Q+A: The AI push inside Bunnings, Kmart and Officeworks

Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Michael Thompson, and Wesfarmers has delivered another strong result from its two retail powerhouses, Bunnings and Kmart. Despite consumers remaining under pressure, group revenue at the conglomerate rose 3.4% to $47.3 billion. Net profits, excluding significant items, rose more than 8% to $2.9 billion. But the performance across the group wasn't uniform. At Officeworks, sales rose, but earnings fell sharply, while Wesfarmers is also warning that high labour costs, energy and supply chain costs will persist. Anthony Gianotti is Chief Financial Officer at Wesfarmers. Anthony, welcome to Fear and Greed Q&A. Thanks, Michael. Great to be with you. Let's start with Bunnings and Kmart. Earnings have grown at both of those businesses, but you've also cut prices on thousands of products at the same time as your own costs are rising. Where are you finding the savings or is it more people coming through the door or a mix of both? Yeah, it

probably comes back to our long-term philosophy. As you probably know, our businesses operate on a basis of everyday lowest prices. And so we guarantee low prices. And when consumers are under pressure, like they have been, so there's been, as you know, no being cost of living pressures, and that's flowed through in inflation and a whole bunch of other areas, including more recently in fuel prices. That's put a lot of pressure on consumers. And when consumers are under pressure, we want to provide great value. And what we're seeing is consumers being much more discerning around where they spend their dollar and how they spend their dollar. So our philosophy is make sure we're providing them with the lowest price products we can and To do that, we have a continuous loop where we're always driving productivity and efficiency benefits across the way we operate our business. And we reinvest those cost savings in costs and efficiencies back into lowering prices. And that allows us to drive more volume and makes it more compelling for consumers to buy our products. So that's the philosophy and certainly is the case across both Bunnings and Kmart and, of course, also across Officeworks as well.

I'll come to Officeworks shortly, but I just want to focus a little bit more on productivity, which you mentioned there and efficiencies. In the commentary around the results yesterday, productivity did keep coming up and it is not just a challenge for Wesfarmers. It is the big challenge really right across the economy. AI consistently being presented as one of the answers. What does that look like in practice though for say Bunnings, which you You have a lot of people, myself included, have a very analog perception of a business like Bunnings where you can walk in, find a staff member, they'll help you find the product, they'll show you how to replace the cord on your whippersnipper and away you go. Where does AI fit into that equation?

So there's a whole bunch of areas. And I would probably incorrect to just talk about AI on its own because I think this driving productivity efficiency through digitization of