Coles CEO Leah Weckert: ’Inflation is still biting, but there’s cause for optimism’

Leah Weckert’s customers are still feeling the impacts for cost-of-living pressures but she sees reasons to be optimistic about the Australian economy in 2025.

Coles CEO Leah Weckert. Photo: Martin Keep

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

We know our customers are still feeling the impacts from cost-of-living pressures but we are optimistic about the Australian economy in 2025. In our business, we are still seeing some cost pressures, particularly wages, however we do have a productivity program known as Simplify and Save to Invest, which aims to deliver in excess of $1bn in cumulative savings over the next four years. This will help us offset the underlying cost inflation we are seeing in the business while continuing to invest in value for our customers.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

We have delivered on two key transformation programs with our two Automated Distribution Centres (ADCs) and two eCommerce Customer Fulfilment Centres (CFCs) opening over the last 12-18 months. Together, these four facilities represent the single largest capital investment in Coles’ history with more than $1.4bn invested in leading world-class technology. I am excited to see these facilities improve our performance and customer offer.

We are also continuing to invest in areas that matter the most to our customers, as well as what makes commercial sense for the business.

For our customers, we are continuing to invest in value, including through our seasonal “Great Value, Hands Down” value campaigns to help our customers’ grocery budget stretch further.

We have also recently announced an investment of approximately $880m to develop a new ambient ADC in Truganina, Victoria in partnership with Witron. The project is expected to commence in FY25 and take up to five years to complete.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Taking a long-term view, the key to a prosperous future for Australia is a growing and inspired labour pool that have opportunities to participate in and contribute to the economy. As migration begins to moderate and birth rates continue to fall, we should consider whether current structures create the right conditions for Australians and Australian businesses to thrive.

A core lever that would help elevate Australians would be broadbased tax reform. It will be unsustainable for the country to increasingly rely on the income tax burden of a shrinking workforce, as the population ages. Tax structures that inspire Australians to innovate and create change in the workplace, rather than invest in less productive assets, would be a strong step towards a more productive and prosperous Australia.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

The strategic alliance between Australia and the US has remained strong throughout many different presidential administrations, and longitudinally we do not expect this to change.

The extent to which new tariffs may not only affect Australian exports, but impact economic activity in our broader region, is a potential risk.

Conversely, the environment may encourage diversification of businesses to other regional and global markets, with pro-business policies in the US potentially also encouraging investment opportunities for Australian firms.

While the specifics of policy changes from the new administration remains unknown, we are optimistic that our two countries will continue to find mutually beneficial common ground.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

Flexibility is key to what makes Coles a great place to work, and our Flexible Working policy helps us to balance how we connect, collaborate and deliver against our strategy.

To ensure we continue to meet our customers’ needs, next year we will transition to a hybrid model which will require all office team members to work at least three days a week from either the store support centre, distribution centre or store, with one of those days to fall on either a Monday or Friday. We believe this new way of working will provide our teams with the opportunities to foster relationships and work collaboratively, while also acknowledging the importance of flexibility and the benefits that hybrid working can provide.

In stores we continue to offer a range of rostering options to help team members balance their work and home life.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

Coles is well advanced in our use of artificial intelligence. We are investing and experimenting with the technology for the benefit of our customers, team members and business. We currently use it across our supply chain, merchandise and HR teams.

AI can identify patterns and trends in data to help us make the right decisions based on the experiences we are looking to create, whether it is for our customers or our team members.

The future of artificial intelligence is very exciting, and we will continue to embrace it, particularly as it complements our Accelerated by Digital strategic pillar in our strategy.

The future of AI at Coles will have increased focused on customer and team member experience as the technology evolves and becomes more sophisticated.

AI technology is at its best when it is working away in the background, when customers don’t realise they are interacting with a piece of AI tech, but may notice that their shopping is quicker, easier and more efficient.