There’s a lot of noise around AI and what it can or cannot do. In this article, Brooke Hodierne, former SVP of Merchandising at 7-Eleven explores the practical applications and challenges of implementing AI in the convenience store industry. She discusses the potential benefits of AI technology and emphasizes the importance of aligning AI initiatives with actual business needs and objectives rather than pursuing AI for its own sake. She also addresses the obstacles and skepticism faced by businesses, highlighting the need for realistic expectations and understanding AI’s limitations.
About the Author: Brooke Hodierne currently serves as an EVP – strategy consulting at Insite AI, an AI and strategy partner for larger consumer brands. She joined the company following her time as SVP of merchandising for 7-Eleven. In the role, she drove category management teams that developed, implemented and communicated merchandising strategies for vault, packaged goods, tobacco and services. Before joining 7-Eleven, Brooke held multiple positions at Giant Eagle, serving as VP of own brands, senior director of strategic sourcing and own brands, and director of prepared foods merchandising. She supported brand marketing at Del Monte Foods and held analytical roles with financial investment firms Wilshire Associates, Federated Investors and the Vanguard Group.
CPG’s Guide to Walmart Luminate: Enhancing Results Through AI.
Are you getting the most out of your Walmart Luminate data? The platform offers a goldmine of shopper insights, but making the data actionable can be a challenge. That’s why we’ve created the CPG’s Guide to Walmart Luminate: Enhancing Results Through AI.
This comprehensive guide provides a deep dive into Walmart Luminate, exploring its unique benefits and how to apply predictive analytics to unlock its full potential.
In this guide:
The key differences between the Basic and Charter versions of Luminate.
How AI-powered solutions can harmonize Luminate data with other sources.
Real-world examples of how brands are using shopper insights to optimize strategies.
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The CPG’s Guide to AI
Empowering Consumer Brands with Clear and Actionable AI Insights
Research confirms leading consumer brands who harness the value of consumer insights and artificial intelligence (AI) better predict the needs of their customers, improve category performance, accelerate growth, and outpace the competition.
72% of executives consider AI as a business advantage
But how can you get started? With data overload, an abundance of options and unclear direction, many companies opt to do nothing. This is no longer an option. You will be left behind. Armed with the right data, AI-driven CPG brands are working hand in hand with their retail partners to better meet consumer demand. By turning mounds of overwhelming data into actionable intelligence, these CPGs are scoring big with retailers and end consumers alike.
In this guide:
Demystifying AI
How consumer brands can leverage AI today.
Top 5 AI/ML Use Cases in CPG
Going beyond Power BI and advanced analytics
Making the case for AI in your organization
Top questions to ask for a fruitful AI journey
Harness the power of AI to ensure you have the right products on the right shelves at the right time. Download this guide to begin your AI journey toward becoming an AI-driven, category-leading consumer brand.
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Taming the Data Tsunami for Better, Faster Decision Making
Won category “Captaincy” at top specialty retailers
What we did
A leading brand in the craft beer sector wanted to elevate its category advisement at Whole Foods and Sprouts. Applying powerful predictive and AI elements, we brought together multiple previously unstructured data sources to surface insights that enriched and accelerated the brand’s planning and decision-making processes.
Create multiple assortments within seconds.
Analytics
We deployed assortment capabilities in the brand’s environment to ingest and analyze key data sources. Utilizing a flexible implementation strategy, our platform quickly delivered critical insights on demand transference so the team could understand and act upon the incrementality associated with product additions, deletions, and resulting effects on demand.
Drive value from insights with speed and agility
Results
With Insite AI, this leading craft beer brand swiftly developed clear forecasts on how their category—and others in the category—are performing within Whole Foods and Sprouts. The brand can now create multiple assortments within seconds and recommend the best one.
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Winning the Retail Space War with Predictive Modeling
40% improvement in assortment trade-off accuracy
What we did
One of the largest brands in the consumables sector wanted to understand how to utilize its store space within Target for optimal results. Applying innovative AI components to develop space elasticity models, we refined the brand’s planning process with calculations and forecasting that identified how space affects profit- ability and sales demand to arrive at their ideal strategy. Insite AI become an extension of their team, providing the support and resources they needed to ensure they achieved their goals through data, adoption, and guidance.
