How One CIO Applied AI to Reshape Grocery Retailer Operations | Digital Grocer S7E2

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Unknown
All right, ladies and gentlemen, we are back. Episode two season seven Digital Grocer. And we have our special guest here. He is known in certain circles as a prolific actor and a newly minted director. I’m sorry. I keep reminding myself this is not a Theo Von podcast. And my guest is not Ben Affleck. He is Todd Renaud. He’s CIO at Southeastern Grocers.

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Unknown
Todd, thank you for joining us today.

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Unknown
Well, thank you for having me. I appreciate the time. And I’m glad to know the,

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Unknown
$100 I gave you actually worked. And you can put me on sale, so thank you. Exactly. But anyway, you’re forgetting about royalties and all those things after that. Exactly. Well, we haven’t signed that agreement just yet, so.

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Unknown
Exactly. Exactly. So one of the the conversations that I have, quite often with retailers is around artificial intelligence, large language modules and, and how do you leverage them? And I think we’re,

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well past that year, kind of the hype cycle, the flirting of using certain things where people kind of flocked and started using, you know, ChatGPT and other tools to do email to, you know, writing documents and so on.

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Unknown
And I really wanted to bring you on the show today to understand what are you and the team at Southeastern Grocers kind of doing with with AI. So let’s just jump right in with my first question.

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when I think of the big picture of AI,

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how is QG leveraging it across your retail operations, and what are some of the strategic outcomes that you’re targeting?

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Unknown
Great. Thanks. So,

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I would tell you, we’re we’re really purposeful and strategic. Now,

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about it, we started,

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with Earnest Work about a year ago. And I’d say there’s two levels of it right now. So we are still doing the efficiency play. So think about copilot.

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You know, enterprise, dabbling in the agents, things that,

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really help our associates, help our,

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team,

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do the work they need to do.

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Do it faster, or maybe do it better. Faster. Feedback loop.

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I would tell you, we we’ve also been partnering with some of the vendors that we have. And, let me rephrase and say, partnering with our partners, to that end of how are they leveraging AI internally and then how can we take advantage of that? And I think there is reality is they’re using a moniker of AI on something they already had, or it’s really not the type of AI that we’re thinking about in the future, but there are partners who are actually doing some real work with that.

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analytics,

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procurement,

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the service we provide, the customers,

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also, we’re big into the rewards and loyalty,

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space. We have a very robust and effective program that our customer marketing team has put in place, and it’s really our go to market,

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for the organization. So personalization is a really big area.

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As well, if I had to really put those, though, into a couple of areas of,

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focus today,

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is chat bots.

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So think about

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chat bots that help the stores,

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that are customer facing or that support corporate,

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personalized offers and pricing. How do we utilize AI to do that both internally. So pricing mechanisms,

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helping us do that,

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in a way that, can be done faster and more personalized, but also,

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you know, efficient for us.

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And then how do we take those offers to you, the customer?

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Both on shelf and in our mobile app as an example.

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And then,

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really looking at things like inventory control, theft detection. So,

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these rely a little bit more on some vision AI,

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work that’s there. And then I could go down the list without, you know, spending a ton of time and just say, partnerships with forecasting and replenishment.

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Any type of product merchandizing. There’s AI activity going on in there,

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as well. So, you know, the goals are no different than anyone else.

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We want, you know, groceries. Easy.

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In theory, hard in practice. But,

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we buy goods, we move goods and we sell goods, and we want to make sure that the customer has what they need when they need it.

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And so that’s what we’re looking to achieve with all of this.

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That’s great. And so yeah, my next question is when you think of grocery in its totality.

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And where do you see AI driving the most value.

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that’s a good question. You know, it’s a boring answer. I’m still going to come back to the efficiency play and, you know, your corporate office,

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we have a saying here, which is there’s no checkout stand at the corporate office. We exist to serve, and we spend money, and you got to sell groceries to pay for us.

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So the more efficient we can make ourselves in the back office,

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the better for everybody at the company. And then ultimately, again, the customer.

