On the fifth episode of Enterprise Software Innovators, hosts Evan Reiser (Abnormal Security) and Saam Motamedi (Greylock Partners) talk with Anuj Dhanda, CIO of Albertsons Companies. As the second largest supermarket chain in the United States, Albertsons is responsible for helping feed much of the country. Anuj discusses the challenges Albertsons faced in the wake of the pandemic, the various next-generation technologies being used to drive the future of grocery, and the thought process behind when Albertsons partners with startups.
Quick hits from Anuj:
On Albertsons deploying machine learning: “Every aspect of how we run our business has an implication [that] machine learning could improve. [Beyond] demand forecasting and replenishment, [how about] when we think about how we staff our stores, the slot management for e-commerce…How do we fulfill those slots? How do we better predict the specific needs of the customer and to be able to match the offers to them? We think there is a big opportunity as we mature both the machine learning as well as a higher level of base automation in the system.”
On being more customer centric and agile: “From an e-commerce perspective, pre-COVID grocery was lagging other industries. And that has certainly increased at a very fast clip…Our view is that customers will decide what works best for them. Some people like to buy their produce in the store and love the theater of looking at the produce…Some people say, ‘hey, if someone can deliver it, that's great for me.’ Some will do different combinations. Our intent through all this is to be able to meet the customer when she's ready and in a way that she wants to shop…And what we find is that even customers who shop online, many of them go to the store, too. If you give the optionality to the customer, we can personalize this experience in a way that works for her, that would be the winning strategy for the customer and us.”
On working with startups: “If you talked to me five years ago, I would have said we generally tend to work with industrial strength companies because we have big [scaling needs. And I have fundamentally changed that [perspective]...because with the cloud, scalability for a small company is not an issue…That has democratized how we access [and partner with] startups.”
Recent book recommendation: Benjamin Franklin: An American Life by Walter Isaacson
Evan: Hi there and welcome to Enterprise Software Innovators, a show where top tech executives share how they innovate at scale. Each episode covers unique insights and stories that will help you succeed as a technology leader. I’m Evan Reiser, the CEO and Founder of Abnormal Security.
Saam: And I’m Saam Motamedi, a general partner at Greylock Partners.
Evan: Today on the show, we’re bringing you a conversation with Anuj Dhanda, Chief Information Officer at Albertsons Companies, which includes well known brands like Safeway, Lucky, and Vons. He’s been a CIO for over 20 years, and previously held the role at the supermarket chain Giant Eagle and PNC Bank.
Saam: In this conversation, Anuj shares why it now makes more sense to partner with startups, how Albertsons gained market share during the pandemic, and what’s next in grocery.
Evan: One thing that I find really unique about the grocery industry is that you’re selling perishable products, which adds this whole other layer of complexity and sophistication when it comes to technology. How do you think about that at Albertsons?
Anuj: If you have too much, you would waste. If you have too little, you’re out of stock and you've disappointed the customer. So it's really important to get it right and get it right in a way that really works for the customer.
Evan: That makes sense. I think when people think about the most sophisticated machine learning organizations, right, they may not think about grocery. Do you mind sharing just kind of some of the ways that you guys apply things like machine learning to drive innovation and to deliver that better customer experience?
Anuj: Exactly. And also it's very localized. So if Oregon is having a heatwave, we might have implications for what we would sell there versus Texas might be different and that yet might be different than Boston or Chicago. So even the local football game makes a difference to the demand. Local weather conditions make a difference.
And of course, local preferences. Every aspect of how we run our business has an implication machine learning could improve. So we talked about demand forecasting and replenishment, but when we think about how we staff our stores, the slot management for e-commerce, how do we fulfill on those slots? How we better predict the specific needs of the customer and to be able to match the offers to them?
Now, in some cases, the lift is significant that you want to prioritize and make that investment. And in some cases, you'd say, hey, it's marginal. But we think there is a big opportunity as we mature both the - for machine learning as well as there is a higher level of base automation in the system.
Saam: So let's rewind the clock to March 2020, the onset of the pandemic here in the US. How did you and your team start transforming the Albertson's footprint for a COVID world?
Anuj: The first thing, you know, as you could imagine, as this happened is to say, hey, how would we support thousands of employees who were going to work, have them work remotely?
We weren’t unique in that need. The two other things that were, I think, more unique to us is all the supply chain disruption. But I'll tell you our business model at Albertsons, what we call nationally strong and locally great, really paid rich dividends because our supply chains were very local. There was a lot of local sourcing for chicken, for different things, which was far more resilient. And as the, some of the supplies to the restaurants got disrupted, we were able to step in and take the supply.
