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CSA Exclusive: Technology drives customer engagement across Ahold Delhaize USA

Supermarket giant Ahold Delhaize wants to get closer to its customers in North America, an endeavor that is being lead by the company’s retail business services division.

The Netherlands-based company created Ahold Delhaize USA in January, 2017, a move that brings Ahold Delhaize’s seven U.S. companies under one operating arm. The merger includes Stop & Shop, Food Lion, Giant, Hannaford, Giant/Martin’s and Peapod, as well as Retail Business Services (RBS). This U.S.-based shared services company, which is comprised of associates in various support groups within the organization, provides cost-effective, best-in-class support services that enable these retail brands to accelerate their individual and local strategies.

“Being able to capture the best that each group had to offer was one of the pieces of the merger that excited many of us,” said Dan Harriman, director of pricing and promotion services at Ahold Delhaize USA’s retail business services.

“Our six local retail brands are focusing on delivering to their customers, while the seventh unit, RBS, focuses on improving technology solutions and best practices around business processes,” Harriman explained. “We are also continually evaluating which areas will best enable our brands to effectively deliver pricing elements to our customers, while managing their business needs.”

Harriman discussed with Chain Store Age how technology solutions such as price forecasting tools, analytics and machine learning are helping Ahold Delhaize USA to better serve customers and even localize the shopping experience.

How does technology play a role in customer service and the overall in-store experience?
A core piece of the Ahold Delhaize USA restructure was to focus on the local brands, and how they could better engage the customer. It is a bit cliché to talk about leveraging technology for personalization, but that is truly the next step in this goal.

We need to move away from talking to groups [of customers] and to empowering our local brands to have a dialog with each person who shops in our stores. Our marketing departments and the newly formed Peapod Digital Labs will empower the brands to have those conversations. While I don’t know everything they are working on, these departments were formed with the goal of driving digital and e-commerce innovation, technology and experiences to meet the changing needs of customers of its local brands, regardless of when, where and how consumers choose to shop.

How does technology play a role in the company’s pricing strategy?
From a pricing perspective, technology needs to be transparent. My team’s goal is to allow the brands to think more about their message and who they are talking to, and less about the details of executing an ad, and how it to make it work. If we can make execution simple and more efficient, our merchants can focus on what is most important: serving the customer.

We currently use the Base Price Optimization and Markdown Optimization modules from Revionics. Base Price elevated our analyst from being a “logic engine” to being a true analyst, or as we say, “a trusted advisor to our merchants.” The technology’s abilities to influence decisions by offering reliable forecasts on scenarios that can be quickly turned around can help shape strategy and execution.

The systemic processing of competitive and cost data adds efficiency and consistency to strategies, and creates more predictable margin results. The markdown tool works efficiently because our merchants and pricers no longer have to focus on each item that leaves our assortment. A brand sets an overall strategy, and while markdown executes in a way that reduces margin spend and reclaim, the pricer and merchant get to focus on elements that can add more value.

What is Ahold Delhaize’s approach to artificial intelligence (AI)?
AI and machine learning has been making an impact for some time, and are always growing. In the pricing area, it is helping our team members make better decisions. By taking in data to create better models, we can better understand how customers will react; create scenarios and options for our merchants, and create dialog with other partners to understand the end results of decision we make.

My team and I look at a need and work on a solution. Sometimes AI is a benefit and sometimes it is not — it all depends on the requirements and nature of the project. In the next year, we hope to address a variety of projects, and I would say that about half would benefit from a solution that incorporates some type of AI or machine learning.

What is your take on fully automated stores when it comes to the future of food retailing?
Visiting the Amazon Go store in Chicago left me with several operational questions, including how to have a conversation or engage with the customer. In a traditional store, you will almost always have an opportunity for a team member to interact with the customer and be your brand ambassador. Online, your tools can collect data and make suggestions, present information, and otherwise interact. In an automated store however, you don’t have that opportunity in real-time so the question is how do you engage them in a meaningful way?
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