In an attempt to secure a step-change in costs and catch up with arch rival Woolworths, Coles has teamed up with a German logistics automation specialist to construct two state-of-the-art warehouses.
Australia's second-largest food and liquor retailer Coles will spend $950 million over the next five years building two new automated distribution centres to replace five existing warehouses.
The supermarket giant has signed 20-year leases to build the two identical 70,000sq m centres at a Goodman's facility in Redbank, Brisbane and another in a Goodman's and Brickworks' joint venture at Kemps Creek in western Sydney.
The new warehouses will store and distribute twice the volume of groceries with half the footprint of existing centres.
Late last year, Coles revealed a renewed focus to invest in supply chain automation which had been on the cards for four or five years.
The push towards automation is now expected to deliver significant productivity improvements, including better safety, better on-shelf availability and freeing up the time of in-store staff through improved picking, packing and despatch.
Coles has partnered with German logistics automation specialist WITRON Logistik + Informatik to construct the automated interiors of the high-tech warehouses which will handle distribution and packing of the supermarket’s groceries.
The technology will allow individual stores to order products from a larger range of offerings and have them packed and delivered for unloading on specific shelves in the store.
“With the signing of these important contracts, Coles is one step closer to implementing a key element of its supply chain modernisation strategy," Coles chief executive Steven Cain said.
The decision by Coles follows a similar strategy by rival Woolworths, which unveiled a $215 million automated distribution centre early last year.
The facility, which sits on a 15.9-hectare site 35 kilometres south-east of the Melbourne CBD, will stock more products than Woolworths’ Brisbane and Sydney distribution centres combined and will supply most of Woolworths’ stores in Victoria.
Coles now plans to make a $146 million pre-tax provision in its 2019 interim results to cover the cost of its distribution network overhaul, including job losses and exiting leases.