Coles to spend $880m on new robot supply centre as it reports higher grocery sales, flat on liquor

Coles will splash out $880 million on a new automated distribution centre in Victoria as it pushes further into robotics to keep products on shelves when customers demand.

The supermarket giant will again partner with WITRON Australia, which has already helped it build two ADCs in NSW and Queensland over the past 18 months.

Thursday’s announcement came as Coles revealed that comparable supermarket sales climbed higher in the first quarter, up 2.4 per cent to $9.5 billion compared to a year earlier. But liquor sales remained flat at $851m.

Coles said work on the new ADC in Truganina, just west of Melbourne’s CBD, could take up to five years to complete but would be 15 per cent bigger than its first two centres.

Once finished, it will process 4.6 million cartons a week, servicing all stores in Victoria and Tasmania — with integration into Coles’ existing supply chain in South Australia and WA — and will deliver full automation of the chain’s ambient distribution centre network across the eastern seaboard.

“This is another important step in Coles’ business transformation as we continue to invest in technology to enhance product availability for our customers and improve efficiency across our supply chain,” chief executive Leah Weckert said.

“This new automated distribution centre in Victoria will complement our existing sites in Queensland and New South Wales, enabling us to drive productivity and further capitalise on the advantages of world-leading automation technology.”

Coles said cost-of-living pressures remained a challenge for many customers in the first three months of the new financial year and it was focused on offering a “compelling” value proposition in the lead up to Christmas.

Sales in the first few weeks of the second quarter remained broadly in line with the first but liquor sales continued to lag as customers reined in discretionary spending.

“Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys and exclusive brands,” Ms Weckert said,

“Pleasingly for customers, meat, dairy, health and beauty and homecare categories were all in deflation during the quarter. Overall supermarkets inflation, excluding tobacco, declined to one per cent, remaining well below historic levels.”

Ms Weckert said shoppers were “cross shopping” in a bid to cut costs, with the average shopper now visiting three to four retailers to fill their shopping basket as they look to save money due to cost-of-living pressures.

She said as shoppers sought out value to stretch their family budgets, 95 per cent of those surveyed by the supermarket shop at three or more retailers every week for their food and grocery needs.

Coles, along with fellow supermarket giant Woolworths, has faced scathing criticism from shoppers over alleged fake discounting scams that have bolstered sales at the expense of unsuspecting shoppers.

The Australian Competition and Consumer Commission is suing both over claims it jacked up the price of hundreds of products across its respective value campaigns, only to later reduce the price above the original and market it as a massive discount.

In a court hearing last week, both pushed the blame onto suppliers.