2% increase in profit with the same amount of shelf space
Analytics
We empowered the Category, Assortment, and Space planning and analytics leaders with critical insights to rapidly simulate multiple scenarios and accurately forecast effects on sales, margins, volume, and demand. Leveraging predictive modeling, our platform delivered insights for maximizing productivity and profitability so the team could determine the ideal plan for each store layout.
Reduced planning cycle time from months to days
Results
With Insite AI, this major consumer brand quickly identified the best use of in-store space. The brand can now swiftly hone its on-shelf facings, arrangements, and structures at the planogram level and defend its plan within Target. Even with competing priorities, limited budget, and resource constraints, the company priori- tized working with Insite AI. This technology has been identified as mission-critical at the executive level and the team members involved have received recognition internally for their efforts.
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One of the Largest Consumer Brands Achieves Category Leadership at Walmart
Became category leader at the world’s largest retailer
What we did
One of the world’s largest brands in the consumables area wanted to elevate its category advisement at Walmart. Applying powerful predictive and AI components across multiple data sources, we enriched and accelerated the brand’s planning and decision-making processes to present Walmart with the best assortments at a planogram level for all 4,600 stores.
Reduced planning cycle time from months to days
Analytics
We deployed assortment capabilities in the brand’s cloud environment to ensure data never left. Merging multiple data sources, our platform delivered insights on demand transference so the team could understand the incrementality associated with product additions, deletions, and resulting effects on demand.
5-15% sales improvement
Results
With Insite AI, this major consumer brand developed very clear forecasts on how their category—and others in the category—are performing at a planogram level within Walmart. The brand can now create multiple assortments within seconds and recommend the best one. As a result of their adoption of AI, they have delivered a better shopping experi- ence for their consumers, growing their joint profit pool, and achieving category leadership. They are now expanding into other retailers.
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Tapping Real-Time Market Data and Performance Forecasts to Pick the Next Winners
Achieved 10% – 20% market share gain
What we did
A leading brand in the craft beer sector wanted to understand, with a high degree of accuracy, the demand drivers at the product, category, and store levels. Utilizing AI elements and powerful predictive capabilities, we gathered diverse sources of unstructured data to deliver granular insights that allowed the brand to forecast performance over a two-year duration.
$20MAnnual Revenue Increase
Analytics
We deployed targeted capabilities in the brand’s environment to assess and track data points across multiple retailer accounts. Applying sophisticated data analytics, our platform delivered visibility into growth and atrophy predictions of various innovation trends, which enabled the team to identify the next winners.
10-30%above fair share market capture
Results
With Insite AI, this leading craft beer brand quickly developed data-driven forecasts using macroeconomic factors, shopper behaviors, and other relevant metrics. The brand can now make better investment decisions by under- standing real-time market dynamics and their impacts on multiple business areas.
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How Brokers Can Lead the Way in AI Adoption
Positioned between brands and retailers, brokers can leverage AI and precise data to find a common truth — and pave the way for CPGs to adopt AI
Brokers play a crucial role in the CPG and retailer community. They possess extensive knowledge of the market and categories across every store, including consumer preferences, trends, and pricing dynamics. Brokers effectively represent brands and lead as strategic partners in navigating the retail industry. Leveraging their expertise, brokers help retailers streamline their supply chains, expand their product offerings, and ultimately enhance customer satisfaction. Their ability to effectively bridge the gap between suppliers and retailers as a total solution makes brokers essential in optimizing retail operations and driving business growth.
By sitting between the CPG and the retailer, brokers hold a unique position, with an opportunity, or even a responsibility, to become leaders in how CPGs of all sizes adopt AI. The technology is currently in its infancy for effective adoption, with limited clarity on exactly how CPGs will allow AI to change ways of working. However, brokers can shape the ways this technology creates efficiencies, reduces the digital overload, and pioneers its broad application to the industry overall. In doing so, they differentiate themselves and fulfill their promises to their CPG partners in helping them gain a competitive edge in this dynamic retail landscape.
