Weckert said a “significant strategic milestone for FY23” was achieved with the opening of its Witron-powered distribution centre opened in Redbank.

The Automated Distribution Centre (ADC) services around 150 Coles supermarkets in Queensland and northern NSW.

“As we've said in the past, it will transform our supply chain and provide us with a strategic cost advantage with the first full year of benefits in FY26," Weckert said.

“For our site in Kemps Creek, NSW, initial commissioning work commenced in line with schedule."

Last week, Coles said a Victoria-based customer fulfilment centre (CFC) has been delayed due to construction issues, shifting the completion date by a year. A similar centre is being built in NSW.

Weckert said that “outside of the construction elements” of the project, progress has been made over the year in other areas, with “new vans commissioned, technology foundations put in place including trial orders have been successfully processed through the system.”

Coles Group sales revenue growth reached $40.5 billion, up 5.9 percent from the prior corresponding year.

Its net profit after tax (NPAT) reached $1.042 billion, up 0.3 percent from the prior corresponding year while its operating cash flow was $3.604 billion.