More than Just Data: How Advanced Analytics is improving the Customer Experience at Coles

You walk in, you grab your bread and milk, you walk out.

A trip to the supermarket is such a routine thing that most people are blinded to the wonders that they see. But just as Russian leader Boris Yeltsin was left wide-eyed by the range of products in a Texas supermarket in 1989 – an event that many say contributed to the fall of the Soviet Union – the truth is that stores like ours accomplish something quite amazing.

50,000 or so products, many fresh, sourced from all over the world, and offered to customers at amazing prices. Running a supermarket is an enormously complex undertaking, and it’s something that our Advanced Analytics team is helping Coles do in ever smarter and more bespoke ways.

How Coles uses big data and machine learning

Our team at Coles specialises in using big data, statistics, machine learning, predictive modelling and optimisation algorithms to solve business problems and improve the lives of the 21 million Coles customers who shop with us every week.

A large chunk of my team’s work is on category management projects – ensuring the range of products in Coles stores aligns with the needs of customers. We have more than 800 stores around Australia, with each needing to service the local needs of slightly different demographic.

My team is responsible for making data-driven recommendations around the product range of each store, to ensure that the right range is in the right Coles store when the customers need it most. The aim of range optimisation is to offer the optimal assortment of products that cater to the unique needs of each customer base for each store.

Amongst many projects in Advanced Analytics, range optimisation is just one great example of how Coles makes data-driven, customer-centric decisions. Before big data these decisions would inevitably be made on gut feel. Sure, it’s probably self-evident that premium products will sell better in affluent suburbs, or that you’ll move more sunscreen in the NT than in Tassie, but there are often more surprising intricacies in the product preferences of each region and store.

My team looks into what customers buy in a specific store, then drills down to product hierarchies that analyse products at a ‘customer decision’ level to provide a deeper understanding of product loyalty and customer profile to create the optimal assortment of products.

How data enhances customer experience

I like to draw the similarities between the work we’re doing now with what George Coles, our founder, was doing when he set up his first store in Collingwood over a century ago. By regularly engaging in small talk with every customer at the checkout, he was able to learn and remember their buying preferences and would tweak his range to suit their needs. While he could cope with that job while he only had one store, trying to do the same for 800 stores across Australia is a little too much for our brains to handle.

Thankfully technology and data are now advanced enough that it can understand the needs of our customers in the same way George Coles did, but at scale.

Data science algorithms such as recommender engines have enabled us to offer things like personalised weekly specials, where an automated email is sent to our customers that tells them which of their favourite products are on special, along with some products that they may be interested in based on their previous purchases.

Far from making Coles less human and personal, technology and data is helping us become more human and personal, as it is allowing us to build one-on-one relationships with our customers.

Technology is also futureproofing our business. The pandemic has been a wake-up call for retail businesses, as it instantly and in some cases permanently changed how customers shop. We’ve had to work hard (and fast) on translating what we do well in our brick-and-mortar stores to our online business. I think our in-store customer experience is one of the best, and we want to be known as the top retailer for Coles Online too. I myself used to shop in-store, but now I buy my groceries online, which has further highlighted the need to provide an awesome online experience.

Why working at Coles is a rewarding experience

Working at Coles gives Coles’ team members a unique opportunity to change the lives of not only our customers, but ourselves, because we’re Coles customers too! As a Coles team member and customer, it feels really good to go into a store and see the fruits of your labour – to know that your work has improved customer experience and made lives of millions of Australians easier, including your own friends and family.

I hope having read my story, you will never look at stores in the same way again, and instead bring a Boris Yeltsin-level of wonder to every shopping trip you make. They aren’t just shelves with random products; you know exactly how much time, effort and smarts has been put in to select and source those specific products. To be honest I feel quite privileged to be able to use my data science skills on work that I get to see and experience the results of. The pandemic really highlighted how Coles was a gamechanger at helping the community. Supermarkets are more important than many give them credit for, and I’m super proud to be helping to drive forward one of Australia’s biggest and best.

Michelle Lugton

Data Science Lead, Advanced Analytics