Woolworths doubles down on data analytics with $223m Quantium deal
The supermarket group has made one of the biggest analytics plays in Australian retail, taking control of AI group Quantium.
Woolworths has made one of the single biggest investments in data analytics by an Australian retailer, after agreeing to pay $223m to up its equity stake in Quantium to majority control, underlining the growing importance major retail companies are placing on data to drive business decisions.
The supermarket group will further enhance the reliance it now has on data analytics to help shape its strategy, interact with shoppers and direct investment by also creating a new business division within Woolworths, to be called Q-Retail, as the company accelerates the use of data in its everyday operations.
It has inked a deal to up its stake in Quantium to 75 per cent, from its current holding of 47 per cent.
Woolworths announced on Tuesday that Quantium will become a key part of Woolworths Group, as it takes on majority control, while retaining its senior leadership team and continuing to operate in sectors outside of retail. It comes as Woolworths also moves closer to spinning off its $10bn liquor and hotels arm Endeavour Group in a sharemarket listing later this year.
The supermarket retailer said on Tuesday it will purchase the extra equity stake in Quantium for $223m, which comes on top of the $20m it paid for an initial near-50 per cent stake in the privately owned Quantium group.
Quantium is a world-class data science and advanced analytics business, with many retailers such as supermarkets increasingly turning to analytics to help develop new strategies, bond with shoppers and guide investments. The harvesting of sales and customer data flowing from hundreds of millions of shopping transactions is emerging as a key competency for retailers, especially supermarkets, with the information studied and used to help guide sales and marketing campaigns as well as anticipate customer demands.
Other companies are also investing heavily in the field, with Wesfarmers, which once owned rival Coles, building its own Advanced Analytics Centre to exploit a number of opportunities in data intelligence.
When Woolworths made its maiden investment in Quantium it also entered into a long-term partnership that has enabled Woolworths and its supplier partners to make customer-first decisions across pricing, ranging and promotions. Three years ago Woolworths broke its 15-year relationship with market research company IRI to award its crucial data-sharing and supermarket scanning contracts to Nielsen and Quantium.
The latest accounts lodged with ASIC for Quantium show that it booked sales of more than $151m from the rendering of its data analytics services in fiscal 2019 to produce a profit for the year of $3.8m.
Woolworths chairman Gordon Cairns on announcing the increased stake in Quantium said the retailer has enjoyed a successful partnership with the data firm over the last eight years by jointly developing products and services that provide critical insights to both Woolworths and suppliers.
Woolworths chief executive Brad Banducci said advanced analytics is key to improving the experiences, ranges and services it provides to customers and the support it provides to teams and suppliers.
“The way we gather data, interpret it, and protect it, is becoming ever more important,” Mr Banducci said.
“Through this transaction, we aspire to bring together Quantium’s advanced analytics capability and Woolworths Group’s retail capabilities to unlock value across our entire retail ecosystem. By working better together, we aim to transform the rapidly evolving retail sector, helping us better service our customers and support our team and supplier partners.”
Woolworths also announced that Q-Retail will be led by Amitabh Mall as managing director, who will also serve as Woolworths’ chief analytics officer.
Mr Mall joins after 20 years at the Boston Consulting Group, where he most recently led its Consumer and Retail practice in Asia-Pacific. Mr Banducci will assume role as chairman of Quantium.
Chalmers to boost watchdog’s merger powers
An overhaul of the ACCC’s merger powers, including the ability to block deals without having to go to court, will move a step closer on Wednesday.
Country Road owner glosses over workplace scandal
The South African owner of Country Road Group has glossed over the sexual harassment and bullying scandal at the retailer, referring to ‘internal pressures’ in its annual report.