Through business intelligence and predictive analytics, brokers can ascend to new heights among CPG partners. They can also strengthen their standing among retailer partners. Moreover, brokers can be a bridge between both, using high-powered AI to uncover common data truths and drive growth across the store.
Here are top ways brokers can lead the way in AI:
1. Present Accurate Demand Planning and Predictive Market Analytics
In 2023, retail sales are expected to grow more than 4%, generating nearly $5.23 trillion, according to the National Retail Federation. NRF also said more than 70% of those sales will be inside physical stores.
How close to reality will that forecast of 4% growth turn out to be? Brokers can provide a precise view of what’s happening in the market and what is likely to happen through AI-powered demand planning and market-level trend forecasts. These data and insights help inform forecasting from the highest level. Brokers can help predict future buying behavior across channels and subcategories. They can inform retailers of trends and shifts in the marketplace, and they can provide the most granular store-level view into inventory and click-and-collect service. All of these efforts, powered by AI, continuously learn, adapt, and create an enterprise environment enabling strategic decision-making, rather than an increased digital workload. Brokers can become a single source of truth in developing a precise view of enterprise market and demand planning.
2. Assist With Store Execution and Assortment
At a store-by-store level, across retail channels, brokers can leverage AI to customize insights for CPGs in any category. AI can be custom-tailored to each of the brands with which brokers work, to build the most impactful product mix and decision-enabled portfolio.
Further, they have the unique perspective of working with brands at all points in their journey of scaling and growth. For larger brands, some brokers have a responsibility to effectively build a mature portfolio with multiple opportunities in the retail environment. In that role, they fill gaps where large CPGs lack visibility and provide solutions where larger CPGs cannot internally manage the need for additional capabilities. For emerging, growth, and niche brands, brokers have a different, more targeted set of responsibilities to deliver that those brands might not be able to generate themselves.
All brands are looking to achieve category thought leadership and mutual growth with retailers they serve. AI application to assortment optimization, demand transference, and predictive analytics can help them achieve a greater share of the category and effective increases in visual inventory. Smaller brands aiming to get a stronger foothold in a category can tap into brokers and their ability to lead with AI-driven insights to bring retailers data-informed strategies on how they’ll grow a category overall.
3. Optimize Promotions and Trade
Even without a robust services suite, as sales partners to CPG brands, brokers, enabled by AI, can boost acumen in understanding elasticities of price, space, and market. AI modeling shows how the interconnected dynamics in availability, leakage, allocated category space, pricing and promotions impact sales and profitability.
Brokers that embrace this technology will lead by using learning models to predict the most effective promotional outcomes, optimized for their partners’ established goals and the current macroeconomic environment.
The technology allows for actionable insights on how to execute the best overall plan, and the best use of promotions, in the most impactful locations, and in the most deserving regions. The technology backs brokers with the unique and differentiating capability to plan efficiently as partners and lead with the optimization of portfolios, brands, and categories, in ways CPGs are currently not leveraging themselves. Brokers can align a pricing strategy that maximizes sales, revenue, and profits for their partners.
4. Become a Bridge to a Common Truth
Possibly the greatest strength a broker can leverage through AI is an ability to lead the data capabilities that solve problems and enable more efficiencies for CPG clients, in addition to relieving their own ‘digital debt’ that continues to grow for the industry overall.
Common truth, or insights driven by the integration of multiple sources of data, narrow the focus to that with the greatest impact on the outcome. And those that excel at — or adopt these integrated models to find the common truth — will be the bridge-builders and the leaders in the industry. This becomes a powerful position for brokers, solidifying them as intelligence-driven category advisors.
Brokers have a tremendous opportunity to enhance their offerings to CPGs through the adoption of AI. AI and machine learning solutions can enable brokers to analyze vast amounts of data, including market trends, consumer behavior, and competitor insights down to the store level. By harnessing these insights, brokers can further establish themselves as thought leaders and strategic advisors, providing CPGs with valuable market intelligence, helping them to be more agile, make more data-driven decisions, and outpace the competition.