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Outside of that, I think anywhere analytics and analysis of patterns of behavior,

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is really a place that I can make a huge difference. Now in grocery, we’re going to see that in supply chain.

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So smarter forecasting reduce waste.

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The customer personalization, the right offer at the right time. Super important for us. And super important for the customer. You’re bombarded with all these offers you want when you’re in the store. You want the offers for the products you need,

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that day. And how do we get to that?

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I think you can go some of the other places, labor efficiency in the stores shrink a big deal for grocery,

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and then service.

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But I really would say the personalization, the supply chain aspects to me are the biggest areas from grocery,

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that you’re going to see, a move to the bottom line and increase sales and keep customers,

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happy. And that’s really the most important part. And how we sell groceries.

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So I my view. Yeah. If I can if you can hear me, start with the mundane stuff.

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Yeah. The things that are just so routine but also are

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are huge time suck in certain things. Right. Leverage. And I’m an example is,

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you know, I think no different than you. We, we operate

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on a much smaller scale with a lot of vendors and partners. And so the frequency of getting contracts and amendments to those is, is quite high.

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And we have a very small team. And we’re also very careful in controlling our legal costs.

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So my view is as opposed to paying an attorney to to summarize or read a contract for you. And again, I’m not suggesting everyone should do this. I think I comes in really well, to summarize something for you.

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Well, right. Look, I’ll, I’ll add on to that and tell you that that’s something we’re actually doing with it.

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Procurement is

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we, we have a separate legal department and we do

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daily we deal with contracts and amendments and terms. And then you got to start looking in some cases at service level agreements.

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You know, in all the aspects of that. And so one of the ways that we can help that process is to actually in it, do a review of that information ahead of time before we get it to legal.

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If you look at the time value of someone’s, our,

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everyone’s important. But a lawyer can be expensive, especially if you have to go outside counsel.

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So we know what we like from density clauses. We know what we like for exit, terms of convenience, things of that nature. And we’ve built that knowledge up. So we’ve actually trained a,

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agent chat bot,

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to reference that.

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So we can take a contract, put pieces in there and it will tell us,

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you know, hey, this aligns, this doesn’t. And we can fine tune that before we insert it into the process. We’ve also had one great example where,

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very deep in the contract was a date and consistency. So we were being charged a certain way over certain dates.

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And in there the date was incorrect. And actually the chat bot found that. So not that we might not have found it anyway, but we certainly weren’t going to find it in about 30s.

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I think you’ve brought one good example that we’ve used, already.

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Yeah. That’s,

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a great example. There’s another one if,

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if I can contribute one,

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helping at a small firm dealing with an IP infringement matter, you know, our specific, specific patent and normally, normally you’d want to get the case history on, on a patent.

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So you have to call a lawyer. They have to go to a patent agent

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patent agent has to pull up the case history,

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download the PDF. So you have to pay for that service they send it to. You have to read it.

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Using a I were able to kind of get the whole case history and even undisclosed information that was available on the web, which is a great timesaver.

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Also,

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a dollar,

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saver.

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Unknown
I struggled to, to draft this next question.

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And I struggle because I think it’s where a lot of corporations really, really trip up when they’re considering injecting that cultural DNA around ie getting their their toe in the water. And I want to get from your perspective,

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how do you structure your team to operationalize?

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I.

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Unknown
Yeah, this is something we’ve been actually going back and forth even as recently,

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as today,

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trying to work through that.

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Unknown
So let me start first with I’d heard a,

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concept about the NASA, space program back in the 60s when they wanted to go to the moon, and you had the Mercury, Gemini, and Apollo missions.

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And so,

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if you take the goal of Mercury was to orbit a human test space survival kind of do the starting stuff. Gemini was to start testing and building all of the components that had to be put together to eventually do what the Apollo mission did, which was land and return humans from the moon. And so it’s like a stair step.

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And they they overlapped each other. And so we took our AI in the same way, journey.

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So number one is a foundation of building a launch system. We called it

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Unknown
And, you know, this is the boring stuff. Most people don’t want to do this, but we really focused on process and governance and security. Why? Because I believe you got to hit that head on.

