LAS VEGAS — As food retailers increasingly turn to data and artificial intelligence to gain an edge in the ultra-competitive space, executives from Walmart's Jet.com and Earthfare talked Monday about how they've transformed their businesses with new information and a well-planned strategy.
Artificial intelligence gives Earth Fare an edge in the fast-changing, dynamic and competitive grocery space, Frank Scorpiniti, the company's CEO, told a crowd at Groceryshop in Las Vegas.
"We have tons of data but the amount of data we have far outstrips the information we create from it so we need a little bit of help," he said.
Earth Fare, like many other small-scale retailers, is partnering with artificial intelligence companies to help it understand what to promote to customers, when to do it and what price they should sell it at in order to drive sales. He says when this all works for the retailer it can boost sales by about 3%.
Many retailers are searching for artificial intelligence technology without the data or a detailed strategy on how they will benefit from it.
"It's clear we need personalization if we want to be successful and if we want personalization, we're gonna need AI but AI alone isn't going to solve a thing for us. AI isn't a strategy it's a technology," said Jack Hanlon, Jet.com's vice president of analytics.
If retailers can compile that data, whether it's in-house like most major grocers or through a third-party service, they can use it to improve their supply chain, help people find things in the store, cultivate more personalized marketing messages and create a seamless customer service procedure, said Carlos Garcia, industry manager for drugstore and grocery at Facebook. But for this to work, retailers have to know what they want to get out of artificial intelligence and how their business can benefit, he said.
"There are different partners who are going to do those things differently, so start with the problem and then find the partner," Garcia said. "Identify the business problem, focus there and find a partner who is going to help you get that done,"
For Earth Fare, it's using its partnerships with Daisy Intelligence and Engage 3 to personalize its data to customize unique offerings. But the company has to do it in a way that is more affordable due to its small-scale, Scorpiniti noted. Most recently, he said the company is partnering with Oracle to look at new ways to bring offers to customers.
Overall, Earth Fare uses artificial intelligence to remove highly repetitive tasks from merchants like crunching data and doing their analytics. This allows Earth Fare to be innovative and find the next healthy products for the stores that will create an experience for customers. "AI helps us with the planning. We know what we may be cannibalizing, and we know what is going to create purchase behavior," said Scorpiniti.
So far, artificial intelligence has enabled the 50-store chain to boost sales much faster than its current 25% growth rate. Scorpiniti added that Earth Fare couldn't open 16 brand new stores and renovate 13 more this year if it wasn't for artificial intelligence, which reduced the costs of weekly and seasonal promotions that could drain profits.
As grocers move into the e-commerce space, Hanlon said one mistake retailers are making is they are not using the data they have accumulated to target customers with personalization based on their location.
"Where they live has a huge effect on their needs, how they need their goods delivered and what products they can't/can have," Hanlon said.
This was a crucial part to Jet.com's push into New York City through its fulfillment centers. The e-retailer opened a fulfillment center in the Bronx and will use it to facilitate deliveries into the area.
Data and artificial intelligence can help consumers change their e-commerce and overall in-store experiences, Hanlon noted. "We need to think about different formats in e-commerce and different user experiences and that would involve actually including customer-centricity in the core," he said.
Buyer's behavior in a data chart should be simple and easy to decipher. If it isn't, retailers need to change, according to Hanlon.
"What is important about artificial intelligence is that it's not looking in the rearview mirror at what happened. It is putting forward trillions of calculations that forecast what will happen," said Scorpiniti.