For more on how Insite AI can help brokers become innovation leaders in the industry, contact us here.
Funding Incremental Growth With AI
Selecting the right AI solutions to for your category, pricing, and assortment decisions can reduce inventory costs, improve forecast accuracy, and enhance the customer experience. By leveraging these solutions, CPGs can fund incremental growth and achieve their business objectives.
How to Choose an AI Solution for Pricing and Assortment Optimization
Choosing the right solution for critical assortment and pricing decisions means a CPG must practice a lot of due diligence to find the right fit. Having worked across CPGs and teams at all levels, from the c-suite to VPs and category managers, here are some of the questions you should be asking as you evaluate a data science, analytics, or AI-based solution:
Protect the IP that is the heart of your CPG’s strategic competitive advantage
There is nothing more precious than the capabilities, knowledge, and unique intellectual property that’s been crafted over decades (or even hundreds of years in some cases). You want to be sure that any analytics, data-science, or AI-powered solution is going to protect the integrity of these hard-won trade secrets. Therefore, choose a solution that sits within your own private cloud, where no data, learnings, or proprietary information is ever going to leave the organization.
Choose a solution built for CPGs and Consumer Brands
AI is often misunderstood. Some of the world’s largest software companies have promised it as being the remedy to an endless number of business challenges. While some of that might be true, they haven’t always done a good job of explaining what AI or data science actually means for specific business functions in a tangible, applied way. Some promote an AI or data science platform that ends up being completely generic – these solutions are often sold as solving any type of business problem. But, we’re often shown that being all things to everyone makes a master of none. Software and technology without consulting is just a tool, and that tool often ends up being challenging to use and without the promised results. Rather, it’s important to look for a purpose-built solution that’s able to be customized for each unique business case, that serves specific needs, and is able to be intentionally constructed to solve CPG-focused assortment, pricing, demand, and category management challenges.
Think about the importance of solving specific problems instead buying a piece of technology
Start with your specific business problems and translate those into a custom solution that works for stakeholders across your enterprise. This allows for a bespoke solution to be built for individual needs, rather than trying to solve individual problems with a broad solution. CPGs may operate in the same industry, but their IP, modes of operation, and go-to-market strategies vary wildly. Solving big, unique problems is never going to be about buying a piece of technology or a solution that works right out of the box. Instead, look for an AI company whose domain experts will get to know your CPG’s business, its unique challenges, and how best to solve them. Then, get those experts to build a custom solution to do the job by producing desired outcomes.
Another Summer of Hard Seltzer?
How you can leverage AI to identify your top performers and revamp your product portfolio
In today’s highly competitive market, it is more important than ever for businesses to continuously analyze and optimize their product portfolios to stay ahead of the game. With the help of AI and predictive analytics, companies can gain valuable insights into their product performance and make data-driven decisions about which products to keep, which to improve, and which to remove from their portfolio.
In this blog, we will explore how AI can help you identify your top-performing products and eliminate the underperformers, using the example of the hard seltzer craze to illustrate the importance of portfolio rationalization in the ever-evolving landscape of the alcoholic beverage industry.
Hard Seltzers Won’t Fizzle Out
A category that got its mainstream footing just a few years ago, with early days powered by brand darlings like Truly (Boston Beer Company) and White Claw (Mark Anthony Brands), hard seltzers are credited with driving overall category growth. With last year’s off-premises sales increasing a whopping $900 million — quadrupling year-over-year — it’s hard to believe that at the start of 2018, just 10 hard seltzer brands were on the market.
Since then, more than 65 brands have entered the space, which continues to grow at a rapid pace, most recently enjoying a 33% increase in sales earlier this year (January – April 2021) versus the same period in 2020. This explosive growth has accelerated the sub-category from new entrant to what’s now becoming a mature mainstay.
While the growth of hard seltzers is starting to stabilize, we can expect to see on-premises sales continue to be a boon to the sub-category’s ongoing evolution as bars and restaurants welcome back patrons. For brand leaders, this means shifting strategies to plan for and accommodate changing consumption behaviors.
