Coles says inflation cooling as it opens hi-tech centre

Outgoing Coles boss Steven Cain believes the billions of dollars the retailer is spending on new automated distribution centres will benefit customers, staff and shareholders.

Outgoing Coles CEO Steven Cain says food and grocery inflation is starting to moderate – mirroring official CPI figures issued on Wednesday – with the supermarket giant also keeping a downward pressure on its own cost of doing business after unveiling its first automated distribution centre in Queensland.

Flanked by Anthony Albanese, Queensland Premier Annastacia Palaszczuk and Coles chairman James Graham, Mr Cain on Thursday officially opened the hi-tech facility in Redbank, 30km southwest of Brisbane, that will service 219 Coles supermarkets across the state as well as in northern NSW.

For Mr Cain, it represents planting a tree whose shade he won’t enjoy sitting under, as he departs Coles next week to be replaced by Leah Weckert. The facility is part of a wider “smarter selling” program he launched five years ago that includes more than $1bn in new warehouse and distribution centre investments.

The Redbank facility built by Germany’s Witron for Coles is the first leg of that multibillion-dollar investment strategy. It spans 170,000sq m, the equivalent size of two Suncorp Stadiums. Its building size of 66,000sq m makes it one of the biggest and most productive automated distribution centres in the world.

It will soon be matched by a similar automated warehouse, also built by Witron, in western Sydney’s Kemps Creek that will open next year, and will be complemented later by twin robotic ­automated fulfilment centres in Victoria and NSW to help drive Coles’s online ambitions.

Coles’ new automated distribution centre in Redbank. Picture: Richard Walker

Once the second Witron site opens in Kemps Creek it can link arms with the Redbank site to deliver food and groceries to stores across both states and bring with it promised efficiencies, savings and better financial performance for Coles.

Mr Cain said there would be direct financial and operational benefits to Coles, its staff, customers, the community and shareholders from the investment in new state-of-the-art distribution and fulfilment centres across the east coast.

“Modernising our operations is how we improve efficiency and availability in our stores and deliver higher service levels for our customers, team members and suppliers,” Mr Cain said.

“Our new automated distribution centres can process twice the number of cases and hold twice the number of pallets in half the footprint compared to our current distribution centres, leading to a more productive and sustainable business model.”

Witron has built these large automated distribution centres across the world for other retailers for more than two decades, and Mr Cain said the strong financial returns from these investments was proved by the fact retailers were becoming repeat customers of the Witron facility.

“This is one of those rare examples of an investment where there’s something for everybody,” he said. “By far the customer is first, the biggest impact is likely to be better availability on shelves.

“With the team in store it is easier and more productive. From a community point of view it is very sustainable, as the waste will be reduced.

“And then for shareholders, the reason why Witron has been so successful over the decade is that its biggest customers are signing up for more facilities and that would only happen if those customers were happy with the ­financial returns that are being achieved.”

Turning to the economy, Mr Cain said he believed the “general trend” was that “inflation is moderating”.

Coles will give further insights into its operational performance, sales and food and grocery inflation when it reveals its quarterly sales update on Friday.

Helping to officially open the new centre, the Prime Minister said the world-leading technology would help advance supermarket supply chains.

“This technology is not only a first for Australia, but also a win for the state of Queensland,” Mr Albanese said.

“As we’ve seen during the pandemic and natural disasters, resilient supply chains are essential when it comes to feeding our ­nation and providing Australians with essential supplies.”

Witron CEO Helmut Prieschenk, also at the official opening in Redbank, said the facility would be a world-leading site.

“We have been engaged to build 93 automated distribution centres in 13 different countries, with the latest for Coles being the largest ambient system Witron has ever built,” Mr Prieschenk said.

The facility can hold the full range of more than 18,000 ambient products. Queensland and northern NSW supermarkets will no longer be reliant on a large number of products being transported from Sydney to Brisbane, so holding the full range of products within the state of Queensland will drive better availability for Coles customers.