As technology becomes a bigger part of retailers’ operations, companies are putting more money into artificial intelligence (AI).
Shoprite, South Africa’s largest retailer, is a sterling example of the value of such an investment. Neil Schreuder, head of digital at ShopriteX, the group’s digital innovation hub, told Business Maverick that north of R1-billion a year is being spent on digital projects, of which ShopriteX is just one arm.
Since starting out three years ago with a team of three, ShopriteX now has a staff complement of about 300 and is adding 100 new employees a year.
“ShopriteX was born out of the realization that the future of retail requires slightly different skills to the skills that got our business to where it was,” Schreuder says. “It was a realization that scarce digital talent — data scientists, shopware developers and smart technologists — are the people who will either disrupt us or who we could hire in an environment they felt comfortable in so we could attack ourselves.”
The ShopriteX team includes staff with titles such as agile coach and machine learning engineer.
“We have disciplines in our data science team from machine learning to data engineering to advanced analytics. These are not positions that the business had five or 10 years ago,” says Schreuder.
Two of the big projects the ShopriteX team has brought to market include the Xtra Savings rewards program launched two-and-a-half years ago and the group’s Sixty60 online delivery platform.
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Although the rewards program was arguably the last launched by a food retailer, it has proven the most disruptive, perhaps justifying the spending on digital professionals.
“It was the first program to offer instant discounts without the customer having to do anything — you don’t have to activate discounts, or earn 1% back to use at a later stage. We give up to 30% off on things like chicken, rice, oil, washing powder, toilet paper just by swiping your card and getting instant discounts at the till point,” says Schreuder.
“When we launched, it was so disruptive we signed up one million customers in 72 hours.” In two-and-a-half years, Checkers has signed up 9.3 million members, and Shoprite signed up 15.5 million people in one-and-a-half years. “We have just clipped 25 million users and we are the youngest grocery rewards program in the industry.”
The retailer has also broken some international ceilings. It is the first retailer globally to offer personalization on WhatsApp. If you add Checkers (087 240 5385) to your WhatsApp and type in “offers for me”, you will receive six images with pricing tailored for you.
This initiative is automated and run by algorithms. “It just made sense,” Schreuder says. “There are 14 million South Africans with access to WhatsApp compared to only six million with access to desktop email. We’ve also just launched the same functionality on the MoyaApp, which is a homegrown, data-free version of WhatsApp.”
The investment of time and significant resources is paying off in bucketloads. Shoprite has moved from having no grocery e-commerce offering to a 75% share of online grocery in South Africa in less than three years.
Competitor Pick n Pay says it has invested more than R150-million in the past two years in AI or digitisation.
Chris Shortt, group executive for information and technology at Pick n Pay, says the group uses an AI-driven algorithm that plots the best store to fulfill an on-demand purchase. It estimates and predicts the basket contents as well as the fulfillment time to meet strict target delivery objectives for each customer order.
“AI-driven algorithms are also used to drive our replenishment and allocation processes aimed at predicting and ensuring the most appropriate stock levels of the defined assortment at a store level. This drives the supply chain planning and fulfillment to stores.
“From a customer experience perspective, we also make use of a predictive engine that determines what we believe each SmartShopper is likely to need and buy next and we send them personalized, specific discounts off the back of this predictive engine,” Shortt no.
When it comes to the Smart Shopper loyalty program, he says the brand has used data from the program to refine the range in its stores.
The company is playing catch-up with Shoprite and recently launched a partnership with Mr D to offer Pick n Pay customers an online delivery service. The online offering delivers items customers would traditionally find in a hypermarket nationwide, but also stocks premium, online-exclusive homeware and kitchenware products.
Looking ahead, Shortt says PnP will be used new technology in store, such as digital and interactive screens, for customers to view promotions or source additional product information.
“Going forward, customers will be able to build a shopping list in our new mobile app (watch this space). We will offer them the options of one-hour delivery, same-day delivery, in-store collection and the ability to go in store and continue the transaction all the way through to payment,” Shortt no.
In the past six months, Pick n Pay has reported an online sales growth of 82%. BM/DM