Q&A With Rom Kosla: How Technology is Helping Ahold Delhaize USA Companies Adapt to Omnichannel Expectations
Retail business models must adapt to today’s omnichannel consumer, but how do retailers transform their IT business models to meet the needs of modern shoppers?
Grocery retail group Ahold Delhaize USA is investing to transform and expand its IT operations, working to create a data fabric that drives efficiency and enhances the consumer omnichannel experience. Formed in July 2016 from the merger of Ahold and Delhaize Group, Ahold Delhaize USA brands include Food Lion, The GIANT Company, Giant Food, Hannaford and Stop & Shop – the group is also in the final stages of a $480 million investment to transform one of the largest grocery retail supply chains into a self-distributed, efficient, and sustainable model for the future.
To uncover the expected outcomes of this work and the role technology plays, RIS News editor-in-chief Jamie Grill-Goodman sat down with Rom Kosla, EVP, CIO, of Retail Business Services for Ahold Delhaize USA companies, during NRF 2023. In the role for almost two years, Kosla is responsible for delivering IT for Ahold Delhaize USA companies.
The following is an edited transcript of Jamie and Rom’s conversation:
RIS News: Tell me a little bit about your role.
Rom Kosla: This is my first grocery role. My career has been mostly with CPGs. Prior to this, I held a couple CIO roles at PepsiCo for about 14 years, and earlier, I held several technology roles at Nestlé. At Retail Business Services, we provide IT for Ahold Delhaize USA companies from the retail brands to the support companies and the supply chain. I’m accountable for everything from infrastructure, cloud enablement, data, application development, business relationship management, and strategy around how we maximize our investments to advance our companies. Retail Business Services has one of the most holistic IT functions I've seen.
A big part of ADUSA companies’ strategy is tied to digital and digitizing capabilities, and in that space we partner with Peapod Digital Labs. Another core focus for us in IT is around modernizing our platforms to support the companies omnichannel ambitions and what we call the Connected Customer strategy.
RIS: Can you tell me about the time frame for the supply chain transformation, which is a $480 million investment, and what the company hopes to achieve overall?
Kosla: The supply chain transformation to a self-distributed model was a post-merger decision. About half of the supply chain was self-managed and the other half was managed through a third-party. The decision was to in-source the supply chain and really own distribution. So what that means for IT is that as distribution centers (DCs) stand up or transition from a third-party partner, we’re responsible for the stand-up or transfer of assets and technology. We’re also building some new distribution centers, including two new fully automated freezers. At this time, about 90 percent of procured center store volume is self-managed. The remainder of the DC sites will be transitioned or stood up this year. It's been a very positive change. To me, it really transforms the whole business.
RIS: Tell me a little bit more about how you're thinking about technology moving forward.
Kosla: For us, a big part of the future is about implementing modern, scalable systems, while continuing to support each brands’ unique needs. This will include uniting or replacing legacy systems.
As we do this work, we’re also thinking about how we better integrate the systems to help create that larger scale. These types of activities are not easy changes. You can’t flip a switch and go from two to one. But as we think about how we continue to drive value and capabilities a common platform approach is key. It’s going to take some time, but we have a commitment across the business that we need to support this important work – and we’re aligned that we need to move with speed.
RIS: How do you think taking this end-to-end approach and employing new technologies is going to help you?
Kosla: An end-to-end or connected approach is incredibly important. As we pivot to focusing on connected solutions rather than certain areas independently, I believe it’s going to add value in the long term. Let’s use product data as an example.If you’re translating different products, if the information doesn't translate well than you're not going to get it real time and you're going to spend a lot of time trying to interpret and match data. It gets more complex with multiple systems in place.
On the flip side, if we have a common product structure and have a common system in place, we have a much more seamless approach to data and we reduce the cycle time, and this creates new value for the business.
RIS: What is one of the top challenges that Retail Business Services is faced with that you're hoping to overcome?
Kosla: I’m not sure it’s a challenge, but it’s a priority for us in 2023. We’re supporting the business in really getting back to basics. That work, aligned with the move to common, scaled systems, I mentioned, is really about ensuring the business has everything it needs to do what we do best at our core, which is sell groceries. It’s critically important to enabling our brands to serve their customers every day, no matter how they want to shop, whether that’s in stores or online.
RIS: How are the planned investments tapping machine learning and artificial intelligence to get fresher, local products to physical and digital shelves and reduce waste?
Kosla: We’re wrapping up the implementation of an AI-enabled forecast and replenishment solution, we’ve deployed with a partner, RELEX. It’s a cloud-based supply chain planning solution that has shown positive impact so far. It’s a great example of how a modern system has helped move the needle.
As with anything, it requires continuous improvement, especially since the last few years have been unpredictable to say the least. Having a technology that takes the data we have, helps teams interpret it and make better, more informed decisions, that’s a win. And like I’ve said, we’ve seen it help move the needle with inventory positions.
RIS: Tell us a little bit about your plans for the year ahead, how you'll connect in-store e-commerce platforms and create this strong omnichannel value proposition?
Kosla: We’re not going to unlock everything this year, but we are going to focus on the foundational pieces that will unlock omnichannel over time. Here are a couple of examples.
We’ll continue to partner with Peapod Digital Labs to build out our proprietary e-commerce platform, which will expand to additional brands over time so that all brands are ultimately flowing through one platform. Having a proprietary e-commerce platform really differentiates our companies from other grocery businesses.
We’re also embarking on an implementation of a modern, integrated point-of-sale solution that will enable us to make changes as needed without going through a physical install. You can change buttons; you can change orientation. All of that can be done virtually, even in a lane specific area. That level of customization means that we really can start to drive changes much faster. We’re just starting this deployment, but eventually will look to connect that with the e-commerce platform to support the connected omnichannel experience.
[Editor’s note: the company is currently building the POS solution and the first pilot will occur with one of the supermarket brands in the first half of this year.]