Business

Walmart uses AI to predict how much Thanksgiving pumpkin pie will sell

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Turkey gets all the attention. Cranberry sauce ruffles feathers. But pumpkin pie is the sweet staple that many Americans crave on Thanksgiving.

And many do not want to make it themselves. That’s why Sam’s Club, a retail and grocery warehouse owned by Walmart, is using artificial intelligence to predict how much pie each of its nearly 600 stores should make for the holiday season.

According to Sam’s Club officials, their model uses a wide variety of data. Things like local temperatures (hot weather often means less pies to buy); whether the Sunday football game is home or away (home games may mean more pies are needed); how popular are pecan pies this year (more pecan pies may translate to less pumpkin pie sales).

Those data points, and others, plug into an artificial intelligence model they created. It spits out recommendations to each store leader, such as how many pies should be in their stores per hour. Last year, Sam’s Club sold enough pumpkin pies to fill 450 football fields, officials said. (They declined to give an exact number.)

Forecasting demand with specificity is necessary, officials added, because competition to retain customers is fierce and profit margins are tight.

“If members don’t get what they need, they won’t renew with us,” said Pete Rowe, vice president of technology at Sam’s Club and store member whose family is buying both pumpkin and pecan pie for Thanksgiving this year. “It’s critical for us and our model to make sure.”

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In recent years, advanced artificial intelligence models have become commonplace in supermarkets. Spurred on by the pandemic and supply chain challenges, it’s rapidly changing the grocery shopping experience: from AI-powered shopping carts that automatically recognize the items you’ve picked up to chef bots that generate recipes based on your purchases.

According to grocery experts, the increase is due to a combination of factors. Stores now have access to mountains of data, including from third-party brokers and customer loyalty programs. Computer processing power is cheaper and faster. Machine learning models, software that computers use to learn and adapt on their own, are advanced. The pandemic has played a major role.

Gary Hawkins, the CEO of the Center for Retail and Technology, said stores used software in pre-pandemic times to help with inventory management, staffing and predicting when goods will be in stock. But after the pandemic hit, “supply chains blew up, demand soared” and supermarkets were unprepared and needed smarter systems, Hawkins said.

“It literally blew up all the models because they just weren’t sophisticated enough,” he added. “So very quickly, especially the big boys said: ‘We need something better here.’ ”

In April 2019, Walmart launched an Intelligence Research Laboratory where cameras and sensors are connected to algorithms to check how stocked the shelves are. In March, Kroger launched an AI lab where technology can track the freshness of vegetables. Ketchup maker Kraft Heinz is now using machine learning to track demand for its products ahead of events like the Super Bowl. Amazon opened a fully automated Whole Foods this year that uses deep-learning software to let customers shop and exit without needing a cashier. (Amazon founder Jeff Bezos owns The Washington Post).

Start-ups have also multiplied. New York-based Caper Cart creates AI-based shopping carts that automatically recognize what customers are picking up and checking out. Seattle’s Shelf Engine tells stores how many items they need each day. Hivery, based in Australia, has a model for advising grocers on where to place products on the shelves.

“AI is making its way into almost every technology-related opportunity,” Hawkins said.

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Dominic D’Agostino, a 30-year-old Sam’s Club member in Dayton, Ohio, said he had no idea the company was using such advanced technology to forecast demand for pumpkin pie.

While he’s not a fan of the dish, and probably won’t take it to his sister’s house for the holidays — “the only pie I really like is pizza,” he said — D’Agostino is intrigued and somewhat concerned , that artificial intelligence is used in this way.

“It’s creepy,” he said in an interview. “It’s also fascinating.”

Sam’s Club made the decision to use AI shortly before the pandemic, Rowe said. The chain used software to manage its business operations, but felt it could be done better.

For example, in years past, Rowe said, “We’d be producing too many pumpkin pies, too many croissants and all that.” [would lead] to our employees wasting their time and also to the fact that we have to throw away inventory.”

Now the company uses machine learning to predict the stock of everything they make themselves, such as pies and rotisserie chicken. They also have “autonomous floor scrubbers” — or self-driving robots — to scan shelves and send alerts to staff to determine which items need to be restocked first when the delivery trucks arrive.

Rowe said it helped the store be more than 90 percent accurate in predicting demand, and wants it higher.

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Despite AI’s appeal, it has risks. According to researchers at the University of Arkansas, algorithms are running away from large amounts of customer data, fueling privacy risks. It can also lead to bias.

“Even if race or gender is not a formal input into an AI algorithm,” they wrote, “an AI application can attribute race/gender from other data and use it to command ‘higher prices’ for specific demographics.”

Others note that AI is not a universal solution, and stores could be wasting money buying fancy software to keep up with the hype.

“You can’t be overly enamored of AI’s shiny object element,” Mike Hanrahan, former CEO of Walmart’s Intelligence Research Lab, said in a technical publication. “There are a lot of shiny objects that do things that we think are unrealistic to scale and probably not beneficial to the consumer in the long run.”

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