Harps Foods improves its promotional effectiveness and enhances profitability.
Harps Food Stores, Inc., based in Springdale, Arkansas, is a chain of 87 supermarkets located across Arkansas, Oklahoma, Missouri, and Kansas. Harps is the largest employee-owned company in Arkansas and the 30th largest in the United States.
With an increasingly competitive landscape, and the grocery category’s already notoriously thin margins, merchandisers and marketers know there is virtually zero room for mistakes or bad decisions when it comes to promotions and pricing.
Despite this unforgiving environment, most grocers have, until very recently, tended to make promotional decisions based mainly on the 3 things: the amount of available vendor marketing fees; history and tradition; and “gut instinct.” This is understandable since measuring grocery and retail data is a highly complex and labor-intensive endeavor.
The changing and dynamic relationships between products and customers, in addition to the effects of pricing and promotions, make understanding and leveraging all this data a “humanly impossible” task.1
Promotion decisions are further complicated by ripple effects, including cannibalization and forward-buying. For example, putting “brand A” of soda on promotion may increase sales of related products, such as salty snacks. But it’s also likely to cannibalize “brand B” of soda sales for that week and probably next week’s soda brand A sales, due to forward-buying.
Promotional Product Selection
Daisy’s A.I. enables us to analyze Harp’s transactional data on a giant scale, and as a result, this significant improvement in promotional effectiveness supports our ability to meet the needs of our shoppers by keeping our prices competitive and enhancing our profitability.
DAVID GANOUNG | VP MARKETING, HARPS
In 2016, Harps decided to deploy A.I. to improve and optimize its chain-wide pricing and promotional efforts. Citing the weekly print circular as its largest advertising expense, Harps looked to Daisy to help analyze its data to “review which products should be featured in its frequent circulars.”2
With Daisy’s help,, Harps analyzed years of transactional data and then simulated a mix of previously known, new, and, untried actions to find the many different ways a promotional decision may unfold. This enabled Harps to determine an optimal sequence of actions that would help it achieve the best long-term results.
Artificial intelligence creates a model of the retail environment that connects a retailer’s actions (promotions, prices, inventory, purchasing, real estate) to market results while factoring in the “ripple effects” caused by these actions. This allows A.I. to evaluate future outcomes, even if there is no historical precedent. In effect, A.I. can simulate the future.
Daisy’s A.I. enabled Harps’ merchandising and marketing personnel to rapidly analyze transactional data on a massive scale and simulate potential strategies, ultimately “supercharging” the process by which it makes promotional planning and pricing decisions. As a result, Harps uses A.I. to improve promotional effectiveness, meet the needs of shoppers by keeping prices competitive and increase revenue without added margin.
INCREASE TOPLINE SALES
Growth to total topline sales.
DAISY IS THE FIRST COMPANY TO USE THE POWER OF A.I. TO SOLVE RETAIL PROMOTION CHALLENGES.
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