Dive Brief:
- Ahold Delhaize is partnering with the Innovation Center for Artificial Intelligence to launch a new Artificial Intelligence for Retail Lab (AIRLab). "With this partnership, we want to further develop our ongoing initiatives and learn how AI can be used to better serve the interests of our customers," said Frans Muller, Ahold Delhaize's deputy CEO, in a statement.
- In the lab, seven scientists will conduct research into “socially responsible” algorithms that can be applied to the company's operations. The research will take place at Ahold Delhaize's Albert Heijn and bol.com brands, and insights from the lab will be used across Ahold’s U.S. and European businesses.
- Muller said AI offers “countless possibilities for the retail industry, the consumer and society at large,” and said Ahold Delhaize plans to research ways to improve supply chains and assortment. Better predicting weather conditions to improve distribution, he said, could be one application.
Dive Insight:
With the anticipated growth of artificial intelligence, companies across the retail sector and beyond are examining how to effectively incorporate the technology. Accenture predicts that AI will increase economic growth by an average of 1.7% by 2035, and could increase labor productivity by 40% or more.
Amazon has tens of thousands of robots automating its warehouse processes. Earth Fare reported a 3% bump to its sales after deploying AI technology for its Smart Flyer program, which enabled the company to plan promotions several weeks in advance and adjust based on recommendations. Other brands have deployed robot technology in-store to comb the aisles for out-of-stock items and inconsistent pricing.
In other words, AI’s early potential is extensive, guiding pricing, promotions, distribution, deliveries and demand forecasts. For Ahold Delhaize specifically, the company is looking for efficiencies through a 360-degree lens, with a focus on both consumer-facing programs and operations.
Efficiency has been the watchword for Ahold Delhaize since its namesake merger two years ago. Its lineup of conventional retail brands are under pressure on pricing, e-commerce and numerous other fronts, meaning the company needs to squeeze out savings wherever it can. Over the next three years, it expects to see close to $1 billion in cost savings thanks to its merger.
AI’s potential to bring cost savings and add productivity to industries across the globe almost seems too good to be true. And, for some, it just might be. Analysts caution against seeing AI as a “silver bullet” at this point, noting that it works best in targeted applications.
By investing in AI research, Ahold Delhaize wants to make sure it's at the cutting edge of development. It can figure out processes, efficiently mine data, and work out any kinks before rolling out the technology systemwide. Think of it as a sort of AI test kitchen – if a product doesn't make sense or dollars, it simply doesn’t make it onto the menu.