Also the other thing unique about Albertsons is we have lots of butcher shops in our stores. So we - we provide a lot of these customized services to our customers. So that really helped. We took some restaurant supplies and we were able to convert it into a consumer supply, which if you didn't have a butcher shop, you wouldn't be able to do.
And the third was the businesses spiked. Every aspect of the business, people were just buying whatever they could buy. So we had to scale very significantly, like our e-commerce business scaled about two to three X order of magnitude within days or - and weeks.
So our ability to scale was really important. And scaling the whole ecosystem, not just the website or the mobile app, but all the whole ecosystem.
Saam: So you mentioned your e-commerce business scaled an order of magnitude almost overnight. What were some of the challenges from a technology and infrastructure perspective that you faced?
Anuj: I think, given that our digital business was already in the cloud, that was a huge help. But really these - the bigger impact on scaling also was not just tech, but also the whole fulfillment of those orders. You know, somebody's got to go pick that order. We have to have labor to pick that, somebody's got to kind of put it in your car or deliver it.
And then the ability to service. So if you do that many orders, people call that much more often and say, what about a particular item or substitutes? So the whole ecosystem had to scale.
Saam: So how did you enable that scaling, and what do you hope persists post-COVID?
Anuj: First thing I'd say is agility was enterprise, not just tech. Tech was a huge enabler. We were a big part of it, but it was really the enterprise. And in this agile journey one lesson you learn again and again is you gotta make enterprise decisions so business and tech and product have to be like one.
There is no air gap between the three, that showed up in spades. Second I would say is being in the cloud also paid very rich dividends. So like when we had to do the COVID vaccination solution, I think it was three weeks from start to finish, when the team said, this is what we want and when we had our first thing live, because we didn't have time to you know, do the usual process. And so we had to learn. My CEO says that we messed with the DNA. And it is true.
Saam: Absolutely. And it's one of these examples of an external kind of crisis - turning that into an opportunity and, and using that to transform the way you take risk and, and move with agility.
Anuj: Look, the grocery business across the country expanded. But what I will tell you, we are very proud of is in that time period, we also took market share, which suggested that we were doing things in a way and demonstrating to customers that we could supply their needs in a more customer-centric way as well as in a way that worked for them. So the lessons learned is both how we work internally, but how we kind of connect with the customer. And those are the things we are really investing behind in a very significant way.
Evan: So it seems like the way that people buy groceries has changed more in the last three years than in the previous three decades. I know Albertsons has partnerships with DoorDash and Uber - how are you thinking about e-commerce options when it comes to grocery?
Anuj: So first I'd start by saying that from a e-commerce perspective, grocery was - pre-COVID was lagging other industries. We had a small base as an industry.
And that has certainly increased at a very fast clip, but still, I think we have lots of room to grow. Our view is that customers will decide what works best for them. Some people like to buy their produce in the store and love the theater of looking at the produce, looking at the butcher block and seeing what they want.
What kind of steak, what kind of cut. Some people say, hey, if someone can deliver it, that's great for me, someone says, hey, I want to be in control. I’ll order. I'll go pick it up. Some will do different combinations. So what our intent through all this is to be able to meet the customer when she's ready and in a way that she wants to shop.
And what we find is that even customers who shop online, many of them go to the store, too. If you give the optionality to the customer, can personalize this experience in a way that works for her, that would be the winning strategy for the customer and us.
Evan: So what new innovations can we look forward to in the grocery space?
Anuj: There are things that we are implementing and scaling and using. Then there are things that we're working on and then things we are incubating. The part on robotics, for example, I would say is in the middle column, in my mind there is bunch of robotics that we do in our distribution centers which look like almost like Star Wars.
And it's hugely efficient and adds value and we’re learning and scaling. We're doing micro fulfillment store - in some stores for e-commerce to say, how do we accelerate the picking there? But when we think about the cognitive sciences and vision and you know, smart cart, we're doing a bunch of pilots right now, learning.
And there are different types of technologies like scan and pay, where you could use your phone to do it.
But each one has to get connected to a customer need. And a way that we solve that particular need. So scan and pay may not work if you want to buy 50 items, it's maybe a little more onerous. For that we want, you know, a different type of solution.
Evan: What are some of the ways you use data that are unique to your industry?
Anuj: So I'm going to use a word which I generally never liked to use, which is to say it's a journey. The precision of the data is expanding very, very significantly. Because now for any particular product, you want to know a lot about the product, not just what it is. You want to know the attributes. You want to know the health attributes. You want to know the provenance of that product and that's all data, so when someone says, hey, do you have SKU-level data?
