Coles and Woolworths Test Facial Recognition as Privacy Concerns Mount, August 18

Coles and Woolworths confirmed on Monday they tested facial recognition technology to combat retail crime and violence against staff, sparking immediate concern from privacy advocates and a warning from Australia’s Privacy Commission. Neither supermarket has made a final decision on rollout, and both declined to name the software provider. The move follows Bunnings’ legal victory in February to use the same technology after overturning a 2024 privacy ruling.

What the supermarkets tested and why

Coles completed a small, controlled proof-of-concept test using volunteers and no customer or staff data, according to a company spokesperson. Woolworths conducted a similar trial in New Zealand but not at a store with customers or staff present. Both companies say they are exploring facial recognition to reduce violence, aggression toward employees, and organised retail crime. Neither has disclosed the software vendor or committed to a rollout date.

The privacy and legal backdrop

The Privacy Commission warned on Monday that retailers do not have blanket approval to use facial recognition, even after Bunnings won its legal battle. In February, an administrative review tribunal reversed a 2024 privacy commissioner ruling that found Bunnings breached customer privacy by scanning faces without proper notification. The tribunal agreed Bunnings had failed to notify shoppers adequately. Facial recognition captures face images from CCTV, converts them to unique faceprints, and compares them against watch lists of banned or aggressive individuals.

What privacy experts say about the ‘dilemma’

Dr Jason Pallant, a marketing expert at RMIT University, framed the issue as a “security versus privacy dilemma.” He said every supermarket visitor would effectively consent to face scanning if the technology rolls out. Pallant called for transparency and consumer education about how the system works. The National Herald raised concerns that the technology turns customer faces into commercial data, particularly given Coles already uses Palantir technology for data analysis and both chains retain CCTV footage for up to 60 days or longer for investigations.

What happens next for investors

Meyka grades Coles (COL.AX) a B- with a neutral recommendation, while Woolworths (WOW.AX) carries a C+ sell rating. Coles trades at A$23.18 with a PE of 31.86, while Woolworths sits at A$39.44 with a PE of 39.92. Both face regulatory uncertainty: any rollout will require Privacy Commission sign-off and likely public consultation. The Bunnings precedent shows courts may permit facial recognition if retailers notify customers clearly, but reputational risk remains if shoppers reject the technology.

Final Thoughts

Coles and Woolworths are testing facial recognition but face a regulatory and reputational gauntlet. The Privacy Commission’s caution signals no automatic approval, and both stocks carry high valuations with modest growth prospects. Investors should monitor regulatory developments closely.

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