Coles partners with Microsoft for new digital transformation

Coles Group and Microsoft have announced a new five-year strategic partnership aimed at enhancing Coles' digital presence and customer engagement.

The collaboration seeks to bolster Coles' sales and ecommerce capabilities, increase operational efficiency, and enhance customer experiences. Through this partnership, Coles intends to leverage Microsoft's cloud, AI, and edge computing capabilities to develop more personalised customer interactions and empower its teams using generative AI.

John Cox, Chief Technology Officer at Coles, stated, "We are delighted to refresh our longstanding partnership with Microsoft to drive our strategic priorities and create more value for our customers, team members, suppliers and shareholders. Microsoft's proven expertise and innovative solutions will help us build the digital foundations and enablers that will empower us in our purpose of helping Australians to live and eat better every day."

The collaboration builds on previous work between the two companies, which includes a strategic partnership formed in 2019 and workplace transformation initiatives in 2021. Earlier this year, Coles and Microsoft worked together on optimising customer experience and operational efficiency through AI models capable of making 1.6 billion daily predictions to support stock management and personalised shopping experiences.

The partnership will involve several key initiatives. Among them is the development of an AI-as-a-Service platform to securely deploy Azure OpenAI use cases across Coles. The first of these is "Tell Coles," a generative AI model used to extract customer sentiment insights from feedback surveys, which are then provided to store managers to enhance customer experience.

The companies will also expand Coles' Intelligent Edge Backbone, a computing platform supporting computer vision and machine learning. By integrating this with Microsoft's offerings, Coles aims to manage IoT devices throughout its supply chain, advancing sustainability goals, reducing stock loss, and enhancing productivity and safety for its team members.

Efforts to improve digital customer experiences are also underway, with plans to use Microsoft Fabric within Coles' Digital Data Platform to offer hyper-personalised recommendations through all digital channels. Early prototypes include a "digital chef" that will deliver personalised meal ideas and recipes based on customer preferences and dietary needs.

Coles will focus on modernising its tools and re-platforming solutions to simplify processes and drive productivity. This involves using Microsoft Power Apps and Copilot agents to provide real-time insights, thereby increasing customer satisfaction and efficiency.

In addition, Coles is working on modernising its data and analytics platform to provide faster and richer insights through data democratisation. With more than 70% of its data currently in the cloud, Coles is building use cases to generate targeted insights using reporting tools like PowerBI and other interactive applications via Microsoft Power Platform.

Steven Worrall, Managing Director at Microsoft ANZ, expressed his enthusiasm about the renewed collaboration, saying, "We're thrilled to deepen our partnership with Coles, a true leader in Australian retail. Together, we'll leverage Microsoft's cloud, AI, and edge computing capabilities to drive meaningful transformation, helping Coles stay ahead in an ever-evolving, customer-first landscape. This partnership is a great example of how our technology empowers retailers to innovate, grow and deliver exceptional value in a highly competitive market."

Coles and Microsoft will continue to explore and pursue additional opportunities and areas for collaboration under their long-term strategic partnership.