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It’s

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going to be there whether you like it or not. And in fact, I feel strongly if you can satisfy some of those areas initially, you don’t get as much pushback from,

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people and the company because of the the fear that’s out there about AI even today. So the second piece, which goes with the Gemini, was how do we get that lift off into the air space?

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So we did, and executed some platform based POCs and first offerings. So we did a copilot, we did an enterprise GPT. We actually built our own on a third one. And then for a fourth one, we partnered

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with somebody,

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with their technology and, you know, really seeing what does it take to do each of these and they’re all these different components.

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And then if you get to the Apollo mission part of it, it’s the feedback loop. So now we know what we can do internally and we can’t. What were we successful with. How do we need to educate and perform differently. And now I can look at a much more ambitious and impactful,

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approach to using AI. So to get back to answering your question a bit more, we’re oscillating between what I call a,

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a hub and spoke in a way, is even though there’s one in the same we started an AI CEO, we hired actually an analyst, and we hired a technical person programmer, developer, someone deep into the AI space.

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And then we put a leader in place and we then start thinking about, okay, the hubs is certainly there, but the spokes ends up being the different teams out there. So there’s customer and digital finance people. I could go through all the traditional places,

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that you would have that and we would push that technology out into that.

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And what I’m finding is initially the,

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momentum and the passion might not be there. And so then the CEO is pushed,

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you know, baby, out into the world and finds out it it’s struggling or worse, it gets eaten and you lose that inertia and momentum. And so I would tell you, we haven’t actually quite figured out which one works best for us.

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Now we have a small team.

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You know, we’re a good size company, but we’re we’re really introducing this out into the wild, shall we say, of the business. And so,

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I think we’ll end up being centralized more for a bit. And we do have evangelists out there that are doing this,

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on their own. We actually have a lot of agents being created.

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We

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did a massive copilot rollout.

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We did education. We did,

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helpdesk hours. We did,

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multiple collaboration opportunities. And we’ve seen some huge usage metrics that has stuck thus far for about two bots. Ask me again in six, and we’ll see. But what we’re finding is there’s a lot of evangelists out there that picked this up and ran with it.

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Now we’re going to get into sprawl. You know, you got too many. They need support. They don’t work as well. What happens if security wasn’t set right somewhere? I mean there’s some challenges no different than any other business.

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But we think with the governance and a delivery model that’s centralized as a hub, but we start pushing out the spokes.

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And then also, you know, we’ll be in a good spot. And the final thing I would say on this one,

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give, give you a chance to weigh in,

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because I’d be curious what you’re seeing out there as well is,

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we want to talk about the art of the possible. So we are also introducing a GPT.

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Let’s say, for example, that does ECS, and we want to say, hey, did you know you can do this? Or we will go find use case scenarios and partner with the business,

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to come up with an example and then let them take it from there, because I still think the art of the possible is one of the biggest challenges you can have,

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to rolling out something like this.

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So,

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I’ll stop there. I could probably go on for more, but at the end of the day, it’s going to say it depends.

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when you asked me. I’ll tell you how we’re organized. I think it’s going to change over time.

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So the concept, the concept that you’re suggesting is.

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Right. Because the reality is

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any corporation that gets a certain size unless there’s a separate team to decouple from the day to day, the mandate isn’t as strong when you have to do that and everything else. And so the the goal, the idea of getting to a finish line of something that’s still very fluid and dynamic becomes a bit buried in the minutia,

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but at the same time is,

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when you’re not involved in it and you’re at the periphery and you’re going to be receiving something.

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And that’s where we were today when talking to other retailers. That’s where they’re seeing the resistance of adoption.

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It’s and there’s a couple of large Canadian non-governmental agencies now that it just did a massive Microsoft Copilot release.

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And they’ve taken the same approach that Southeastern Grocers has,

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I think add a little bit of the difference is that

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they’re letting it run rampant, have anyone build anything they want and then and then pull it back, pull it back from there.

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So,

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I also I appreciate the book that you’re quoting, which I think is the book you’re quoting.

