Woolworths, Coles, and Amazon Are Building AI Advertising Empires — What It Means for Small Business

The next time you buy something at Woolworths, Coles, or Amazon Australia, you’re not just a customer. You’re a data point in one of the most sophisticated AI-powered advertising systems in the country: and small businesses are increasingly caught in the middle of it.

Retail media: the business of selling advertising space within a retailer’s digital ecosystem, powered by first-party purchase data: is the fastest-growing segment of Australian advertising. And it’s driven almost entirely by AI.

What Retail Media Actually Is

Retail media networks allow brands to advertise directly to shoppers at the point of purchase: in search results on a retailer’s website, in personalised email campaigns, in targeted social ads powered by the retailer’s customer data.

The magic ingredient is first-party data. Woolworths knows exactly what you buy, how often, in which stores, at what price points, and how your behaviour changes seasonally. Coles knows the same. Amazon knows your entire online shopping history. That data: combined with AI: lets them show advertising that is far more targeted and effective than anything a standalone brand can achieve.

In Australia, this market is growing rapidly:

• Woolworths’ Cartology is Australia’s largest retail media network, offering brands access to Woolworths’ 13 million loyalty members across digital, in-store, and offsite channels.
• Coles 360 offers similar capabilities through Coles’ Flybuys data, 8+ million households.
• Amazon Advertising Australia gives brands access to Amazon’s purchase intent data across its local marketplace.

The AI layer powers everything: bid optimisation, audience segmentation, creative personalisation, campaign measurement, and increasingly, AI-generated ad creative.

Why Small Businesses Should Care

If you sell products through Woolworths, Coles, or Amazon: or if you’re an FMCG, food, or consumer goods business: retail media is already affecting your category. Here’s how:

Shelf visibility is now bought, not earned

Search results within retailer apps and websites are increasingly influenced by paid placement: similar to Google search ads. A small brand that previously earned top search placement through good product ratings or sales velocity may now find itself outranked by a competitor with a larger media budget. The AI auction systems that power these placements favour bidders with data and budget.

The data asymmetry is growing

Woolworths and Coles know more about how your products perform than you do. They know which of your customers have also purchased a competitor’s product, which of your buyers are price-sensitive, and when your category peaks. They sell some of this insight back to you through their media networks: but on their terms, at their price.

AI-generated insights are becoming a paywall

Cartology and Coles 360 both offer AI-powered analytics dashboards to brand partners: showing purchase patterns, basket analysis, and competitive share data. Access to the most detailed insights is increasingly tied to advertising spend. Brands that spend more get better data.

The ACCC’s Response

The ACCC has been watching the growth of retail media carefully. Its concerns centre on two areas:

• Transparency: Whether consumers are clearly informed when search results or product recommendations are influenced by paid placement rather than pure relevance or quality.
• Competitive effects: Whether large retailers using their data to run advertising networks creates an unfair competitive advantage: both over smaller retailers and over brands that can’t afford to participate in the media networks.

No enforcement action has been taken specifically against retail media practices to date, but the ACCC’s Digital Platform Services Inquiry has flagged the sector as one requiring monitoring.

What Small Businesses Can Actually Do

If you sell through major retailers, retail media is an unavoidable reality. Some practical positions:

• Test retail media for your category. For FMCG and grocery products, sponsored product placement through Cartology or Coles 360 can be highly effective: the intent data is unmatched. Start with a small test budget before committing.
• Build your own first-party data. The retailers’ power comes from their data. Your best response is to build direct customer relationships: email lists, loyalty programs, direct website sales: that give you data they don’t own.
• Use direct channels to differentiate. Your website, your social channels, your email list: these are distribution channels where you control the algorithm and the pricing. Invest in them alongside (not instead of) retailer channels.
• Consider Amazon’s advertising tools carefully. Amazon’s sponsored product and brand advertising tools are accessible to small businesses selling on the marketplace and offer sophisticated AI-powered targeting. For some product categories, the ROI is strong.

🦅 The honest assessment: Retail media consolidates power with the retailers who already have the most. For large FMCG brands it’s a necessity; for small businesses it’s a choice. The best hedge is diversification: be in the big retailers where you need to be, but invest equally in the channels you control.

Related: Slyp: The Sydney Startup Replacing Paper Receipts With AI-Powered Smart Receipts | Tiliter: The Sydney AI Startup Helping Coles and Woolworths Identify Fresh Produce Instantly

This article is for general information. Retail media pricing and capabilities change frequently: contact Cartology, Coles 360, or Amazon Advertising directly for current rates and options.

Sources

• Woolworths Group. Everyday Rewards Media Network
• Coles Group. Coles360 Retail Media Platform
• Amazon Ads Australia
• IAB Australia. Retail Media: State of the Nation 2025

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