Of course. But it's what level of degree that you have. That's what will unfold more and more of the magic. How current the data is, we used to say, hey, if we have monthly data, customer preferences don't change in shopping, so if we use last month's data, we’ll be pretty good. Then we said, no, maybe weekly then daily right now we're saying, hey, can we say in the moment what would change?
I think as we step up each function there are many unlocks and the efficacy of data continues to improve. We in fact, partnered with Snowflake early on. They've been a great partner as we are building this whole - our enterprise data platform which is message-enabled and then really lends itself for machine learning and modeling and training models.
And so we're doing some work with Google, so lots of great partnerships, great learning. We are very excited about the opportunities, I have to tell you.
Evan: So Anuj, how do you decide when to innovate internally, versus when to collaborate with other partners? Like, how do you strike the balance between, you know, when you buy, when you build, and when you partner?
Anuj: Our general thinking would be as follows: closest to the customer, we want to innovate and own and build that experience as much as we can. And the furthest away from customer, we would say buy, get scale and leverage technology to provide the most efficient, fast platform.
So if you were looking at let's say HR, we would not think about building our own - our own general ledger, but when it comes to the - close to the customer, the app, we would like to have our own, right? So that's the broad state. And then in between what we say is where are we leading the pack? Where would we differentiate?
Where would we see an opportunity to make a real difference? And then we would go sometimes and build. And even when we build, there are many, many tools, and this is again, another value of the cloud part is this whole platform as a service, that has changed the game. So that lots of services we can use, like even the cognitive services, we don't need to start from scratch and say, hey, can I build computer vision?
You get that as a service. Now you’re going to say, how do I use it? How do I train the model how - lots of work to do, but the core science of it, you are really buying.
And the last thing I would say is if you talked to me five years ago, I would have said, hey, we generally tend to work with industrial strength companies because we have big scale.
And we want to make sure that when we roll out something, it can scale and be secure and you know, all those things. So we would default to large companies. Fundamentally changed that. I think, in my opinion, at least, what has fundamentally changed is cloud because with cloud, scalability is, for a small company, not an issue.
Because scalability of a Azure is coming, or a GCP, is standing behind a startup. The security is not an issue because no, again, within reason we have to kind of make sure it is designed right. But those things, which used to be big concerns are not concerns as much. So that has really in a huge way, democratized how we access smaller companies or startup companies.
Evan: Wow, that’s really interesting. Okay, so now Saam is going to kick off a lightning round of questions.
Saam: What should be the number one thing every new CIO thinks about and tries to get done when they join a new company?
Anuj: Build business relationships and get to know the enterprise and really make technology core to the business.
Evan: And on the flip side of that, what is the biggest mistake a CIO can make?
Anuj: Start believing that technology is the only answer and works in isolation. Technology with people is the answer.
Saam: How do you measure the performance of a CIO?
Anuj: The impact that technology has at scale, that I think is the ultimate test.
Evan: How do you think the role of the CIO changes over the next, you know, five or 10 years?
Anuj: Becomes more central, more critical, but also the expectations change. So not a support function, not a staff function, but really a business function and CIOs own more accountability to deliver at scale, own the business. And the historical lines that we used to have between business and technology get more blurred and CIOs have to be able to work in that blurred line and not look for clear boundaries.
Evan: That makes sense.
Saam: Anuj, we like to end the lightning round with a personal question. What's a book you've read recently that's had a big impact on you and why?
Anuj: I just finished a book, a biography of Benjamin Franklin. It's a fascinating book and the reason I was so enamored and so got engrossed with the book is he brought innovation when - without any formal education for the innovation, but was a public servant and also was so human.
You know, I love biographies. It's something we can also admire that people while - whether it was Lincoln who was so human and yet so great. And so bold.
Evan: Absolutely. Hey Anuj, thank you so much for taking the time to speak with us today.
Anuj: This was a blast, thanks.
Saam: Thanks, Anuj.
Saam: That was Anuj Dhanda, Chief Information Officer at Albertsons Companies. Thanks for listening to the Enterprise Software Innovators podcast. I’m Saam Motamedi, a general partner at Greylock Partners.
Evan: And I’m Evan Reiser, the Founder and CEO of Abnormal Security. Please be sure to subscribe, so you never miss an episode! You can find more great lessons from tech leaders and other enterprise software experts at enterprisesoftware.blog.
Saam: This show is produced by Luke Reiser, Josh Meer, and Emily Shaw, and mixed by Veronica Simonetti. See you next time!