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Failure is not an option, which is the whole history of

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the pre Apollo program right up to Apollo 13. So great book. Yeah, yeah. No, I,

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I think the space program is immensely interesting for it because you think about the, think about the achievements they made.

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I mean, I always laugh, you know, they went to the moon with slide rules and some really smart people, I mean,

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and then we complain if we can’t get our Excel to work. And that’s why we couldn’t make something happen,

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for a meeting or an analysis or something. I mean, you know, it’s almost like we’ve digressed, right?

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We’ve gotten lazy. And so,

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I just I think you can take so much from the way that you approach,

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your work,

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especially in technology at the company,

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from what the space program does. I mean, obviously it has its failures and its problems, as evidenced by the book. But,

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I really think it’s a it’s a great one.

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Unknown
You know, you mentioned one little key point that you mentioned in there was about,

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education and, you know, pushing it out and letting things go rampant. I mean, I referenced it a little bit, but,

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I think about AI fluency that you can build this and you do it through awareness and readiness and engagement. And so

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we did a roadshow.

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I mean, we definitely were very thoughtful about that. And we’ve given the tool and the agent and to

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anyone who wants it,

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to be able to go and they all have a license for it. So to your point, I think there’s a lot of agents out there we don’t know about, you know, there’s no telling what people are doing.

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Unknown
we did this also because I wanted to have it in our tenant. I wanted to do our best job of making sure that information doesn’t land there in GPT somewhere, which of course, look at every company. Someone can still go use their ChatGPT at home and you know, what can you do about it? But,

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if you provide them an opportunity with all the functionality they’re going to need, almost everyone will use it that way.

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And so you do have some of that governance,

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for that. And then the ongoing education is going to be huge. I mean, it’s the biggest challenge right now is and you see it everywhere in the paper is people worried about using AI because it’s going to put them out of work. And,

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Unknown
we’re very much a people oriented company.

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In fact, we pride ourselves on being, we’re in the people business. We just happen to sell groceries. And,

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so the goal never is to put someone out of a job. But I think if you took an attitude of we’re not going to embrace new technology and innovate,

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we’d still be using,

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clay tablets.

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And so jobs are going to change.

00:16:58:16 – 00:17:12:12
Unknown
I used to believe I would challenge those who knew less or were less skilled. I actually think it’s actually helping them rise to the occasion because whereas they might have struggled to do some analysis or

00:17:12:12 – 00:17:17:01
Unknown
to write a memo or to create a presentation, they now have a tool that can do that.

00:17:17:06 – 00:17:18:28
Unknown
And that’s what you’re looking for. You’re looking

00:17:18:28 – 00:17:29:22
Unknown
to give people what they need to make the best of the work that they have in the best of themselves. And so I actually I’ve kind of swung back over saying, certainly, look, at the end of the day,

00:17:29:22 – 00:17:36:11
Unknown
AI is going to do something that someone has a job with today, but you’re going to have to create three other jobs to enable that to happen.

00:17:36:14 – 00:17:42:09
Unknown
And so the trick is making sure you’re training your team, and they can use AI to do it so they can,

00:17:42:09 – 00:17:53:18
Unknown
be in one of those three jobs down the road. So a lot of opportunity I think you’re right. And it’s it’s one of these rare moments, rare moments in history.

00:17:53:18 – 00:17:55:08
Unknown
And I think no different than you.

00:17:55:08 – 00:17:59:08
Unknown
I haven’t been too long on the planet here to to be able to quote this, but

00:17:59:08 – 00:18:10:08
Unknown
I say empowered the end consumer faster than the enterprise. Yeah. So it would take away the right the noise of Nvidia and all the back end technology I get it.

00:18:10:08 – 00:18:29:18
Unknown
It’s the CPU requirements and infrastructure. It’s important. But it seems it’s like this jumped the enterprise extremely quick compared to some other tests that have been developed over time. Almost, almost overnight. I think that it will be,

00:18:29:18 – 00:18:30:09
Unknown
where,

00:18:30:09 – 00:18:33:28
Unknown
the white collar job was the equalizer to the blue collar job.

