ALM using AI to improve promotional campaign success
Metcash has implemented Complexica's artificial intelligence (AI)-powered Promotional Campaign Manager (PCM) to bring a little more ‘smarts’ to its promotional and retailer profitability.
Phase one is complete, after the agreement was signed last year, within Metcash’s liquor division, Australian Liquor Marketers (ALM), which operates out of 15 distribution centres in Australia and New Zealand. In July, Complexica and ALM will kick off phase two of the project, which will introduce advanced prediction and optimisation capabilities into the deployed system.
Complexica's PCM provides functionality for planning and analysing retail promotional campaigns, as well as predicting and optimising their effectiveness. Powered by Complexica’s Artificial Intelligence engine, Larry the Digital Analyst, PCM uses internal and external data to provide practical decision support for promotional activities.
General manager of merchandising at ALM, Joel Zamek, told CMO the project was born out of the need to improve its retail promotions offering.
“Within ALM is a component of the business called Independent Brands Australia, and we run all the promotional programs for about 1500 retailers. This was really about improving our offer and making some fact-based decisions,” he said. "We previously used gut feel and retailer input to make decisions around promotions, so it was about bringing some smarts into that space to improve our retailer profitability."
Prior to phase one, ALM was not using any technology of this task, rather, it was using spreadsheets, which was time consuming and error-prone. Phase one involved streamlining and removing spreadsheets to improve workflow. Phase two will involve integrating data feeds and implementation of the AI. The task has involved about six months of pre-work and PCM has been running for about six months.
As well as error rates going down significantly, Zamek said the team is involved in less labour-intensive work. In addition, promotions are easily trackable and managed in one piece of software.
"It’s streamlined everything and brought in great accountability to the teams,” Zamek said. “Next, we will be optimising promotional programs, engaging with states and retailers, taking feedback and manipulating programs from there. The AI will bring some fact-based and real time data to it so we can better predict. We have previously been guilty of spending a lot of time looking back in our business. We want to look forward."
Already, ALM has deployed seven people out of its team onto other projects, "a valuable resource now going into other parts of the business, with retailer dollar optimisation results", Zamek continued. “With any tech, we want it to enhance what we do, not replace people. This tool is going to free people up to make better decisions.”
Zamek was particularly appreciative of how Complexica made an effort to understand the ALM business and tailor the solution to suit. The next phase of work will allow ALM to build promotional programs using advanced prediction and optimisation algorithms, aimed at ensuring the best possible outcomes for retailers.
“We looked at various tools, but a lot didn’t have the ability to tailor into our business, but Complexica did," he explained.
“In the next five years, it will become table stakes to use this kind of technology. If you’ re not setting up your business to operate in this way, you’ll be left behind. A lot of businesses in this highly competitive area don’t operate as technically as they could. We know, as more innovation enters the market, we’ll get left behind if we don’t keep up."
With annual revenues in excess of $3.4 billion, ALM is Australia’s largest broad-range liquor wholesaler, supplying over 12,000 liquor-licensed premises throughout Australia. ALM supports more than 2700 independently owned stores operating under the IBA banner group. Well-known IBA brands include Cellarbrations, the Bottle-O, IGA Liquor, Thirsty Camel and Porters Liquor.
Complexica aims to replace spreadsheets with a cloud-based system that provides multi-user access to centralised slotting boards, forward plans and dashboard analytics. It also offers predictive capabilities to forecast and measure the value of plans based on volume, revenue and margin; optimisation capabilities to produce optimised promotional plans based on a variety of constraints and objectives; and automate data loading, handling and manipulation.
"PCM is used by ALM to centralise and automate a wide variety of complex analytical tasks associated with the process of building effective promotional campaigns for more than 2700 retail stores," said Complexica director of strategic accounts and customer success, Mike Costa.
PCM interfaces with ALM’s internal systems, so that staff can build promotional campaigns and pricing on a product, product group, and region level. The deployment of phase two functionality will enable the business to create optimised plans and prioritise their promotional banner store activities."
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