Coles to unify digital channels as online demand soars

Coles Group will merge its e-commerce and digital channels into a single website and app to improve the user experience as more customers move towards purchasing online.

The supermarket giant revealed plans to “unify” its website and online shopping website in its full-year results as part of planned enhancements to the digital experience.

It plans to fund the upgrade using a portion of around $300 million in additional capital that it set aside for FY22.

At present, Coles' e-commerce site can be accessed from the retailer's main website but is hosted separately on its own domain.

It appears Coles will bring its website and e-commerce operations together, first in a smartphone app and then as a single integrated website.

“What we’re planning to do this year is launch one app,” Coles CEO Steven Cain told the FY21 results briefing.

“So for the first time in Coles’ history we’ll have effectively what’s on our website today and what’s 'under' the website ... come together in an app before Christmas and then next year that’ll happen on the web as well.

"That will unite 2 million-plus customers for the first time.”

A spokesperson added that the digital experience investments would deliver a "true omnichannel website and transactional app".

Planned enhancements to the online experience follow strong performance in e-commerce over the last year, with sales topping $2 billion for the first time.

Coles reported that e-commerce sales grew by 52 percent over the last year, which it said was partially the result of lockdowns in several states and territories.

“Omnichannel customers” – those that shop both in-store and online – are also continuing to spend around twice as much as customers that shop in only one channel.

The app and website upgrades also go some way towards explaining why Coles has been working to set up a single identity credential for customers across its various brands.

Smarter selling strengthens

Coles also achieved $300 million in benefits from the second year of its 'smarter selling' program, a four-year transformation that aims to cut $1 billion in costs from the retailer’s bottom line by 2024.

It brings benefits from the scheme to $550 million since the program began, with a further $200 million in savings expected over the coming year.

Coles said the savings generated had allowed it to “accelerate” its e-commerce plans and further invest in technology, as well as invest in advanced customer service, both in-store and online.

It pointed to a number of initiatives delivered as part of the program, including “data and technology-led solutions supporting store operations” and new self-service checkout solutions.

It also introduced “technology-led transport and logistics solutions” and artificial intelligence to improve the “end-to-end flow” of fresh goods and reduce loss.

Coles attributed an 18 percent reduction in stock loss and waste to the smarter selling program, though it is not clear whether all of this is the result of the technology improvements.

Additional capital expenditure will also flow towards the program’s “front end transformation”, which includes trolley assisted checkouts.

A new “one-stop shop” people and payroll system, called myhub, was also launched as part of the program.

In June, Coles said it had transformed its HR and payroll with a “wall-to-wall” implementation of SAP SuccessFactors.

Coles said FY22 will be a “significant year” for both capital and operating expenditure due to work on its two Ocado online customer fulfilment centres and Witron-powered automated distribution centres.

For the Witron centres based in Queensland and NSW, it “continues to expect total capital investment of $950 million, of which approximately $290 will be incurred in FY22”

Coles also expects further project costs for the Ocado centres in Victoria and NSW in the lead-up to the commencement of operations in FY23 in Melbourne and FY24 in Sydney.