Q&A: Ahold Delhaize USA CIO Rom Kosla talks tech at NRF

Rom Kosla joined Ahold Delhaize USA (ADUSA) as executive VP of information technology and chief information officer for the company’s Retail Business Services (RBS) arm in April 2021. He oversees all aspects of IT and supports digital solutions and omnichannel strategy for Ahold Delhaize’s U.S. businesses, which include Stop & Shop, Giant Food, Giant/Martin’s, Food Lion and Hannaford, as well as online grocer FreshDirect and the Peapod Digital Labs e-commerce unit. Kosla came to ADUSA after more than 14 years at PepsiCo. His 25 years of technology experience also includes more than two years at Deloitte Consulting and over nine years at Nestlé.

Winsight Grocery Business Executive Editor Russell Redman got a chance to sit down and talk with Kosla this week at the National Retail Federation’s 2023 “Big Show” convention in Manhattan. Here are edited excerpts of the discussion.

WGB: What were some of the major technology investments that Ahold Delhaize USA made in 2022? What have they brought or will bring to the company?

ROM KOSLA: A big part of last year was our self-distribution capabilities. In 2022, the biggest things that we were trying to drive is moving a lot of distribution from third parties into our own distribution. We implemented a supply chain solution. In some cases, we integrated some of the older supply-chain instances into our back end. So technology was a big part of integrating our supply chain. At the same time, I would say that has really propelled our growth. You could see that, not just within ADUSA but across the industry, supply chain was a challenge. But I do believe that having more control of that and the integration within the systems really gave us a leg up. We did really well last year. I don’t have all the details we can share at this point from Q4, but we grew significantly as a business. A large part of that was our ability to manage our destiny.

On the e-commerce side, we grew as well. As a company, we built our e-commerce platform, called Prism, in-house. One of the things that we were seeing during the pandemic was a huge growth in that space, but we built the technology really on-premises within our data centers. The size and scale is just not possible in a traditional data center. So we migrated a significant portion into the cloud. The elastic side of it—where we see the [demand] seasonality like back-to-school or during the holidays—is a big piece of technology assets that you really can’t just deploy, you know, order and then put into the space. So the concept of elastic compute and then burstable compute is an important part of our strategy. And that hybrid cloud will always be about hybrid cloud. We’re never going to just move everything into the cloud. We think we need to maintain some of our assets within our control. So those have been two big strategies we had last year.

WGB: Where is ADUSA currently at on the technology side in transitioning its network to self-distribution? Is that completely done yet? I think it was at 85%. What kinds of technology implementations has this involved?

KOSLA: I don’t have the full percentage. We have new facilities that are also being added. The scope is we have some brownfield and some greenfield. We have cold facilities that are getting added. Actually, this month we’re going live, and then we have another one coming up in the second half of the year. So a lot of these things are not just something we're bringing in, but also implementing technology around automation. A good portion of these facilities are robotics. It’s highly automated. These facilities are super-cold—try to get the number of people [needed] to work in these cold facilities, which are minus-30 in some cases. So we’re building the robotics to help drive that capability. And, we’re partnering with our ecosystem to make sure they’re just not for these instances but also potentially future ambient solutions as well. We’re pretty close to finishing our self-distribution program. By the second half of the year, we should be a 100% done.

WGB: What tech investments are in the pipeline for ADUSA in 2023?

KOSLA: One of the things we’re spending a lot of time thinking about is how we’re going to do more scaled. We have systems that are fairly legacy. It’s common with a lot of companies. And with legacy, we’re talking about decades old. For us, we are going to continue driving capabilities and productivity in the existing systems, but also the concept of new platforms and platforms that will scale across all of our brands. Part of our investment is the beginning of the roadmap. We just implemented our finance solution on SAP. So all of our brands now leverage the same finance solution. We’re thinking about the next step to integrate finance plus our supply chain, our commercial system, together.

At the same time, we’re also replacing and engaging our integrated point-of-sale system. We have multiple point-of-sales [systems], and what we’re doing now is developing a single point-of-sale solution across all our brands. The goal here is, once we have that—plus our back end, our in-house e-commerce solution—integrate them and really unlock the connected customer. A lot of it’s in flight, and it’s going to take time. But once we have that all together, we will have a fully vertically integrated solution. That’s one of the most interesting parts of this company right now. The business is really looking at, how do we create that truly connected-customer omnichannel capability? And so our investments are really tied to that value proposition.

"The automated fulfillment centers have been fantastic. We are learning a lot about that experience," Kosla said, citing The Giant Company's Giant Direct facility on Island Avenue in Philadelphia. / Photo courtesy of The Giant Company

WGB: On the customer side, what kinds of technologies has ADUSA adopted to enhance the customer experience and make fulfillment more cost-efficient?

KOSLA: Last year, we deployed a fulfillment solution that is on a TC52 [Zebra handheld device]. We’ve migrated a lot of our fulfillment capabilities, all mobile, all in-house-built. Then our engineering team, our Peapod Digital Lab organization, is building these capabilities directly. So we’re not necessarily relying on third-party software providers. We are building an in-house solution. The hardware is what we buy. The good news is, we deployed it last year, and then we’ll continue to deploy out to two other brands. The rollout is going to be part this year for Food Lion and next year will be for Hannaford. All the technology, we’ve fully tested that in our three other brands. So we’ll see fulfillment capabilities continue to expand.