Another factor to account for in assortment planning is consumer preferences and flavor profile trends, which will drive category dominance and innovation as hard seltzers themselves become less of a novelty. Today, citrus- and raspberry-flavored hard seltzers prove most fruitful in sales, whereas blueberry does not fare as well.
Ready-to-drink (RTD) and Canned Cocktails
Ready-to-drink cocktails: Ready-to-drink (RTD) cocktails have been growing in popularity in recent years, particularly in the canned format. RTD cocktails are pre-mixed and often packaged in convenient, portable cans or bottles, making them a popular choice for outdoor events and activities.
The canned cocktail trend has been gaining popularity in the US in recent years, as consumers look for convenient and portable options for their summer drinks. Canned cocktails are pre-mixed, ready-to-drink cocktails that are packaged in cans and sold in packs. They offer a convenient alternative to traditional cocktails, which can be time-consuming and require multiple ingredients and equipment.
One of the main advantages of canned cocktails is their convenience. They can be easily transported to outdoor activities such as picnics, concerts, and beach trips, making them a popular choice for summer events. They are also easy to store and serve, requiring no additional mixing or preparation.
Canned cocktails are available in a wide variety of flavors and styles, from classic options like margaritas and mojitos to more innovative and creative combinations. Many brands are also emphasizing the quality of their ingredients and the use of premium spirits to appeal to discerning consumers.
Overall, the canned cocktail trend is expected to continue to grow in popularity, as consumers seek out convenient and high-quality options for their summer drinks.
Beer Will Begin to Bounce Back
While the early part of 2021 (January – April) saw certain segments of beer sales decline, including craft beers, which saw a 1% year-over-year drop, we will see some segment growth return. For premium beers, markets like Denver, Little Rock and Houston have all delivered segment growth, which underscores the importance of localizing assortment plans to maximize potential pockets of development.
Other category sub-segments, including hard tea and ciders, do not show as much promise for the short-term, coming off annual sales declines of 3% and 4% respectively.
‘Healthy Choices’ Rule
In this age of information, today’s knowledgeable consumer is increasingly mindful of what they are putting into their bodies (and mouths). Newer generational values of millennials and Gen-Zers who are coming of drinking age are focused on wellness — one reason hard seltzers, with lower calories often touted as a brand benefit, have performed so well.
One newer sub-segment marketed as a “healthy” option that is showing tremendous potential for continued growth is hard kombucha. According to Kombucha Brewers International, hard kombucha sales grew from $1.7 million in 2017 to more than $12 million in 2019, and Insite AI data indicates an 85% year-over-year increase in growth for these beverages during January through April of this year.
The fermented tea has been compared to light beer in terms of taste, but like hard seltzers that showcase fewer calories — or in the case of Vizzy hard seltzer (Molson Coors), antioxidants — hard kombucha touts its digestive benefits, an attribute that is increasingly resonating with health-conscious consumers today. Expect to see more innovation in this sub-segment, especially with major players like Anheuser-Busch InBev getting in on the action by backing the fast-growing Kombrewcha brand.
Data-Based Decisions Will Drive a Profitable Future
As America continues down its path of pandemic recovery, the alcohol category — including hard seltzer, canned cocktails, beers, flavored malt beverages and more — will continue to grow in both in-home and on-premises consumption as consumers figure out and embrace what the “new normal” is in their lives. However, after the next six to 12 months, the category will begin to see a reckoning and rebalance as long-term patterns begin to emerge.
For consumer goods brands, that means now is the time to prepare for potential shifts and to be ready to make the right decisions in category planning for future success. Brands that embrace innovative technology solutions like artificial intelligence and machine learning will be well-positioned to bullet-proof those plans, especially when they can make decisions based on predictive recommendations with granularity down to an individual SKU on a shelf in a single store location. Such decision-making power will be critical in navigating the ever-changing landscape, uncertainties like supply chain disruptions and inflation and evolving consumer behaviors.
Let us help you identify your top performers and eliminate the underperformers. Contact Insite AI today.
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