Australia Markets open in 7 hrs 39 mins

How Coles and Woolworths will crush Aldi with your personal data

Image: composite of AAP Images

The two incumbent supermarket giants are spending millions to crush newer rivals like Aldi with tools that use your personal data in ever-more specific ways.

Already Coles and Woolworths have customer data from their loyalty programs that allow them to send emails to members specifically when products they have bought in the past are on sale.

But a Credit Suisse report has revealed this is only the very crude start of how the supermarket chains will use artificial intelligence to target promotions in a way Aldi and IGA can only dream of.

"The respective Rewards and Fly Buys programmes of Woolworths and Coles provide an unmatched capability to engage with customers on a unique basis," the report said.

The future might see the retailers specifically offer discounts to customers they think are price-sensitive, while not offering the same discounts to those that behave like they're apathetic to cost.

This will save Coles and Woolworths money by not having to offer blanket discounts to all customers. Currently, 20 per cent of the cost of every grocery item goes towards promotions.

Aldi, meanwhile, proudly brags about the fact that it doesn't have a loyalty program that tracks customers' shopping habits.

Last summer the German supermarket ran an advertising campaign poking fun at the loyalty cards of its rivals, by depicting them as a strange cult giving out "pointless points".

"Aldi has a different point of view on loyalty. In the 17 years we’ve been operating in Australia, we’ve created a loyal following of customers by offering consistently low prices and great quality goods. Customers continually tell us that this is what matters most to them," said Aldi Australia marketing director Mark Richardson at the time.

Credit Suisse concluded in its report that mining customer data would help Coles and Woolworths claw back market share it has lost to Aldi in recent years.

The finance firm last month even upgraded the stock recommendation for Coles to 'neutral', retained Woolworths as 'neutral' and downgraded Metcash (the owner of IGA) to 'underperform' as a result of its findings.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.