Smarter Stocking Through AI
How Albertsons future-proofed its shelves
In the high-frequency, low-margin world of grocery retail, timing is everything. For Albertsons Companies, one of the largest food and drug retailers in the U.S., predicting demand, managing inventory, and optimizing fulfillment were already complex challenges. Then came the pandemic.
Albertsons Companies faced a pressing challenge: modernizing operations and enhancing customer experience in an industry known for thin margins and complex supply chains. Anuj Dhanda, the company's Chief Technology & Transformation Officer, recognized that traditional methods were insufficient. He observed, "Our ability to scale was really important. Not just the website or the mobile app, but the whole ecosystem."
With over 2,200 stores and 20+ well-known brands, Albertsons needed a digital transformation to scale fast, localize intelligence, and preserve the trust built over decades. But the challenge was more than just a migration to cloud or mobile; it was to embed AI and real-time analytics across a fragmented supply chain while millions of customers still depended on in-store consistency.
This resulted in a rearchitected, AI-enabled backbone that helped Albertsons make faster decisions, deliver more personalized experiences, and build resilience from the store floor to the executive dashboard.
The cost of slow cycles
Historically, grocery retailers relied on manual processes and siloed systems. Inventory management was often reactive, leading to overstocked shelves or stockouts. Customer experiences were inconsistent, and personalization was minimal. These limitations hindered the ability to respond swiftly to market changes and customer preferences.
Like many retailers, Albertsons had invested in technology over time, but often in pockets. Legacy systems handled logistics, point-of-sale, loyalty programs, and warehouse management as separate domains. That architecture limited visibility and agility, particularly when the environment demanded minute-by-minute responsiveness.
Store managers made decisions based on limited information, and departments lacked coordination. Most analytics were backward-looking, making it hard to respond to real-time events like demand spikes or delivery disruptions. Loyalty data was abundant but under-leveraged, leading to generic offers and lost customer engagement opportunities. This fragmented approach resulted in inefficiencies and missed opportunities for optimization.
When COVID-19 hit, Albertsons had to pivot overnight, moving to contactless delivery, curbside pickup, and adapting inventory allocation to local volatility: “People were just buying whatever they could. So, we had to scale every aspect of the business very significantly. Our e-commerce business scaled about two to three times within days.”
A stronger stack for smarter stores
Under Anuj’s leadership, Albertsons launched a strategic modernization plan grounded in agility, automation, and AI orchestration. The objective was to digitize and embed artificial intelligence at every layer of the operation, from customer app experience to inventory shelves: “Every aspect of how we run our business has an implication that machine learning could improve,” says Dhanda.
Machine learning models now analyze local buying patterns, weather, promotions, and external events to optimize inventory by store. One significant initiative was the deployment of Afresh Technologies' AI platform across over 2,000 stores. This platform provides real-time recommendations for ordering and inventory management, particularly in the meat and seafood departments, resulting in reduced food waste and improved product availability.
Additionally, Albertsons introduced AI-powered shopping carts through a partnership with retail technology startup Veeve. These smart carts allowed customers to scan items as they shopped, view a running total, and pay directly on the cart, eliminating the need for traditional checkout lines.
Importantly, the team focused not just on technology but on culture, shifting from IT as a service provider to IT as a strategic enabler. Domain-aligned product teams were empowered to make decisions, test hypotheses, and iterate, continuously releasing updates to digital platforms with A/B testing frameworks for mobile, web, and in-store apps.
Results in Motion
Implementing AI automation at Albertsons yielded measurable benefits across operations, customer engagement, and internal velocity. Real-time dashboards help managers reallocate inventory, adjust promotions, and flag anomalies before they impact performance. The Afresh platform significantly reduced food waste and improved inventory accuracy. With improved visibility and simulation tools, teams can proactively manage shortages, weather impacts, and vendor risks.
The smart cart feature enhanced the shopping experience by providing convenience and reducing checkout times. App-based personalized offers and predictive insights have improved redemption rates, reduced churn, and increased digital engagement. These streamlined digital journeys and tailored personalization have led to higher NPS scores and retention, increasing customer satisfaction and loyalty.
Designing for resilience, not just efficiency
Dhanda’s approach underscores the importance of embracing technology to stay competitive in the modern retail landscape. His willingness to challenge traditional practices and adopt cutting-edge solutions serves as a model for other organizations seeking to navigate the complexities of digital transformation.
Albertsons has completely transformed its operations and enhanced customer experiences by integrating AI and partnering with innovative startups. From store managers to marketing leads to fulfillment planners, users can now access actionable data in tools they already use to assist with predictive store performance modeling, real-time inventory algorithms, and assisting shoppers. Each layer of intelligence reduces guesswork, lowers latency, and increases confidence across the network, serving as a blueprint for other companies across the industry.