Stefan Mileschin

Using AI and other tech to see off competition

Australia's second-biggest grocery chain Coles revealed its intention to cut A$1 billion in costs through more deliberate use of technology. It reflects the new imperative for supermarkets looking to stay competitive amidst pressure from deep discounters and online retailers.

Beancounters at GlobalData said that the announcement outlines an ambitious but not entirely surprising objective from a retailer that has enjoyed industry dominance – alongside rival Woolworths – for the past three decades in Australia.

Katrina Diamonon, Consumer Insights Analyst at GlobalData, said: “The arrival of the likes of Aldi, Costco and Amazon has undermined the value proposition of Coles and given price-conscious and convenience-driven shoppers more attractive alternatives. Coles’ plan reflects the new reality that technology can and must be used to streamline costly processes and offset energy costs.”

However, the retailer must ensure that the application of technology is not solely focused on generating cost savings but also better addressing consumer needs. Indeed, from a retail perspective, technology can be used in myriad ways beyond warehouse automation and self-service checkouts.

Artificial intelligence, for example, is being used more deliberately to curate product assortments and deliver more personalized shopping experiences. Significantly, this is something that shoppers themselves are taking an interest in.

According to GlobalData’s 2018 Q4 consumer survey, 33 percent of Australians consider it appealing to receive personalized product or service recommendations based on their previous shopping behavior. Powerful machine learning algorithms can process vast amounts of shopper data to do precisely this.

Diamonon concludes: “While technology should undoubtedly be incorporated into cost-saving strategies, the value of more costly technological investments should not be overlooked either. Indeed, using such technologies may become a necessary cost for retailers looking to stay afloat in the increasingly dynamic grocery landscape.”

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