On the digital front, the e-commerce solution is also getting expanded. There’s a backlog of capabilities that the teams are working on and, really, the brands have a high need for some of these capabilities that tie directly to our customer engagement. For me, coming from CPG, when I actually understood a little bit about how our e-commerce solution directly ties to the customer, it’s interesting. Chat is a big part of that, chatting with our customers when they ask to buy a certain kind of apples or bananas, and we know them from our [purchase] history. The chat is, for example, ’Hey, Ms. Johnson, we noticed that you order bananas. These are not as ripe as what you usually buy. Would you want to wait, or do you want to buy them?’ That engagement is extremely personal. And that personalization is really part of what I think is interesting about the technology we’re deploying. It’s truly what our brands are looking for. Enabling that [level of] engagement with the customers is much more intimate than what I’ve seen in my previous experience.

WGB: You led me right into my next question. How is ADUSA leveraging its troves of data to create a more personalized experience for customers and help CPG partners market their brands?

KOSLA: What’s interesting is we have a common loyalty solution, and we also have a Big Data platform in the cloud. Everything we’re doing to manage and gather transaction data is flowing through to really understanding our customers, and then leveraging that data for both online and in-store. So the brands see what’s happening at the in-store level, and the e-commerce business is seeing it from at the online level. But it’s the same data, and we can correlate the data between an online customer and an in-store customer. That is one of the powerful capabilities that we have—we call it Fiona—but it’s all of our Big Data residing in Azure Cloud.

It has been a significant unlock because, first, the data is massive. We’re talking about, I think, the term is petabytes of data, but the amount of transactions like exabytes. Exabytes of the amount of network traffic that that’s being captured, and then actually the nuggets of data that we need to store and report on. And the insights that come out of that are unbelievable. To me, this is a sophisticated part of our business that is world-class because it’s the nature of how we engage our customer. We have our own internal data. We don’t just leverage third-party data and assume what online consumers are doing. We actually have it at our fingertips. Other retailers are struggling with that because they haven’t really built that themselves. I think that’s an important investment for the future.

"The business is really looking at, how do we create that truly connected-customer omnichannel capability?" Kosla said. / Photo courtesy of Giant Food

WGB: Some technologies that ADUSA has piloted in recent years include micro-fulfillment centers, frictionless checkout and aisle-scanning robots. Any status update with those?

KOSLA: We’re taking a pause on some things. We definitely are implementing camera analytics because, in some stores, we have self-checkout as a big part of that. So those are being deployed. And then, in the Marty [scanning robot] solution, we are implementing version 2.0. Those are capabilities around shelf-scanning, planogram compliance—all the things that will provide additional insights.

And then, from the other pieces [you mentioned], I would say frictionless [checkout] is probably one where I think there’s a lot of technology out there—you know, Amazon has implemented something, right? The number of products and items we have is significantly larger than a normal small-store format. So trying to get that into a larger format is probably something we still need to work through. I would describe this as a great ability to understand and lessons learned. But we haven’t necessarily thought through, for example, what is the deployment long term? And the last part of your question, micro-fulfillment centers, those have been deployed.

WGB: With Swisslog/AutoStore [as the automation partners].

KOSLA: One is at Island Avenue [in Philadelphia] for The Giant Company. That’s been significant. I would say those are impressive, the technology and capability. It’s really driving a lot of growth. At the same time, it makes a lot of sense geographically—urban centers, right? That isn’t going to be our single play. We’re still going have where our inventory sits with the stores, in some cases. Other cases we’re going to have dark stores. So we do have those opportunities. But the automated fulfillment centers have been fantastic. We are learning a lot about that experience.

WGB: It basically depends on [population] density, right?

KOSLA: Exactly. Correct.

WGB: Have any technologies or trends jumped out at you so far at the NRF show?

KOSLA: This is my first NRF show. I would say that it’s overwhelming [laughs]. It’s like a Vegas lights type of thing. My eyes were just trying to process everything that was there. I did get to see  electronic shelf labels, which were pretty impressive. So I spent some time there working through that. I’m going do more walking around. Everyone tells me go to the first floor, because those are the up-and-coming technologies. Those will be the future and will be on the main floor in the next few years. They also said check out innovation. So I’m really open, and part of it is just really understanding what’s at play in the retail space. I’ll have my teams come back with a report card and say, you know, ‘Here’s what we think we should go after.’ Right now, I’m an observer. Maybe next year I’ll have a lot more insights about what the tech trends are.

WGB: What technologies do you think grocery retailers are looking at?

KOSLA: We’re all kind of in the same space. We all have a lot of legacy technology where we want to advance a lot of the capabilities to drive growth, while we’re really remediating some of these systems that need to be modernized. The challenge is there are a lot of technologies that if you kind of overlay the capabilities, sometimes they will not always fit the needs of the business. And every business is unique.

Retail businesses right now are looking at growth in online. That is something we talked about in conversations I’ve had with other CIOs. There’s also a lot of discussion around, you know, how to manage it? A big part of that conversation is really supply-chain efficiency forecasting and replenishment. How do we make sure that AI [artificial intelligence] and machine learning are incorporated into our planning schedule?

A lot of that data crunching and and getting insights out of that data is something that every retailer is trying to make sense of. Because in trying to forecast for the future, you might be able to do a better job in three months, but trying to forecast a year from now so you can build up your inventory and do all those things is going to be a challenge. We’re going to have to figure out which data points are relevant for which future forecast. That’s a big piece of the puzzle, I think, retailers will try to figure out, how to accurately forecast the future.