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Whether you do your shopping online or in store, your retail experience is the latest battleground for the artificial intelligence (AI) and machine learning revolution. Major Australian retailers have begun to realise that they have a lot to gain from getting their AI strategy right, with one currently recruiting for a Head of AI and Machine Learning supported by a team of data scientists.

The franchising industry has faced challenging trading conditions over the past five years. Instability in financial markets led to negative consumer sentiment and cautious consumer spending on franchised goods and services (IBISWorld, 2018). As a result, revenue for the franchising industry is projected to demonstrate limited growth at an annualised 1.7% through 2017-18 (IBISWorld, 2018). Trends in real household disposable income, average weekly hours worked and the target cash rate have also affected the industry's performance. Industry revenue is expected to post steady growth over the current year, rising by 2.5%, to $177.1 billion (IBISWorld, 2018).

Coles is aiming to have private label products make up 40% of its product range over the next five years. This increase will apply across multiple tiers of products, with a focus on quality, innovation and new strategic global relationships. More supermarket-owned brands will mean lower prices for consumers and greater margins for the retailer. But the move could significantly impact Australian suppliers as their branded products are delisted and supermarkets seek out cheaper manufacturers overseas.

If you think your local supermarket is shrinking, you might be right. Coles has announced that it will open smaller-sized supermarkets in more locations. This follows the lead taken by other large retailers such as Woolworths, Harris Scarfe and Target. Australia’s growing population may mean more customers, but it is also putting pressure on available real estate for retailers. As population density increases, mostly in urbanised areas, many retailers are shrinking to grow.