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Who Won The Week Pt. 1

· 3 min read
Doug Edmonds
Doug Edmonds
CEO

Every week, in the headquarters of grocery supermarkets across the country, the chief merchants and category managers will get together to see who "won the week". How the winner is determined is only part data-driven, relying on a combination of factors; depth of discount vs quality of item. What's missing from this calculation is customer behavior.

In this regular series of blog posts we are going to rectify that by putting our grocery AI model to the test and establish, through data, who won the week based on customer response to the combined set of offers from all1 retailers' promotions that week.

For this topic we will start in the Mid-Atlantic region, the most competitive region for grocery supermarkets in the country. In the Mid-Atlantic states, we chose (arbitrarily) Towson, the county seat of Baltimore County, an upscale community of over 50,000 residents within 2 miles of 11 Grocery Chains. The average household income of Towson is $100k vs $80k nationally - find out more about Towson, MD, on the Data USA Website 2.

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Supermarkets Sampled​

Of the 11 supermarkets within easy reach of Towson, we will be taking publicly-available weekly promotions from these stores:

  • Giant Food
  • Eddies Roland Park
  • Weis Market
  • Graul's Market
  • Safeway Stores
  • The Fresh Market
  • Sprouts Farmers Market

In later weeks we might include Trader Joe's, Aldi and Wholefoods but the pricing and merchandising strategies of these chains is differs from the seven we selected, making any cross-retailer comparisons potentially flawed.

Weekly Ads​

For each of these seven retailers we just used the front page of offers on promo. Below is a composite of the front page of each of the seven, as you can see Giant Food is really packing in the promos on to its front page - we will leave a discussion of promotional density vs readability for another post.

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Who Won?​

We collated the promotions from the front page of these seven banners' weekly ads and ran them through our AI Model. The model simulates purchase decisions from a synthetic audience that has been trained on millions of grocery purchases. The output of the model is a score for how many shoppers would choose that promo in favor of others. Once every shopper has chosen their top item, the model stops running. From a store-wide set of promotions running into the thousands it might only take a few hundred promotions to find the favorite item for every shopper.

Our criteria for winning the week is the retailer for whom more shoppers select an item from their front page compared to the competitors. In our experience this leads to a higher likelihood of winning trips from these shoppers.

For this week we have 400+ front page items - of which about 70 were chosen as top items by our shoppers. When we group the data by retailer we see that Safeway narrowly besting Giant Food with more top items being chosen from Safeway's front page than Giant Food's Weekly Ad.

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Footnotes​

  1. We will choose as many retail banners as makes sense. Pitting Wholefoods against Walmart isnt a fair comparison so we will try and keep to the mid-market high-low banners. ↩

  2. Data USA Website ↩