Albertsons builds data acumen in pursuit of AI gains

Dive Brief:

• Albertsons is strengthening its data science capabilities as it expands AI adoption and aims for productivity improvements, executives said during the company’s Q4 2024 earnings call Tuesday. 
• “Most recently, we built a real-time comprehensive data platform designed to enable data science and artificial intelligence,” COO and CEO-elect Susan Morris said during the financial report. “This advanced technology platform on which we will continue to innovate … will allow us to leverage emerging AI technologies to accelerate our operational transformation going forward.”
• The grocer has sharpened its focus on technology as part of a three-year cost-cutting initiative announced in January. Albertsons executives tied AI adoption to improved employee and customer experience, enhanced productivity and sales growth during a January earnings call. 

Dive Insight:

In the wake of a failed merger with Kroger, Albertsons is doubling down on its technology goals as it grapples with heightened competition and economic uncertainty. 

The Idaho-headquartered grocer reported $18.8 billion in net sales and other revenue during the fourth quarter, up around 2.5% year-over-year. Albertsons tied its $485 million in Q4 capital expenditures mainly to investments in technology platforms and modernization of the store fleet. The company plans to drive incremental growth in its 2025 fiscal year through these projects.

“Our North Star is to use technology in everything that we do,” Morris said. “We’ve invested strategically to build best-in-class technology platforms with our core infrastructure in the cloud and a modernized, scalable network.”

Albertsons plans to increase AI use to enhance product quality, monitoring produce departments to ensure freshness, which in turn leads to higher sales and better net promoter scores, Morris said. 

The grocer is also planning to use AI to reduce inventory loss, a fairly common use case among retailers of all kinds. Around 3 in 5 retail companies have turned to AI to improve loss prevention, and another 30% plan to implement it in the next year, according to a February report by Everseen.

AI use cases for grocers are varied, from improving product forecasting and optimizing back-office tasks to minimizing food waste, Grocery Dive has reported. Target laid out plans earlier this year to experiment with AI in order to improve inventory decision making, and Walmart expanded developer access to AI-powered coding assistance tools.

Despite implementation plans, hurdles remain for businesses. Retailers most often cited resources needed for training, difficulty integrating with existing systems and a lack of customer trust as persisting challenges, Everseen found. Nearly 3 in 4 shoppers surveyed by the firm wanted greater transparency of AI use in grocery and retail stores.