Coles says Azure is now 'cloud platform of choice'

Technology and software transformations at major retailers used to come with chunky nine-figure price tags and an obligatory notification to the Australian Securities Exchange.

That era now looks to have passed, after Coles ushered in a new ‘strategic partnership’ with Microsoft overnight that upsells new capability, but fell short of the material threshold needed to trigger a notice to investors before the morning bell.

In a deal that so far comes without an official price tag, Coles said it signed a strategic partnership deal “to accelerate its digital transformation, using cloud-based innovation to transform the shopping experience for customers, make life easier for team members and improve productivity across the business.”

Under the deal Coles says it will build “an enterprise data platform in Azure that will power advanced analytics across Coles and enable the rapid deployment of artificial intelligence (AI) technology to drive innovation in physical stores and through the supply chain.”

The deal follows Coles’ chief executive Steven Cain announcing a four-year transformation it is calling Smart Selling that aims to use technology - coupled with job cuts - to reduce its costs by $1 billion.

That move in turn followed Coles' February announcement that was putting in a new finance, procurement and HR stack by SAP.

The grocery retailer remains under stiff pressure from investors and rival Woolworths to lift its productivity and cut costs as online sales continue to bleed margin thanks to increased labour inputs for picking and delivery via services like Uber Eats.

“The use of Azure AI services will bolster Coles’ ability to use a variety of customer insights to drive decision making and better tailor its range to meet the needs of customers and how they like to shop,” Coles said.

“These decisions will be based on deeper data analysis from its proprietary research, flybuys and customer transactions.”

As revealed at its investor day, Coles says it’s doubling down on efficiency through its ‘Smarter Selling’ strategy.

“Team members will be provided with a range of new tools that will transform how they work, such as removing manual tasks for repetitive activities like stock management and price markdowns. These changes will boost productivity and allow them to focus on the things that matter most to customers,” Coles said.

“By moving to the Azure cloud we will be able to simplify our operations and deliver at pace,” Coles chief Information and digital officer Roger Sniezek said.

“The Azure-based enterprise data platform will allow us to execute advanced analytics and artificial intelligence across all areas of our business at extreme scale.

"Dynamics 365 will power a few of our business units, driving simplicity, speed, and robust processes.”

The heavy lifting however, in physical and software terms, will be done on the already known mix of Ocado for automatic fulfilment for online purchases, Witron for store supply chain and warehousing automation (both partly using robots) and SAP for store support and procurement.

Coles maintains there’s plenty of potential upside in the new deal.

“This is an incredibly broad strategic partnership that demonstrates Coles’ commitment to win together with our team members, suppliers and the communities we serve in our second century,” Sniezek said.

And like the service it gets from credit card companies, Coles has also extracted a premium partner deal from Redmond in terms of service.

“To ensure that all these transformational initiatives can be delivered at pace, Microsoft will provide direct executive support from its global product functions,” the retailer said.

We figure that means a direct line to a human rather than a chatbot.