Coles Liquor has revealed it has been trialling AI, machine learning and algorithms over the past six months to predict consumer demand for products sold at Liquorland, First Choice and Vintage Cellars.

An advanced forecasting and automated ordering system is using data around annual events such as Easter, Mother’s Day and Christmas, together with campaigns, promotions, past sales and weather patterns to generate a demand forecast to ensure stores have enough supplies.

The system is now being officially rolled out, with suppliers being shifted onto the system throughout 2024-25.

“Our forecasting and automated ordering system will help us predict customer demand and required stock levels in advance,” a spokesman for Coles Liquor told The Australian.

“This allows us to effectively tailor our range to local communities and better replenish stock, meaning our customers can always rely on us to have their favourite drinks on our shelves, where and when they want it.

“By having access to better data and insights we can effectively collaborate with our more than 2000 suppliers and give them greater visibility of stock requirements in advance to support their production planning. This is particularly important for our small and medium suppliers so they can ensure availability of their stock in our stores at the right place at the right time.”

Coles customers abandon premium drinks

Coles Group announced its third-quarter results in late April, which revealed its liquor sales revenue declined by 1.9% to $786 million as customers reduced their discretionary spending.

Sales fell 3.1% on a comparable basis, compared with analyst predictions of a 0.5% fall.

Coles Group CEO Leah Weckert said 30% of shoppers were cutting back in purchases across its Liquorland, First Choice Liquor Market and Vintage Cellars shops. Early fourth quarter sales have also been broadly in line with the March quarter.

“We’re seeing people trading into low-cost alternatives, so, for example, out of champagne into things like prosecco or Australian sparkling,” she said.

After a long period of falling sales, Werkert said there has been a shift back into beer.

“People are moving back into beer because this tends to be a category where there are cheaper alternatives,” she said.

International spirits brands have been hard hit as shoppers turn to cheaper RTD options.

“The flow on effect from that is what we are seeing is that RTDs are now continuing to grow because customers are trading out of those full bottle of spirits into more affordable options, like RTDs,” she said.