Cost cutting Coles should not overlook 'value of big tech investments'

Coles, Australia’s second-biggest grocery chain, is looking to technology to help it achieve A$1 billion ($685.40 million) in cost savings by financial year 2023.

It’s an ambitious but not entirely surprising objective from a retailer that has enjoyed industry dominance – alongside rival Woolworths – for the past three decades in Australia, according to GlobalData. Katrina Diamonon, Consumer Insights Analyst at GlobalData, says: “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. Coles’ plan reflects the new reality that technology can and must be used to streamline costly processes and offset energy costs.”

However, she adds, the application of technology should not be solely focused on generating cost savings, but also better addressing consumer needs. Artificial intelligence, for example, is being used more deliberately to curate product assortments and deliver more personalised shopping experiences.

Diamonon concludes: “While technology should undoubtedly be incorporated into cost-saving strategies, the value of more costly technological investments should not be overlooked either. Indeed, using such technologies may become a necessary cost for retailers looking to stay afloat in the increasingly dynamic grocery landscape.”