Two updates this week on big retail companies’ use of AI give solid insight into where the technology is delivering near-term results while raising issues that must be addressed by rank-and-file employees striving to capture full value from AI.
The grocery firm Albertsons is reporting larger order sizes when customers take advantage of AI chatbots to plan and purchase food for meals and events. WalMart, the world’s largest company by retail revenue and a tech/AI titan, is experiencing growing pains among retail store employees who are challenged to manage and train AI tools they’ve been tasked with using in their day-to-day jobs.
Order Sizes Grow
Like many organizations that have dabbled in AI, Albertsons is more closely analyzing the payback from its investments of time and resources, according to a report in the Wall Street Journal (subscription required). The company recently reported it expects sales to decline in the current fiscal year, so tools including AI that can boost sales will be treated as priorities.
The company is in the process of consolidating multiple AI chatbots to a single experience designed to deliver the best customer experience that customers will use to locate products, get recommendations for related products, and receive advice on preparing shopping lists for events they host. This will eliminate internal development and management silos and sharpen the focus on customer experience, officials said.
The results it’s reporting on these efforts to date: a 10% increase in average order value when using standard conversational searches and a 26% lift in average order value with comprehensive assistants to find recipes and ingredients that match their needs, said Jill Pavlovich, senior vice president of digital shopping experiences. These results clearly support the move to focus on a consolidated approach to AI assistants.
Albertsons revenue wins in the customer experience realm could inform additional areas where the grocer is pursuing AI-driven transformation, including merchandising intelligence, optimizing its supply chain, and empowering staff.
WalMart’s Challenges
That last AI focus area of Albertsons, empowering staff, is consistent with one of the latest AI-driven initiatives playing out at WalMart. We previously reported on the company’s work with OpenAI to sell products through ChatGPT before it eventually course-corrected and decided to have its own chatbot operate inside ChatGPT and Google Gemini. A wide range of tech and AI initiatives contribute to a track record of innovation and leadership.
With its massive retail employee base, WalMart has one of the largest potential AI test beds anywhere – the company has over 2 million employees globally and as many as 1.6 million US workers.
This is what those employees are saying, according to interviews with Business Insider published by AOL:
Workers are discovering the need to spend time training the company’s AI software, supplying context and judgment related to their jobs, which of course AI doesn’t natively possess. Those employees are being assigned tasks and targets by an AI assistant (AI models and other details weren’t disclosed) that appear in their MyWalmart app running on personal device and are intended to help with their daily routine.
For example, a digital assistant could observe their frequent tasks then use that insight to create work assignments. But the system isn’t strong out of the box in recognizing subtle details or complications that arise and therefore needs to be trained further by employees.
One example: stocking shelves requires checking expiration dates and discarding damaged items – those tasks can take a variable amount of time, which AI isn’t strong at recognizing, so its expectations can be out of step with real-world experience. Another risk: AI-directed workflows with prescribed times could push employees to cut corners or skip steps, such as sanitizing shelves or checking for expired products.
A new AI agent that monitors store safety has confused some workers as it learns how to interpret data from security cameras and sensors. The agent can provide a high number of safety alerts but often requires workers to correct information or provide context that AI lacks.
“The technology is there to help them, but they ultimately have the say in what they do,” a company executive said.
Driving impact with AI is also critical to WalMart in today’s challenging retail environment: this week the company said comparable sales at U.S. stores rose 2.6 percent in its most recent quarter, its slowest growth in more than six years.
Retail AI Lessons Learned
Albertsons and WalMart are delivering practical lessons for retailers, their competitors, and AI customers broadly.
Albertsons’ focus on refining its approach from multiple chatbots to one in favor of one to deliver the best customer experience is the kind of learning and adaptation that companies need to be open to and, in Albertsons case, especially as the company approaches two years’ experience with AI.
Its sharp focus on revenue – and direct involvement from financial leadership in its AI strategy – reinforces the point that financial metrics and drivers must be a core part of every discussion or prospective AI project that’s more ambitious than a controlled, small-scale trial.
In WalMart’s case, the company has the unique ability to flex the muscle of a massive employee base in its AI initiatives while its experience reinforces the point that business context — provided by employees — will always be required to get the most value from AI.
More Customer AI Insights:
- Ford’s Engineering Pivot: More Course Correction Than AI Failure
- Stanford AI Report Quantifies Usage by Industries, Functions
- Data Workflows Rank Highest in AI Confidence
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Tom Smith
Analyst
Cloud Wars, Agent and Copilot
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