Northeast Grocery CIO Says GenAI Will Fundamentally Change How Grocers Operate

Scott Kessler, EVP and CIO at Schenectady, N.Y.-based Northeast Grocery, the parent company of Price Chopper/Market 32 and Tops Friendly Markets, took to the stage on day two of GroceryTech in Dallas to talk about today's biggest technology-driven trend: GenAI. 

“GenAI is going to fundamentally change how grocers operate,” he said. “It's going to fundamentally change all industries. There’s a lot of exciting stuff.” 

[RELATED: Northeast Grocery Shares Renewed Strategy for Retail Success]

He said that technologies in the GenAI space will allow retailers to manage better data, to better capture that knowledge and wisdom, and use it to their advantage. One technology that Kesser specifically mentioned was RAG, or Retrieval Augmented Generation.

RAG is the process of optimizing the output of a large language model, so it references an authoritative knowledge base outside of its training data sources before generating a response. Kessler explained that it “takes all of your digital assets and puts them on top of a large language model and then ask questions, general chat, to get really insightful answers. It’s something that's I think everybody's going to eventually have at their fingertips.”

Overall, Kessler believes in data architecture. At GroceryTech, he advised retailers of the need to start to build their assets of digital information, whether that be from customers or vendors. This in turn can also empower retail media. “It fuels your data insights and it becomes a layer which you can use and reuse on top of GenAI, he noted.

Kessler even recently established an office of AI at Northeast Grocery. The office of AI has a representative from its legal department, from its digital group and from its merchandising group. 

“What we're trying to do is establish the governance because of privacy and copyright issues; there are things called hallucinations where you can get very confident results back from GenAI, but they are wrong. So, how do you train and make sure that you're prompting correctly so that you get the expected results, especially when you're using your data or when you're making insightful decisions on your business using GenAI results? It’s my job as a chief information architect to lay the foundation, make sure that everybody understands what the art of the possible is, and then give them the tools to do so. I like to say I democratize generative AI to the masses so they can solve their own problems using this new technology.”

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For example, Northeast Grocery introduced Co-Pilot on a limited basis. “You can see the thought process start to happen,” Kessler said. “You upload an Excel document and instead of reading the document, you just ask a question -- which store had the most sales on Tuesday? Boom, it brings it up. And so you get those juices flowing, and it creates excitement.”

What’s Next

Northeast Grocery will conduct a pilot with Simbe’s Tally robot in September for four months “to prove out the data desert that lives in center store and how can we monopolize that data, which I find very fascinating. I believe that there's a large opportunity there to both save in labor [and] generate gross margin that we're leaving on the floor, so to speak,” said Kessler. 

With this type of technology, Northeast Grocery will be able to strengthen its supply chain because it will have access to real data that people can't question. “I grew up in the digital space and e-commerce and we have all that data, and I'm totally excited to get it from in the four walls, multiple times a day, and see what we can do with it,” said Kessler. “It's very powerful.”

Meanwhile, when asked about the retailer's e-commerce strategy, Kessler stressed that Northeast Grocery is very loyalty-driven business. “We use that platform to grow our loyalty. We have the Advantage card on the Price Chopper side, for example. Customers can accumulate points and use them as dollars in their next transaction, or use them to pay for gas. It’s been a very successful program, but we're trying to drive that even higher. It's one of the things that helps differentiate us with our competition.”