Coles (ASX: COL) has announced a subscription service, is it going to become a Supermarket-as-a-Service business?
After 10 years being owned by Wesfarmers, Coles Group was split from the broader Wesfarmers conglomerate (which owns Bunnings Warehouse) in November 2018. However, the Coles name has operated in Australia for 100 years. Today Coles is one of the largest retailers in the country, serving 21 million customers per week across its supermarkets, Coles Express, Online, Vintage Choice and others.
Coles Subscription Service
The supermarket giant has launched a service which would allow customers to have unlimited free deliveries (for a price) if they sign up to a monthly payment of $14 or $19 a month depending on which day they want the groceries delivered, according to reporting by the Australian Financial Review. Delivery is free if customers spend over $100 in a single transaction.
This service is meant to appeal to time-poor customers. The AFR quoted Coles Online General Manager Karen Donaldson, “On average, the cost of a Coles Home Delivery window is $10, depending on location, time of day and length of delivery window chosen.
“Delivery Plus will allow customers who regularly shop online to save hundreds of dollars a year and help them manage their family budget by knowing exactly how much they will pay on Coles Online delivery each month.”
Coles is investing heavily in increasing its online capabilities including its service agreement with Ocado so that it can gain access to Ocado’s Smart Platform technology.
Coles is also planning two automated Coles distribution warehouses, one in Sydney and one in Melbourne, which are expected to be operational by FY23. Each of them have a sales capacity of between $500 million to $750 million per annum.
Coles said capital expenditure inclusive of upfront Ocado fees is expected to be approximately $130 million to $150 million over the four year development and construction period.
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