Woolworths is one of the most data-rich businesses in Australia, and that’s precisely where its AI opportunity begins. With over 20 million active Everyday Rewards members, the company sits on one of the largest consumer datasets in the country and holds purchase history, frequency, basket composition, and price sensitivity insights across millions of households. AI analysis and utilisation of that data can drive highly personalised promotions, dynamic pricing, and targeted product range decisions that simultaneously lift sales and reduce promotional waste is a meaningful revenue and margin driver that traditional retail analytics can only scratch the surface of.
- WOW’s online sales grew by +15.3% in H1 2026, and with ecommerce now representing 13.1% of total supermarket sales this opportunity is growing fast.
However, we note that online growth, while impressive on the top line, is structurally lower margin than in-store shopping as delivery costs and picking/packaging labour eat into profitability. The race for both Coles and Woolworths is to automate fulfilment fast enough to close that margin gap before the volume growth becomes a profit headwind rather than a tailwind. In time, store shopping could become a thing of the past – never say never.
On the cost side, the opportunity is equally compelling. Woolworths employs over 200,000 people across its supermarkets, distribution centres, and support functions, making labour its single largest cost line. AI-powered demand forecasting can dramatically reduce food waste and over-ordering, which currently costs the industry billions annually. In the supply chain, machine learning can optimise inventory levels across hundreds of stores in real time, reducing both out-of-stocks and excess holdings. At the distribution centre level, AI-driven automation in picking and replenishment is already transforming comparable global retailers like Walmart and Tesco, with material reductions in cost-per-unit handled. Strip even modest efficiency gains across Woolworths’ enormous cost base and the earnings impact is significant, making it arguably one of the most underappreciated AI beneficiaries in the ASX200.
- We like WOW but similar to TLS it has enjoyed a defensive bid of late, the risk/reward is more appealing ~$35.
MM is cautiously bullish towards WOW around $37
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