Dive Brief:

• Earth Fare’s artificial-intelligence-powered Smart Flyer boosted sales for the company and freed up its employees to work on other important projects, like product innovation, CEO Frank Scorpintini said Wednesday at a panel discussion at the Shoptalk show in Las Vegas.
• The natural and organic grocer sends its consumer data to Daisy Intelligence, an AI firm, which tests various product combinations in the Smart Flyer based on predicted shopper demand. “It helps us understand what [shoppers] want and when they want it,” Scorpintini said.
• Scorpintini said Earth Fare plans to use artificial intelligence more closely with information from its loyalty database and craft more personalized offers for shoppers.

Dive Insight:

Retailers know that artificial intelligence can boost their sales and improve efficiency, but most aren’t sure where, exactly, to apply it. They’re even less clear on how it works.

Examples have cropped up throughout the industry. Retailers like Target and Whole Foods have deployed machine learning to make their store deliveries more precise, while supply chain services company McLane relies on AI to sort more than 300,000 products per day at its newest production facility.

Technology experts point out that AI is not a cure-all and should be applied in focused, measurable ways.

“AI seems to be rapidly approaching Silver Bullet Syndrome status – retailers, desperate not to be crushed by Amazon, and hearing about how Amazon is AI- and data-driven, insist that the company go out and buy some AI,” wrote Nikki Baird, managing partner with Retail Systems Research, a technology consulting firm, in a recent Forbes column.

Earth Fare’s Smart Flyer is a good example of a limited-scope application that’s getting results. Launched in 2016, the program plans promotions several weeks in advance and allows staffers to adjust recommendations as they see fit. Daisy claims its recommendations can improve yearly sales by 3%.

But according to Scorpintini, the integration hasn’t come without its share of challenges. The Earth Fare team was initially resistant to the idea of applying machine learning to a process that had been reliably carried out manually.

“AI is sort of a scary term for our team,” Scorpintini said.

And although sending the company’s data over to Daisy Intelligence was easy enough, sorting through the results the vendor sent back was a bit confounding. Over time, Scorpintini said, Earth Fare has learned how to interpret this data, and sales have climbed as a result.

“Our seven product directors now have more time to innovate,” he said.

These results should help fuel Earth Fare’s growth plans. The natural and organic grocer currently has 47 stores to match its 47 years in business. In the next few years, it plans to add around 10 stores annually, eventually reaching 70 locations by 2020, Scorpintini noted.  

Earth Fare makes health a core part of its business proposition. It bills itself as a supermarket dedicated to “clean” food, and has product standards that include no artificial ingredients. Last year, the company issued a “Clean Label Challenge” that invited other grocers to match its standards for clean, natural ingredients in their stores.

It’s an identity that should help Earth Fare stand out from competitors — particularly Whole Foods, which is contending with new owner Amazon over product standards, according to reports.

Competition is fierce in the regions where Earth Fare is growing. In the Southeast, it’s butting heads with Publix and Aldi, while in the Mid-Atlantic it’s swimming against a flood of competitors. In the natural and organic space, it has a surging Sprouts Farmers Market to contend with as well as Lucky’s Market — both value-priced formats.

In this environment, Earth Fare needs every advantage it can get.