How SPAR, denree and Co. use the power of prediction

28.03.2024

by Jennifer Meyer

Fruit and vegetable section of a SPAR supermarket in Austria; Copyright: SPAR/Foto Karg

In the world of food retail, well thought-out inventory management and shelf planning are of crucial importance. The use of artificial intelligence gives retailers the opportunity to make precise predictions about the purchasing behavior of their customers. Current examples from the retail sector show how companies are implementing this and benefiting from it.

Effective planning of the product range and shelf allocation are essential for food retailers. This has long been true. However, thanks to advanced algorithms, retailers have been able to make increasingly precise predictions about which products will be in demand in the future and where customers expect to find them in the store for a few years now.

Inventory management refers to the strategic control and organization of products in a retailer's stock. The aim is to ensure optimal stock levels to meet demand, avoid overstocking and minimize storage costs. Advanced technologies such as artificial intelligence are often used to enable precise forecasts for demand planning and ordering.

These forecasts are based on comprehensive analyses of past sales data and external factors such as seasonal changes and current market trends. This results in huge amounts of data that need to be analyzed as quickly and accurately as possible. This is precisely why the food retail sector is perfectly suited to the use of artificial intelligence (AI). The aim is to optimize the purchasing process, maximize customer satisfaction and avoid surpluses and waste wherever possible.

SPAR wins the "Future of European Commerce Award"; Copyright: SPAR/Foto Karg

Award-winning concept: SPAR Austria

One food retailer that has now implemented this in a particularly innovative way is SPAR Austria. The company received the "Future of European Commerce Award" from EuroCommerce for the first time in December 2023. The coveted prize recognizes companies and associations for their transformation projects. SPAR Austria impressed the jury with its visionary approach "Fruit and vegetables 3 days fresher". This involved a comprehensive analysis and optimization of planning, procurement and delivery in the fruit and vegetable sector.

SPAR Austria's aim is to offer consumers fruit and vegetables that are ready to eat at any time. Markus Kaser, SPAR Management Board member, was delighted with the award: "160 experts from the areas of IT, process management, logistics, product range and quality assurance were involved in the SPAR changeover initiative 'Fruit and vegetables 3 days fresher'."

AI and the cloud at the heart of the "Fruit and vegetables 3 days fresher" project

The key to the innovative IT solutions from SPAR ICS, the IT unit of the SPAR Austria Group, lies in the precise calculation of sales volumes. By using AI, extensive data on sales volumes, weather conditions, special offers, marketing campaigns, seasonality and many other factors are analyzed. In this way, the technology makes it possible to accurately predict the optimum quantity for each store.

Technology innovations are revolutionizing retail, from the store to the back office, from the supply chain to the checkout – Stay in touch with developments: Find the latest solutions, an invaluable exchange with the industry and plenty of expertise at EuroCIS – the Leading Trade Fair for Retail Technology.

The implementation of this project was a collaboration between SPAR, Microsoft and Paiqo. In view of the large volumes of data and the variable demand for computing power, the decision was made to use the Microsoft Cloud. The advanced analytics tools from Microsoft Azure access this cloud-based data, making an intelligent supply chain possible in the first place.

How SPAR wants to prevent food waste

SPAR has introduced targeted measures against food waste, including precise ordering, discounted offers for products close to the sell-by date and donations to social organizations for unsold products. By implementing this project, SPAR Austria was able to reduce food waste to 1 percent. In comparison: in German supermarkets, around 6 percent of perishable foods such as bread are thrown away on average, and around 4.3 percent of fruit and vegetables.

Andreas Kranabitl, Managing Director of SPAR ICS, emphasized: "Driven by AI, the project has revolutionized the planning, procurement and delivery processes. The result is a forecasting accuracy of over 90 percent. All of this means that the exact quantity required is available in the right store at the right time, thereby reducing food waste even further."

Inventory management and shelf planning – more examples from the food retail sector

Other food retailers have also long been using AI to reduce spoilage costs while improving product availability and thus customer satisfaction. RELEX Solutions is a partner for some big names in the industry. This company specializes in supply chain management, space management and the application of artificial intelligence in these areas.

Back in 2020, Germany’s REWE opted for RELEX Solutions' space planning solution to improve the shopping experience with automatically generated, store-specific planograms. The aim is for customers to find items exactly where they expect to find them. This should increase the turnover of goods. Until working with RELEX Solutions, REWE had been working with a manual, more time-consuming tool.

Shelf planning is the strategic arrangement and design of products on the shelves of a store. The aim is to create an effective presentation that promotes visibility and sales. Factors such as product placement, seasonality, customer behavior and sales data are taken into account.

REWE was followed by customers such as Lidl, EDEKA and, most recently, the denree Group. denree's aim with this collaboration is to break down silo structures by better integrating data that was previously collected and viewed in isolation. It is hoped that this will provide more in-depth insights across company divisions, which will contribute to the efficient use of data. In addition, forecasting accuracy is to be improved and scheduling processes automated. The overall aim is to reduce the costs of spoilage and stock levels while improving product availability.

Shaping the future of food retailing

The use of AI in inventory management and shelf planning enables food retailers to adapt more flexibly to the needs of their customers. Current examples from the food retail sector show that those who use these technologies skillfully not only reap economic success but can also operate more sustainably.