Wesfarmers talks up ICT investments

Target flags launch of online store, splurges $200 million on IT and supply chain

Wesfarmers, the owner of Coles and Target among other businesses, has announced a massive ICT investment in the past year across its businesses.

Speaking at the Group’s investor briefing Coles managing director, Ian McLeod, said the Coles business two years ago was characterised by chronic under investment and structural decay.

"Today, following a $200 million investment in IT and supply chain projects under the first phase of a three phase renewal program, progress had been made in turning the business around," McLeod said.

On the issue of supply chain, on-shelf gaps – empty shelves due to a lack of in-store stock – had been reduced by 50 per cent, and some 99 per cent of all stock deliveries were now on time.

“We have to invest in infrastructure - we still have to do that. One of the benefits of the previous regime was that they invested heavily in the supply chain and we were the beneficiaries of that. We have also supported that with further investment in IT – [particularly in evolving further platforms for growth and efficiency across supermarkets, liquor, and Coles Express.”

Several million had been spent on 5,000 new point-of-sale (POS) register and screens, and 2500 new POS scanner scalers. Self scan checkout had been rolled out at 76 stores.

The company’s ‘Easy Ordering’ system - an integrated ware replenishment system aimed at improving stock availability, reducing inventory, and boosting productivity - had been deployed at 150 stores and is expected to reach 180 to 200 stores by the end of Financial year 2010. The program is expected to be completed by FY12.

The company’s Caltex petrol station stores, C-Stores, were also on track for a new POS system by the end of FY12.

Target to move online

Target managing director, Launa Inman, said supply chain was also a focus at the company, with some $20 million saved via investment in its supply chain.

Some $30 million over three years was also being invested in technology upgrades across assortment planning, a stock allocation tool, a space management tool, and on a direct sourcing system to track, manage and facilitate offshore sourcing.

“We do recognise that online retailing is here to stay… and we have begun to do some work on that. You can now buy gift cards online from Target,” Inman said.

“At the moment we have a project in place where we are trying over the next six to seven months to be able to have consumers to buy certain products.

“We know initially that we will lose money – there are very few retailers are able to go online and make money straight away, so one of the things we are very cautious about is making sure we don’t lose too much money.”

Kmart managing director, Guy Russo, said that the company would not be expanding into larger consumer technology items.

“We’re not about TVs and large appliances – we are about every day items,” he said.

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