Retailer Coles Group has announced a major partnership and multimillion-dollar investment designed to ramp up its ability to make deliveries direct to online shoppers.
In a statement to the ASX and a webcast to investors, Coles said that it had entered an exclusive service agreement with British online supermarket Ocado to use its technology platform, which Coles said would “bring the world’s leading online grocery platform, automated single pick fulfilment technology and home delivery solution to Australia”.
The Australian supermarket giant will also develop two multi-temperature automated fulfilment centres, one in Sydney and the other in Melbourne. Each of these are expected to deliver annual sales capacity of between $500 million and $750 million.
“This in turn will approximately double Coles’ current home delivery capacity Australia-wide, and is expected to lead to an improved profit margin,” the company said.
Additionally, Coles, which last year was demerged from Wesfarmers and floated separately on the Australian Stock Exchange, will roll out last-mile routing management technology, designed to “optimise delivery efficiency and customer service”.
The online delivery service is expected to be fully operational by the end of the 2023 financial year, and will come at a cost of “approximately $130 million to $150 million” over the four-year development phase.
“Ocado is singularly focused on online grocery shopping and, as a result, has become the leading solution provider in the world. We are delighted to be partnering with them to make life easier for Coles’ customers here in Australia,” Coles CEO Steven Cain said.
“Ocado’s ongoing investment and retail partnerships around the world will help us continue to improve our offer into the future.”
Ocado Solutions CEO Luke Jensen said that Coles is “a leading player” in online grocery retailing in Australia.
“Our flexible, scalable and modular solution will help them bring new levels of convenience, choice and value to Australian consumers. The Australian market is changing as consumer needs evolve and our platform will enable Coles to lead this transformation in a profitable and sustainable way,” he said.
Ocado is listed on the London Stock Exchange in July 2010, having been established in the early 2000s.
On its website, Ocado claims to be “the world’s largest dedicated online grocery retailer with over 580,000 active customers”.
It follows announcements earlier this month that Bunnings is rolling out a Click & Click offering as it seeks to expand online, while fellow Wesfarmers-owned retailer Officeworks revealed that it had acquired IT service provider Geeks2U.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.