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Coles to spend $150 million on online offer

Supermarket giant Coles has entered into an exclusive services agreement with the world’s leading online grocery platform, Ocado, to double its home delivery capacity in Australia by the end of the 2023 financial year.

Over the next four years, the supermarket will spend $130 million to $150 million on the construction and development of the project, which will give the retailer access to Ocado’s online grocery website, automated single-pick fulfilment technology and home delivery solution.

As part of the deal Ocado will install and maintain equipment for Coles in new automated customer fulfilment centres outside Sydney and Melbourne, which are expected to be operational by the 2023 financial year.

Each centre has an estimated sales capacity of between approximately $500 million and $750 million per annum.

The new deal is expected to offer customers a seamless digital customer experience, greater range, improved product availability and freshness, as well as more regular delivery windows. The partnership means increased network capacity at a lower cost to serve and is expected to double Coles’ current home delivery capacity.

“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. Ocado’s ongoing investment and retail partnerships around the world will help us continue to improve our offer into the future,” Coles CEO Steven Cain said.

Customers outside of metropolitan Melbourne and Sydney will have access to Ocado’s website, whereby orders will continue to be fulfilled by the existing store-based network, which will continue to evolve over the coming years.

“We are delighted to partner with Coles,” Luke Jensen, CEO of Ocado Solutions, said. “Already a leading player in online grocery retailing in Australia, we are proud that they have chosen the Ocado Smart Platform to take them to the next level. 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.”

Ocado CEO Tim Steiner said he is delighted to be working with Coles “to reshape the food retail landscape in Australia”.

Ocado has over 15 years’ experience in grocery market innovation and recently signed a deal with British retailer Marks and Spencer to boost its online grocery experience.

This story first appeared on sister site Inside FMCG.

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