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Spending done on Coles' IT

Coles parent Wesfarmers yesterday poured cold water on the idea of spending more money on IT for the ailing supermarket chain, saying most new capital expenditure would go towards store refurbishment.
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Written by Suzanne Tindal, News Editor on

Coles parent Wesfarmers yesterday poured cold water on the idea of spending more money on IT for the ailing supermarket chain, saying most new capital expenditure would go towards store refurbishment.

Ian McLeod
(Credit: Wesfarmers)

"You've got to remember with Coles that they did spend over the last three and a half years the best part of $800 million on IT infrastructure and warehouse infrastructure. So effectively once you've spent that, you don't spend it again," said Terry Bowen, finance director of the supermarket's food, liquor and convenience division.

In a conference call, the executive added the "chronic underinvestment" that had been referred to in an ASX presentation by Coles head Ian McLeod was money not spent on refurbishment of the stores, something Wesfarmers, which bought the supermarket chain last year, was rectifying.

Earlier in the presentation, McLeod had said that the earlier IT infrastructure spend had started to reap benefits. "Quite a lot of investment has gone into both those areas and we're now starting to get the dividends of that," he said.

However, he admitted that there were still some improvements required, for instance to get automatic stock replenishment systems up and running. "We're still ordering products through pen and ink," he said.

The system to carry out the duty is working, McLeod said, but there have only been pilots run as yet, not a full roll out, because he didn't believe the business processes and staff were ready for it.

"I've seen pretty disastrous implementations of auto replenishment," he said, adding that some companies have had to go back and start all over again, with the system requiring stock accuracy, which he said can be difficult when stock was at many different locations in stores.

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