Coles is Investing $2.5 Billion into Digital: What’s Changing?

Coles is planning to invest $2.5 billion into its digital platform, the business has announced. E-commerce sales currently make up 5.9 percent of its total sales penetration, and the supermarket aims to make the omnichannel strategy a top priority for the business moving forward.

The business will invest in an omnichannel experience, embedding technology in its stores and supply chain. It will also increase its tech spend by ~2x, and increase the exploration of digital in-store experiences.

The result of the pandemic has fundamentally shifted customer expectations, which Coles believes they are positioned to take advantage of, the business shared. The customer benchmark for the online grocery experience is constantly growing, which is rapidly increasing alongside the investment into digital from other retailers.

With online groceries rapidly growing in popularity, the business will also invest in increasing delivery times and windows. Coles will be partnering with third-party fulfilment businesses to ‘further expand their distribution capability’ the business said.

As part of this development of its digital space, Coles will be investing in its multichannel strategy to create a seamless online shopping experience. “Customers have shown they are willing to not only vary the channels they shop with, but also how they pay with digital payments, ” said Lisa Ronson, the Chief Marketing Officer at Coles Group. One in five payments in Coles supermarkets were made using smartphones, up 14.3 percent from last May, the supermarket reported. This is almost double the growth the company has seen since 2019.

According to Ben Hassing, the Chief Executive E-Commerce, omnichannel shoppers at Coles are likely to spend 2.3x more than those who just purchase in-store. As part of this $2.3 billion investment, Coles is introducing an ‘Anytime, Anywhere, Anyhow’ strategy, which includes improving its Perfect Order Rate, enhancing its NPS Score and growing its omnichannel shopper audience. In the space of a year, Coles’ NPS Score has more than doubled (up 2.1x) and has improved its Perfect Order Rate by 4.2x by implementing new processes for a faster and seamless online grocery experience.

“As customer experience improves, we’re seeing a higher retention rate online, and this has led to a +110bps increase in our omnichannel customer base,” explained Hassing. “The e-commerce channel has reported solid growth on the year at 57 percent, while growth in e-commerce penetration has increased by more than +203bps.”

The development of its digital space includes the merging of content with commerce on a new, unified site. Previously, there were two separate sites with content and commerce. The Coles App will also have a revamp, which will “enhance a number of in-store experiences and simplify [the] in-store operations,” Hassing shared. Its Click & Collect service is also being ramped up as part of the new digital strategy, with a Rapid service (90-minute order to pick up service) implemented across 400 stores Australia-wide.

The supermarket will also partner with Ocado – a tech and automation company that specialises in online grocery retailers – to expand its online product range. Coles is ‘on track’ to launch CFCs in Melbourne and Sydney as part of this partnership, which will ‘double the range’ of what the supermarket currently offers online, and further increases its Perfect Order Rate. The businesses will further automate the intelligent fulfilment capacity that optimises efficiency.

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