AI chatbots like Buddy at Bunnings years from becoming norm

AI chatbots like Buddy at Bunnings years from becoming norm for shoppers In short: Some of Australia's largest retailers are investing in autonomous AI agents shopping for customers. But experts said it was expensive technology years away from being mainstream. Retailers such as Wesfarmers, Woolworths and Coles made combined profits of more than $5 billion in the 2026 financial year. AI chatbots are already in use by Australia's biggest retailers, from Buddy at Bunnings to Olive at Woolworths. But experts say it will be years before these company-built artificial assistants can do more than just chat to shoppers. During their full year financial results presentations, all major retailers earmarked "agentic commerce" — letting an AI program shop for you — as a key space to invest in. "Olive, our much-loved digital shopping assistant, has transformed into a personal shopping companion," Woolworths CEO Amanda Bardwell said. Coles, which has yet to develop its own AI chatbot, has flagged conversational shopping as an opportunity for further investment. Australia's major retailers reported a combined profit in the last financial year of more than $5 billion. "The earnings growth came out of cost, not out of customers spending more,"Retail Customer Advisory's director Trent Rigby said. Retailers also highlighted the growth in private label and online sales during their financial results presentations. One in three purchases to be online, expert says Some of the largest revenue growth for retailers came from online orders with Coles seeing a 26.4 per cent increase with sales reaching $5.6 billion, representing almost 14 per cent of all sales. Woolworths saw its online orders grow by 18 per cent, which represented almost $11 billion. As many as one in three products could be purchased online soon, according to Queensland University of Technology's Gary Mortimer. But high transport and logistics costs will curb the profit margins for online sales, he said. Since 2019, Coles has partnered with e-commerce company Ocado Group for its automated deliveries. According to Ocado Group's 2024 annual report, the cost per item picked for its British clients was 52 British pence ($1.06). Professor Mortimer said the growth could see store sizes and ranges shrink with repeat purchases such as toilet paper and cleaning goods delivered to homes. "It is certainly cheaper to fill shelves and have shoppers physically select, scan and take their purchases with them,"he said. US supermarket chain Kroger announced last year it was closing three of its automated warehouses, which was in partnership with Ocado, due to sites not meeting financial expectations. University of Sydney retail expert Lisa Asher said customers could soon bear the additional costs associated with online orders. "Groceries will continue to go up if they're going to push forward with this as an option because the price point that you pay online versus in store is the same," she said. AI privacy concerns as retailers move to 'agentic commerce' Ms Asher said regulation was needed to curb "surveillance capitalism", and protect the privacy of shoppers as supermarkets deliberate how to roll out AI in stores and online "They are essentially monetising our shopping habits and data points from a customer perspective to make more money from us," she said. "We are not the product because we are trying to buy food to feed our families with rising cost of living." Mr Rigby said it will take at least three years before agentic shopping becomes a standard practice in Australia. "Woolworths is beta testing Smart Basket, which builds a basket from your previous purchases. [It] still puts a human at the check-out," he said. "Nobody here is letting an agent complete a grocery shop unsupervised at any scale." Mr Rigby has tested 'agentic shopping journeys' across a number of retail categories, and said grocery was the hardest to hand over. "My read is grocery will be one of the last categories to go agentic, not the first,"he said. "People are particular about fresh. Substitutions are personal. Get one item wrong in a $200 basket and you've lost trust in the whole thing. "When it lands it will be more routine replenishment, not fresh. Not to mention this tech is very expensive to rollout." Home-brand growing as retailers become suppliers Private label, or home branded products represent about 36 per cent of consumer sales across all supermarkets in Australia, and the category is growing according to Mr Rigby. At the major supermarkets, Coles saw a 6.1 per cent lift in private label sales, while Woolworths saw that figure increase by 5.5 per cent in the year to June 30. Mr Rigby said home-branded products have created savings for retailers but the growth was due to the quality gap closing between them and branded products. "It's a rational trade rather than a sacrifice for a household under genuine financial pressure that's the difference between making the week and not," he said. Mr Rigby highlighted Kmart's home-brand Anko which expanded to supply overseas retailers from Walmart in the United States, Hudson's Bay in Canada, Flipkart in India and Amazon. "An Australian discount department store has turned its private label into a product design and sourcing business it sells to retailers overseas,"he said. "There's no other example like it here." But the growth in home branded products especially at supermarkets could, over time, displace other competitors, and potentially impact costs for consumers. "Where it goes wrong is conflict of interest," Mr Rigby said. "The moment a retailer is also a supplier, every ranging and pricing decision it makes about a competing brand is open to question." Home branded products were a short-term sales strategy to improve profitability but could limit customer choice long term, according to Ms Asher. "So when they delete our competition, they delete the brand, we lose out from price competition … and they can do this because it's not unlawful," she said. "And once they own a product in the category, they can just increase the prices because they'll have a monopoly over their shelves." [Image text:] Warehouse A