Coles 'Smart Selling' strategy delivers AU$100m savings during 2022 half-year
Coles' tech-driven "smart selling" strategy continues to pay off, with the Australian grocer giant reporting that it is on track to bank over AU$200 million in extra savings by the end of 2022 financial year.
In delivering its half-year results on Tuesday, Coles reported it achieved more than AU$100 million in savings during the period after delivering a number of measures under the strategy. This included using artificial intelligence to reduce the loss in store and introducing an automated fraud detection tool to reduce loss and deliver additional e-commerce efficiencies.
The update comes off the back of Coles Group reporting after-tax profit dipping by 2% year-on-year to AU$549 million for the six months ended 2 January 2022.
Group earnings before interest, tax, depreciation, and amortisation also fell slightly to AU$1.8 billion, with Coles noting it incurred approximately AU$150 million in COVID-19 related costs during the half, an increase of AU$45 million compared to the prior corresponding period.
Group sales remained steady hovering around AU$20.6 billion. Of that total, supermarkets contributed AU$18 billion, liquor made up nearly AU$2 billion, and the remainder came through the express segment.
The company also reported demand for e-commerce continued during the first half, even though e-commerce growth slowed as COVID-19 restrictions eased and customers returned to shopping in-store.
"E-commerce sales of AU$1.5 billion grew by 46% with penetration of 8.2% in the first half, compared to 5.7% in the prior corresponding period. Sales growth was supported by expanded customer offers such as double Flybuys points for Coles Plus members, and investments in capacity which supported elevated demand earlier in the half," the company said.
"A new unified shoppable app was also launched during the half to further improve the customer experience."
Coles added during the half, more than 100 click and collect locations were added, taking the number of locations to more than 640 while 30 new click and collect rapid stores -- where online orders can be picked up in 90 minutes -- were added taking the number of stores to over 430.
"The home delivery store network was also expanded nationwide with a focus on regional areas, and same day home delivery now available at approximately 500 stores, allowing customers greater access and choice of the Coles online home delivery service," Coles said.
Liquor e-commerce sales were equally positive, with 60% growth, which Coles said was supported by the opening of a fourth e-commerce store in New South Wales.
The retailer also provided an update on the development of its Ocado online fulfillment sites in Sydney and Melbourne, and Witron automated distribution centres in Queensland and Sydney. While all facilities remain on track, the Melbourne Ocado facility will be delayed by a year is not expected to open until FY24, due to COVID-19 disruptions, Coles said.
"Approximately AU$20 million of implementation operating costs in relation to the Witron and Ocado transformation projects were incurred, while strategic investments in IT and ecommerce continued," the group said.
Looking ahead, Coles has adjusted its capital expenditure from $1.2-$1.4 billion to $1-1.2 billion for FY22.
"As foreshadowed at the first quarter sales results, COVID-19, including construction delays, has impacted Coles' capital expenditure program," the company said.