Achieving Merchandising Excellence -
Driving Retail Innovation with Analytics, AI, and Automation

Axfood_logotype

  • Sweden's second largest food retailer

  • Axfood was founded in 1999 and is based in Stockholm

  • The principal owner is Axel Johnson AB

  • With a market share of 20%, Axfood has approximately 300 Group-owned stores, e-commerce
    and collaborates with approximately 900 additional stores in Sweden

  • The company operates brands such as Willys, Hemköp, Tempo, Axfood Snabbgross, Mat.se and Middagsfrid

  • Axfood has over 13,000 employees and net sales of over SEK 80 bn

Further information: www.axfood.com

Success Story

Axfood: Achieving Merchandising Excellence - Driving Retail Innovation with Analytics, AI, and Automation

To become customer-centric, retailers need to go beyond generic assortments for stores and channels to tailor unique offerings for individual locations based on their consumers. This requires modern, advanced assortment planning solutions that are driven by customer data science, utilize predictive analytics and AI, and achieve a high degree of automation for greater efficiency and collaboration across the organization.

To better serve customers, store assortments must be tailored for the local clientele. Therefore Axfood embarked on a project to enhance assortment planning across all banners and channels. The retailer aimed to become more data-driven, automated, efficient, and customer-centric while maintaining profit margins.

Business Benefits

1. Enhanced Customer Satisfaction:

  • Tailored store assortments to better serve local clientele.
  • Data-driven decisions allowed for more unique assortments without increasing labor.
  • Increased assortment per product group to better meet customer needs.
  • Transparency in the assortment revision process.
  • Shared relevant information across the organization.

2. Improved Efficiency and Profit Margins:

  • Automated recommendations based on business rules, weighted ranking keys, customer data science, and AI.
  • Optimized assortments within the constraints of available shelf space.
  • Improved profit margins while driving growth.

3. Streamlined Decision Making:

  • Infused decisions with customer data and insights.
  • Enabled planning of many assortments simultaneously.
  • Evaluated assortments based on the roles each category fulfills.

4. Increased Collaboration and Flexibility:

  • Category managers had control over the level of data-driven decisions and automation applied per category.
  • Continuous support and dialogue with users ensured enhancements and new capabilities.
  • Functionality requested by planners rather than forced decisions increased acceptance and usage.

5. Business Alignment and Stakeholder Involvement:

  • Early and continuous involvement of business users in the design process.
  • Formalized support and continuous improvements post-implementation.

Opportunities for Business Improvement

1. Data-Driven Decision Making:

  • Leveraging customer data science, predictive analytics, and AI to drive smarter assortment planning.
  • Using a Consumer Decision Tree and metrics like demand transference, substitutability, and incrementality for better assortment decisions.

2. Advanced Automation and Efficiency:

  • High degree of automation to handle the workload of planning and managing assortments.
  • Use of AI to complete store clustering and provide automatic recommendations.

3. Enhanced Customer Engagement:

  • Personalizing assortments to meet the unique needs of customers at each location.
  • Ensuring that each part of a store assortment plays a role in customer perception and satisfaction.

4. Continuous Improvement and Adaptation:

  • Implementing an iterative approach to leverage AI and predictive technologies for continuous learning and adaptation.
  • Formalized support for continuous enhancements and new capabilities in assortment planning.
[English]

Category planners want to be more targeted, but they don’t want to increase their workload. So, automation is key. We need systems that can perform as much of the legwork as possible and free up the users to focus on higher value-add activities.

retailsolutions

Ed Bullen

Head of Competency Centre for Customer Engagement

[English]

Retailers want solutions that are going to proactively identify emerging trends and make suggestions and recommendations for them and highlight potential problems rather than passively relying on users to initiate those sorts of analysis.

retailsolutions

Ed Bullen

Head of Competency Centre for Customer Engagement

[English]

It’s been a great partnership and co-innovative effort with SAP, Axfood, and retailsolutions, acting on trends around customer-centricity to get smarter about how to offer relevant assortments to customers in all channels, whether that’s physical stores or online.

SAP

Kristin Howell

Global Vice President, Retail Industry Business Unit

[English]

From a business point of view, our new assortment planning solution is driving customer satisfaction.
Considering the number of decisions needed for 10,000 assortments and over 80,000 SKUs over all our retail chain banners, data-driven decisions are really needed.

Axfood

Anna Ihme

Application Specialist, Assortment Solution

[English]

As you think about what you’re carrying, how you’re positioning it from a space perspective in the store, how you’re using the digital space, both in your mobile app as well as your online application, assortment planning and category management have become a very important pillar for how merchants can really appeal to their consumers and integrate those tastes and preferences, but then obviously it still offers that kind of tailored experience based on the format based on the placement.

SAP

Kristin Howell

Global Vice President, Retail Industry Business Unit

[English]

Es ist wichtig, den Geschäftswert einer datengetriebenen Lösung zu erkennen. Daten sind der Schlüssel, und obwohl APL die Werkzeuge bereitstellt, ist allein die Nutzung ausschlaggebend für den Geschäftswert. Jede Warengruppe unterscheidet sich in Aufbau, Attributen und KPIs, und das Wissen des Category Managements muss in die Werkzeuge übersetzt werden, um einen automatisierten Entscheidungsprozess zu ermöglichen. Dies muss vorhanden sein, um gezielte und maßgeschneiderte Sortimente zu erstellen, die den Geschäftswert steigern.

Axfood

Anna Ihme

Application Specialist, Assortment Solution

[English]

The category manager is in control of every aspect of the solution, so functionality is requested rather than forced. The desired level of data driven decisions and automation can be applied per category and down to individual assortments.

Axfood

Lars Nordqvist

SME Assortment Management & Analysis

Merchandising Excellence

See the recording of a LIVE discussion for more information