00:18:33:28 – 00:18:42:05
Unknown
because today it’s, you know, still today in certain markets, being a blue collar workers, not seen as as being as good as being a white collar worker.

00:18:42:07 – 00:18:51:22
Unknown
I think that being an AI builder will level set you against someone that is a good, strong thinker.

00:18:51:22 – 00:19:01:26
Unknown
Where with the tech in the hands of the right person will know the right question, will take full advantage of it. And I think this is what we all need to be ready for moving forward.

00:19:01:26 – 00:19:06:29
Unknown
so great. Let me pose a question back to you, because I, I’ve read a couple of articles and thought about this.

00:19:06:29 – 00:19:09:05
Unknown
How do you feel about AI,

00:19:09:05 – 00:19:12:12
Unknown
people and articles saying AI is going to make us,

00:19:12:12 – 00:19:13:14
Unknown
dumber,

00:19:13:14 – 00:19:17:20
Unknown
in the future because you aren’t challenging your self,

00:19:17:20 – 00:19:19:26
Unknown
your brain, you aren’t stretching,

00:19:19:26 – 00:19:22:00
Unknown
neurons. Shall we say, to,

00:19:22:00 – 00:19:28:14
Unknown
do analytics, to write a document. And, you know, it’s no different than thinking about the idea of why does someone do Sudoku or

00:19:28:14 – 00:19:29:16
Unknown
crossword puzzle?

00:19:29:16 – 00:19:38:12
Unknown
Because it’s mentally challenged. They talk about as you get older, you want to continue to challenge yourself mentally. And yet now in a lot of jobs, you could use AI to do everything.

00:19:38:12 – 00:19:46:05
Unknown
you talk about the equalization or the comparison, even forget equalization or anything between white collar and blue collar jobs. What do you think about,

00:19:46:05 – 00:19:47:27
Unknown
does it make you dumber from that perspective?

00:19:47:27 – 00:20:03:13
Unknown
Does it actually make everyone kind of come to the muddy middle and all the equal, no matter what you’re doing? And yeah, I thought equal. That did come out right. Correct. Because it’s it’s a non-human view is what I’m talking about. It’s your skills and the value is what I’m saying.

00:20:03:13 – 00:20:04:25
Unknown
I see it in phases.

00:20:04:29 – 00:20:05:11
Unknown
And

00:20:05:11 – 00:20:11:17
Unknown
would say I’m, I’m living through one of those, those phases now and more,

00:20:11:17 – 00:20:14:19
Unknown
concerned about the second phase. I think the,

00:20:14:19 – 00:20:32:14
Unknown
first phase is you become desensitized on the transfer agency and candor and what’s being written back from an AI engine, which you may be sending out to an individual or group of individuals.

00:20:32:16 – 00:20:35:25
Unknown
Okay. So an example is you could be

00:20:35:25 – 00:20:36:05
Unknown
and

00:20:36:05 – 00:20:38:00
Unknown
I’ll give you a great example,

00:20:38:00 – 00:20:40:28
Unknown
because today I was, I was really, really time pressed.

00:20:40:28 – 00:20:41:19
Unknown
We’re doing a,

00:20:41:19 – 00:20:46:13
Unknown
deep security review across a series of pieces of technology. We have a group of

00:20:46:13 – 00:20:50:04
Unknown
security experts doing a review with our CSO.

00:20:50:07 – 00:20:54:06
Unknown
So I got to let the team know. So I went to ChatGPT, and I,

00:20:54:06 – 00:21:04:24
Unknown
You know, I ask the question, acting as a code that that that data that do that. But I’m not thinking about how I’m reading. I’m thinking about how this message is going to be received. I’m not asking you to write it with empathy.

00:21:04:24 – 00:21:09:26
Unknown
I’m rather not like I’m not asking those things. I think if when you go down that rabbit hole, eventually

00:21:09:26 – 00:21:18:10
Unknown
you could fall into a copy and paste situation, right? Which you in which you really want to avoid the second one

00:21:18:10 – 00:21:19:07
Unknown
is you become less

00:21:19:07 – 00:21:24:10
Unknown
curious. And so it’s to your point,

00:21:24:10 – 00:21:32:14
Unknown
if you’re if you’re in the middle of something that’s really important and maybe not part of your sphere of expertise, or maybe it is, and it’s a stretch.

