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Coles promises not to sell FlyBuys customer data

Australian supermarket giant Coles uses its customer loyalty card data for store planning, but has promised it will never sell the data onto anyone else.

The wealth of data that Australian supermarket giant Coles collects can now provide a street-by-street view of how much customers are spending to determine where to put the next supermarket. However, privacy is key, according to Wesfarmers financial services managing director Rob Scott.

Speaking to investors today, Scott said that Wesfarmers subsidiary Coles now has a large network planning team that has a model built upon data about drive time, local spend, demographic, the strength of competition in certain locations, and even the data that customers hand over through the customer-loyalty program known as FlyBuys.

"We can actually analyse street-by-street spend and penetration, which provides a wealth of insight, and that is very helpful in terms of understanding the opportunity that exists within new sites," he said.

While analytics is "crucial" to Coles' business in the future, Scott said that ensuring customer privacy is also important.

"We will not use any data without the consent of our customers, and, very importantly, we would not sell any personal customer data. We will only use information that is available for offering relevant and targeted offers for customers," he said.

The company's financial arm, which has grown on the back of Coles-branded credit cards and insurance offerings, is now growing with the addition of a mobile wallet and Pay Tag technology , Scott said, with net promoter scores in the 60s for customers using Coles' financial services.

"The Pay Tag and mobile wallet has also been very well received, and we are finding a lot of our customers love the ease of use," he said.

Scott said Coles would look to introduce more financial products over time, but that the focus is on building a lean, integrated, and agile financial platform, with profits gained from the investment in the platform going back into developing the platform.

"This will provide a point of difference relative to competitors," he said. "A significant investment is being undertaken in this area, but in many respects it is self-funding."

At the same time, Coles is working to improve its supply chain from the distribution centres out to transporting stock to stores. The company has reduced the number of distribution centres over the last few years from 32 to 20, but Coles' operations and supply chain director Andy Coleman said that the centres are now 75 percent more productive than they were in 2008.

There are now automated ordering systems, and the company will finish rolling out a system by Christmas that will provide better labour and equipment planning in the distribution centres.

Coles is now investing in owning trucks for deliveries that can carry 10 percent more pallets than its current trucks, which would also allow Coles to roll out its own machine-to-machine tracking and delivery planning system that Coleman said is about to be trialled in trucks in Victoria.

"We're just about to start trialling now within Victoria in-cab technology, which means that for every single truck, we'll be able to see exactly where it is, how fast it is moving, what the estimated time for that truck to arrive at the shop so the store team will be standing by ready to unload that truck, minimising loss time for that truck and that driver sitting on the back door of our shops," he said.

"Or, if it does hit traffic, we're able to see it hit traffic, and send it an alternate route, and actually make sure that future trucks that might be going down that route actually also get rerouted. So even if that road isn't moving, our trucks continue to move. All of that will help us continue to drive reductions in our transport costs per cart."

There are now self check-outs in 650 stores, with the card-only self check-outs in 300 stores, which Coleman said further reduce costs due to not needing to handle the cash in those systems.

On Coles' online shopping business, Coles managing director John Durkan said the business is still around 2 percent of sales, but is growing.

"It is definitely a metro business for us. It is growing very well, but it is a very small amount of sales," he said.

It comes as Coles is facing a lawsuit from a legally blind woman for unlawful discrimination over the lack of accessibility on its online store. Durkan said today that he could not comment on the case, as it is before the court.