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Coles Group and Microsoft have continued to build on their longstanding relationship through a new five-year strategic deal centred on AI and evolving customer experience.
Building an AI-as-a-Service platform, Coles will leverage Microsoft’s cloud, AI and edge computing capabilities and modernise its IT estate to uncover more AI and machine learning opportunities.
The aim will be to help the supermarket giant grow its sales and ecommerce capabilities, increase operational efficiency and enhance customer experience using technologies like Azure OpenAI.
It will also empower and develop customer-focused teams through the use of generative AI copilots with the first use case already in motion, called Tell Coles.
This generates customer sentiment insights based on customer feedback surveys and delivers them to store managers to drive on-going improvement in customer experience.
In addition, the partnership will focus on growing diversified revenue streams for Coles by reaching more ready-to-buy shoppers, increasing the level of personalisation, and capitalising on market insights through its Coles 360 retail media business.
The two organisations will also explore ways to co-innovate with Coles’ current Intelligent Edge Backbone (IEB) to connect and manage IoT devices across the supermarket’s supply chain and into stores.
The aim is to advance Coles’ sustainability goals, improve customer experiences, reduce stock loss, and boost team member productivity and safety.
With Microsoft Fabric at the core of the Coles Digital Data Platform, machine learning models will provide real-time, individual and family-relevant recommendations consistently across all digital channels.
Early plans to leverage AI-as-a-Service include prototyping a “digital chef” to provide personalised meal solutions, recipes and cooking tips to customers based on their preferences and dietary needs.
Coles will modernise and re-platform tools through building Microsoft Power Apps and Copilot agents that provide team members with real-time, next-best-action insights to increase customer satisfaction and drive productivity.
The supermarket giant also plans to establish a modern data platform to provide richer insights to business users at a lower cost, through data democratisation and streamlining access to both historical and real-time data.
Coles already has more than 70 per cent of its data in the cloud and is building use cases off the platform. It provides the business with a self-service environment with reporting tools such as PowerBI enabling Coles to generate targeted insights at scale.
It also recently began using Microsoft Power Platform for interactive apps alongside its data and AI platforms and plans to use Copilot Studio to extend out-of-the-box copilots such as Copilot for Microsoft 365, Copilot for Power BI, Copilot for Security and GitHub Copilot to deliver data-driven use cases at speed.
More recently, Coles and Microsoft used several AI models to develop the retailer’s IEB, which makes 1.6 billion informed predictions each day so customers can find exactly what they are looking for across its 850 stores.
Coles CTO John Cox said its longstanding Microsoft partnership will drive strategic priorities and create more value to customers, staff, suppliers and shareholders. The two organisations previously struck a strategic partnership in 2019 and a workplace transformation deal in 2021.
“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,” Cox said.
Microsoft A/NZ managing director Steven Worrall added it will 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,” Worrall said.