The Future of Grocery at Albertsons Companies
On the fifth episode of Enterprise Software Innovators, Anuj Dhanda, Chief Information Officer at Albertsons Companies joins the show to discuss the challenges Albertsons faced in the wake of the pandemic, the variety of next generation technologies being used to drive the future of grocery, and how Albertsons thinks about partnering with startups. As the second largest grocery store chain in the United States, Albertsons is responsible for feeding much of the country. While on the surface the grocery industry might not be thought of as the vanguard of technical innovations, Anuj shares a different story.
Beyond the challenges every company was facing in the wake of COVID-19, namely how to transition essentially an entire workforce to be remote, Albertsons was also dealing with acute supply crunch issues and logistical hurdles in the immediate wave of chaos during March of 2020. With a quickly changing landscape and an entire population anxious but still needing to eat, Albertsons had to spring into action. Anuj describes the approach that helped the grocery stores and distribution centers meet the challenges of those unprecedented early months of the pandemic: “Our business model at Albertsons, what we call nationally strong and locally great, really paid rich dividends because our supply chains were very local. There was a lot of local sourcing for chicken, [for example], which was far more resilient. And [when] some of the supplies to the restaurants got disrupted, we were able to step in and take the supply…we have lots of butcher shops in our stores and can provide customized services to our customers. We took some restaurant supplies and we were able to convert it into a consumer supply, which if you didn't have [your own] butcher shop, you wouldn't be able to do.”
As the initial system-wide shock of March of 2020 subsided, a new era in e-commerce was born and many industries rushed to take advantage of the new ways customers were buying and interacting with products. Anuj and his team at Albertsons had the uncomfortable realization that within the e-commerce space, the grocery industry as a whole was lagging behind. Investing in more customizable e-commerce solutions became a focal point, with a particular emphasis on the cloud. While some aspects of the business were already in the cloud, ensuring that the customer-facing products in the Albertsons ecosystem were geared towards a changing consumer experience was essential. As business overall was spiking in COVID, the technologies Albertsons relied on to meet demand also needed to grow: “..the whole ecosystem had to scale. One lesson you learn again and again through the agile journey is you gotta make enterprise decisions so business and tech and product have to be like one. There is no air gap between the three, and that showed up in spades [in the post-COVID landscape].”
In describing some of the specific new technologies Albertsons Companies are deploying, Anuj immediately listed machine learning and robotics. Quick to say that nearly “every aspect of our business has an implication [that] machine learning could improve,” Anuj describes how demand forecasting, replenishment, slot management for e-commerce, and generally better predicting specific needs of each customer is something machine learning helps address. In their distribution centers, Albertsons is harnessing the power of robotics to maximize efficiency and improve their scaling capabilities across the nation.
Like many large corporations, there is a constant push and pull of when to invest internal resources into technology development versus when to partner with a startup. Because the grocery industry is so reliant on a wide range of producers across many different specializations, the prevailing wisdom has been to generally stay away from startups because larger companies can scale easier and are seen as more robust. In a cloud-based world, Anuj’s thinking has changed: “If you talked to me five years ago, I would have said we generally tend to work with industrial strength companies because we have big [scaling] needs. And I have fundamentally changed that [perspective]...because with the cloud, scalability for a small company, not an issue…That has democratized how we access [and partner with] startups.” When it’s closest to the customer, it’s Anuj’s preference to develop technologies from within, but there are plenty of instances where partnering with startups and technology companies who are more specialized make sense. For example, as precise, actionable data access is fast becoming a key asset, Albertsons partnering with Snowflake to build their enterprise data platform has paid great dividends. Snowflake’s ability to scale appropriately to match Albertsons’s needs is a welcome change that gives Anuj confidence in continuing to partner with startups and smaller technology companies.
As exciting as technological innovations are in the grocery industry, Anuj is quick to point out that technology in a vacuum is not the panacea some tech evangelists proclaim it to be. Like most applications of technology, the synergy of the enterprise and technology is where the best results come from. The CIO of the future should recognize the blurring lines between business needs and technology needs. Anuj leaves us with an insight that is applicable to nearly every situation, that technology does not work in isolation: “Technology with people is the answer.”
