Coles and Woolworths introduce highly automated fulfilment centres

19/02/2020

Coles and Woolworths are partnering with global tech companies to advance their fulfillment capabilities in a bid to meet the growing demand for online groceries, with Coles announcing it will build two new automated fulfilment centres.

The leading Australian supermarket giants have both partnered with external tech companies to highly automate their fulfilment centres.

Woolworths has announced it will house its first Australian “eStore” at the Carrum Downs supermarket in Victoria and Coles has revealed they will build two automated fulfilment centres in Melbourne and Sydney.

Set to be operational by the middle of the year, the Woolworths eStore will have automated picking technology in a 2,400 square metre facility at the rear of the existing supermarket.

Woolworths partnered with US eGrocery startup, Takeoff Technologies, last year in August to help implement their micro-fulfilment technology.

Using the Carrum Down store’s existing footprint, the automation minimises the space required by using innovative technology that functions in compact vertical spaces.

Their hyperlocal model is designed to meet this growing demand for online groceries by moving high volume long-life products closer to online customers.

Annette Karantoni, Woolworths eCommerce Director, said the company is seeing rapid growth in online orders so its continuing to look for faster and more flexible delivery options.

“We believe smart fulfilment through our local store network is key to delivering this,” Annette said.

Carrum Downs is one of three initial Woolworths Group sites to trial the capability in 2020. The other confirmed sites are in Auckland and Christchurch, New Zealand.

Coles and Woolworths 2019 annual report’s have revealed the online shopping category has grown by more than 30 percent.

Coles has partnered with Ocado, a British online supermarket that describes itself as the world’s largest dedicated online grocery retailer.

The company has also implemented intra-logistics business WITRON to collaborate with Ocado and improve product availability, better pick accuracy, enhanced online capability at a lower cost to serve, and more regular delivery windows.

Coles has announced they will build two highly automated, multi-temperature customer fulfilment centres in Australia’s largest capital cities, Melbourne and Sydney. These centres will be highly efficient and are underpinned by AI, algorithms and machine learning.

The company’s partnership with WITRON is allowing it to build two automated distribution centres to fulfil orders to supermarkets in New South Wales and Queensland too.

A spokesperson said their partnerships will address capacity constraints, lower supply chain costs and enhance its overall business competitiveness.

“We have committed to being technology-led in our stores and throughout our supply chain to reduce costs while delivering an even better shopping experience for customers and making life easier for our team members,” the spokesperson said.

In the past 12 months Coles has announced a series of global partnerships and developments through which Coles is building its technology and digital capability, these include working with Microsoft, SAP, Optus and Accenture.

Queensland University of Technology (QUT) business school Professor Gary Mortimer said Australia is following international markets by implementing retail technology and advancements.

“Coles is adopting a centralised approach by building two new fulfilment centres in our capital cities,” Gary said.

“Whereas Woolworths understands that supermarkets will become smaller and products will be automated so they think that micro-fulfilments in the back of larger stores is the best method to speed up deliveries.”

Gary said automated centres will dominate the competitor’s role in grocery fulfilment in Australia.

The consumer expert believes more people are turning to online shopping for groceries due to the convenience.

“Packaged products such as toilet paper and laundry are particularly popular as consumers don’t feel the need to touch or pick these staple items from supermarket shelves,” Gary said.

“Consumers in urbanised areas are able to have deliveries very quick, and supermarkets are being strategic to enable guaranteed fast delivery by getting the consumer to contribute a fee to that service.”

Coles have implemented a subscription service ‘Delivery Plus’ that covers the cost of home delivery fees when customers spend $100 or more in one transaction from Coles online.

In competition, Woolworths has a new subscription service “Delivery Unlimited” that enables customers to have as many deliveries as they want when they spend over $100 too.

“Online shopping keeps growing from strength to strength despite the flattening retail sector,” Gary said.