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Heinen’s gets deeper insight into store operations

Chain uses machine-learning technology to flag missed sales opportunities

Russell Redman

April 17, 2018

4 Min Read
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Cleveland-based grocer Heinen’s Inc. has enlisted a cloud-based, machine-learning solution to help identify potentially missed sales opportunities in stores.

The software, from New York-based CB4, digs into a retailer’s point-of-sales data to unearth consumer demand patterns that may indicate an in-store operational issue impacting sales of a product — at the SKU level — with high local demand. Findings are translated into actionable recommendations and sent to store managers with guidance on how to fix the issue, in turn capturing the lost sales and enhancing the customer experience.

“As a retailer, we’re continually seeking out technology to help us improve our business processes and efficiencies,” said Greg Sotka, director of category management and procurement at Heinen’s.

“We think this technology is going to help us detect unmet demand at a store level, and that could cross many different areas. It could simply be flagging out-of-stock items. It could be missing shelf tags or a sign that’s out of place,” he explained. “The system could also highlight some store-level decisions about what’s produced in the stores, such as in our foodservice areas — what they’re putting out on the shelves everyday might not always be meeting that local demand.”  Product mix opportunities in certain stores, too, could be revealed through the tool, he added.

Plans call for Heinen’s store managers to train on the CB4 software in the second week of May and make it available at all 23 stores in Ohio and Illinois by the middle of the month, according to Sotka.

As a proof of concept, Heinen’s did a live demo with CB4’s solution, which includes a mobile app that provides easy access for store managers, who can also provide feedback through the tool.

“We walked some stores with [CB4], and they were pretty quickly and efficiently able to point out missed opportunities. We were surprised at the results,” Sokta said. “To be honest, we were a little skeptical at first because the patterns were not familiar to us, and they didn’t know Heinen’s at all. But we pulled up the data on their app, and 75% to 80% of the recommendations that came up were spot-on and we could see at the shelf.”

CB4’s software focuses on identifying patterns for high-demand SKUs. When a pattern is found in a store and that SKU isn’t sold at the expected levels, there’s a tangible gap in demand. Using machine learning, the solution then points to the statistically most probable operational issue to have caused that gap.

“What we do is upload the POS data from an entire chain, run that through our machine-learning algorithms and, through that, detect patterns not being met at the store,” said Matthew McAlister, director of marketing for CB4. “For example, maybe once every two weeks or so, we would run through all the data and send recommendations to the store saying, ‘These 10 items should be selling in your store in much higher volume than they actually are. So take a look at them.’ The store manager will go take a look at the items, report what was wrong, and then our algorithms learn from those responses and deliver better recommendations in the future.”

Common execution problems include promotions not properly applied, ticketing discrepancies, out-of-stocks, missing price labels, display and signage issues, damaged items or products left in a back room, among others.

“So for a grocery store like Heinen’s, we’d be delivering 10 to 15 recommendations per store every two weeks to correct in-store operational issues across their entire chain,” McAlister said.

Each recommendation delivered to a store receives a response from the store manager via the CB4 app on whether the issue was discovered or if nothing unusual was found. Return-on-investment and compliance dashboards enable managers to monitor the issues uncovered, their team’s execution status and the revenue driven.

“This is the first experience we’ve had with a machine-learning solution that takes our POS data and provides recommendations based on recognized patterns,” Heinen’s Sotka said. “It’s very easy for our store management teams to look at these recommendations quickly through the mobile app and then respond to what they’re seeing by checking the items out on the shelf.”

CB4 reported that its clients have a 95% compliance rate on recommendations from the stores and see a net sales gain of 0.8% to 3% from its solution.

“Our store management teams haven’t worked with this yet, and we want their feedback to make sure it’s a useful tool,” Sotka said. “But the early proof-of-concept work that we did was promising.”

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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