00:21:32:14 – 00:21:40:13
Unknown
And, you know, normally you would go research you you’d find someone you talk to, then you’d go take a course, I don’t know, there’s so many, so many ways you can bridge a gap on knowledge here.

00:21:40:13 – 00:21:53:17
Unknown
You may completely skip that and you become surface level. And eventually, I hate to say, like you’re the 18in between you, the keyboard and the AI engine and just sending information out.

00:21:53:17 – 00:21:54:03
Unknown
And then

00:21:54:03 – 00:21:57:12
Unknown
As humans, we will start questioning, what’s my purpose? What’s my value?

00:21:57:12 – 00:22:10:09
Unknown
I don’t think we’ve hit that crisis just yet, but we will we will hit that. Yeah. Actually, if I take your example, I would say the crisis hits when the majority of the people you interact with are doing the same thing.

00:22:10:09 – 00:22:13:08
Unknown
there was a podcast about 6 or 8 months ago and a,

00:22:13:08 – 00:22:26:16
Unknown
gentleman trained, he partnered with some third party forums to create a digital self, and he did it to answer scammer calls and do all of that. And at some point he actually connected two of his. I started having a conversation together.

00:22:26:18 – 00:22:28:25
Unknown
And, you know, you also see,

00:22:28:25 – 00:22:29:23
Unknown
out there,

00:22:29:23 – 00:22:37:18
Unknown
you have to start thinking about AI bots on your website as being a customer, don’t you? I mean, if you’re selling groceries online,

00:22:37:18 – 00:22:42:09
Unknown
somebody is going to be created if they of course, they have already done it. They’re ordering,

00:22:42:09 – 00:22:45:29
Unknown
groceries on your site. Well, if you’re competing on price or you’re competing with

00:22:45:29 – 00:22:51:07
Unknown
other companies that sell groceries online, do you have to start marketing to the AI?

00:22:51:07 – 00:23:00:03
Unknown
Well, of course you do. If they I bought works like that, you know, so it’s I think once that proliferates and becomes more common, to go back to your point

00:23:00:03 – 00:23:09:16
Unknown
I think that’s where you’re going to start to have some real change today. I think personally, not everyone is really using it or using it all the time like that.

00:23:09:16 – 00:23:16:18
Unknown
So you can either get away with it or Excel using it or something of that nature. And to your point, people,

00:23:16:18 – 00:23:30:13
Unknown
interest levels are short, attention spans are short. So they’re just going to look for some certain pieces of information and go to their. I do think it can help with curiosity though. So I mean you can have it keep asking questions or you can keep asking questions,

00:23:30:13 – 00:23:30:27
Unknown
for it.

00:23:30:27 – 00:23:35:01
Unknown
So I don’t know, it’s still developing. Absolutely.

00:23:35:01 – 00:23:36:21
Unknown
and the speed at it, which it’s going,

00:23:36:21 – 00:23:42:10
Unknown
I’m sure we, we will find that next hurdle to to crest over. Yeah,

00:23:42:10 – 00:23:50:23
Unknown
Sir, I want to say thank you for joining us on Digital Grocer. Well, you’re welcome. And for those of you want to get Ahold of Todd, you can find him on LinkedIn.

00:23:50:23 – 00:23:57:28
Unknown
And I’m sure you just DM any of your questions. Right. Well, thanks for having me. I really appreciate the opportunity to,

00:23:57:28 – 00:24:00:04
Unknown
you know, to be on the show.

00:24:00:06 – 00:24:01:09
Unknown
Thank you. Sir.

00:24:01:09 – 00:24:17:11
Unknown
That’s it for the first half of our conversation with Todd Renaud of Southeastern Grocers. We’ll be back soon with the second half of the interview. And guess what? You’re not going to want to miss it. Don’t forget to like and subscribe on YouTube or follow us on Spotify.