To cut costs by $1 billion.
Australia’s second-biggest grocery chain Coles has announced a more strategic use of technology to achieve its goal of $1 billion in cumulative savings.
The strategy reflects the new imperative for supermarkets looking to stay competitive amidst pressure from deep discounters and online retailers, according to analytics group, GlobalData, an ambitious, but not entirely surprising objective, from a retailer that has enjoyed industry dominance, alongside rival Woolworths, for the past three decades.
“The arrival of the likes of Aldi, Costco and Amazon has undermined the value proposition of Coles and given price-conscious and convenience-driven shoppers more attractive alternatives,” consumer insights analyst, Katrina Diamonon said. “Coles’ plan reflects the new reality that technology can, and must be used, to streamline costly processes and offset energy costs.”
However, the retailer must ensure that the application of technology is not solely focused on generating cost savings but also better addressing consumer needs. An example of this is Artificial Intelligence, which is being used more deliberately to curate product assortments and deliver more personalised shopping experiences.
According to GlobalData’s 2018 Q4 consumer survey, 33 per cent of Australians consider it appealing to receive personalised product or service recommendations based on their previous shopping behavior. Powerful machine learning algorithms can process vast amounts of shopper data to do precisely this.
Coles chief executive, Steven Cain, said as discounters such as Aldi and Costco continue to grow, new players arrive and online grocery sales outstrip bricks and mortar, maintaining market share would be an achievement in itself.
“The company would not hesitate to close unprofitable stores,” he said in a media call.
The group also intends cutting 450 jobs from its Melbourne head office.