Coles launches its own tech hub, LAB288, to ‘rethink retail’

Coles is the latest traditional retailer to invest further in a purpose built hub for technology, disruption and AI.

Coles chief executive Steven Cain. The company’s new tech lab takes its name from Coles founder Sir George James Coles, who opened his first variety store at 288 Smith Street in Collingwood, Melbourne. Picture: Andrew Henshaw

The technology and artificial intelligence arms race between the nation’s leading retailers, Wesfarmers, Woolworths and Coles, is intensifying with supermarket group Coles the latest to open its own disruptive tech hub with the public launch of its LAB288 business unit.

Operating quietly in the background for a number of years out of Coles’ headquarters at Tooronga, Melbourne, the LAB288 facility has now made its first pitch to the outside world with an especially created website and call-out for IT specialists to join its ranks.

With the opening welcome on its website of “rethink retail”, the LAB288 online presence has a corporate identity separate from Coles, with the supermarket’s logo almost completely absent.

In the grab for the cream of the nation’s IT, AI and data analyst professionals, Coles is hoping it will not miss out on the huge demand for talented tech employees as it battles with Woolworths and other traditional retailers such as Bunnings, Kmart and Officeworks for the tech world’s best and brightest.

It is becoming a crowded field. In 2017 Woolworths chief executive Brad Banducci was impressed with what he saw during a US study tour at supermarket giant Walmart’s tech hub, WalmartLabs, that he launched the WooliesX digital arm at Woolies. He later followed that up with a tech venture capital arm called W23.

In 2018 Wesfarmers chief executive Rob Scott unveiled his own vision of a tech-led future by announcing the creation of a new Advanced Analytics Centre that he promised to pack with data scientists and engineers.

The new website, Lab288.ai, is deliberately a separate identity from a Coles website and is designed to share stories about the work the Coles tech and IT lab team is doing and attract new talent to work with the team. Internally, LAB288 is a facility, based at the Coles HQ, but also seen by Coles management as a new way of thinking about and tackling problems as the supermarket transforms into a digital retailer.

The tech lab takes its name from Coles founder Sir George James Coles, who opened his first variety store at 288 Smith Street in Collingwood, Melbourne.

The LAB288 facility allows Coles to mimic conditions of its stores, to test prototypes and concepts without disruption to customers or team members. Coles has ramped up its store of tech knowledge and sophistication with a focus on disruptive technology and advanced analytics, helping to apply machine learning and deep learning at Coles. Its team includes more than 60 data scientists and over 25 tech experts with PHDs in mathematics, laser physics, robotic vision and environmental engineering.

Explaining the mission of LAB288, Andrew Nolan, principal engineer, disruptive technology for Coles, said on the site the business unit was a type of start-up but with the backing of a big company.

“With our own purpose-built space for experimentation, robotics and emerging technologies, LAB288 is a force of innovation. Culturally we feel like a start-up, but we have the backing of a large corporation.

“It’s the best of both worlds, and it’s incredibly exciting to be digging into these new and emerging technologies whose potential when deployed at scale is enormous. We serve 21 million customers a week, so to know our work is in the spotlight and seen by so many people is so exciting.”

And it might not just be intellectual property and tech ideas that would just be used by Coles.

“Much of the work we do at LAB288 is tailored towards Coles, but our hope is that the technologies we’re working on could eventually be deployed into other retailers outside Australia,” Mr Nolan said.

Retailers such as Woolworths, Coles and the businesses within Perth-based conglomerate Wesfarmers are pouring hundreds of millions of dollars into purpose-built tech labs and start-ups that are focusing on new technologies, such as AI, to improve their traditional retail operations.

In April Woolworths announced it would invest $100 million on a new hi-tech robotic warehouse in Sydney’s west to turbocharge its home delivery business, while its W23 arm bought an equity stake in tech start-up Marketplacer to launch its own online marketplace later this year.