Retail giant Woolworths is looking to expand its data analytics capabilities by purchasing a controlling stake in AI company Quantium.

Woolworths will increase its shareholdings in Quantium from nearly 50 per cent to 75 per cent at a cost of $223 million.

In a statement to the ASX, CEO of Woolworths Group Brad Banducci said the acquisition will “unlock value” for the company.

“Advanced analytics is key to improving the experiences, ranges and services we provide to our customers and the support we provide to our teams and suppliers,” he said.

“The way we gather data, interpret it, and protect it, is becoming ever more important.”

Once the controlling stake is bought, Quantium will be rolled up into Woolworths under a new business unit called Q-Retail, to be headed by Woolworths’s Chief Analytics Officer, Amitabh Mall.

Quantium will continue its contracts with other industries and clients around the world. Adam Driussi, CEO of the data analytics company, said he was “delighted” by Woolworth’s acquisition.

“This partnership enables Quantium to further build out our retail capabilities while accelerating our vision to be the world’s most respected and impactful data science and AI partner,” he said.

It’s no secret that retailers like Woolworths gather massive amounts of customer data to deliver personalised marketing material.

On the Quantium website, the company describes its ‘personalisation engine’ that gives Woolworths customers “what they want, when they want it” every time they scan their Rewards card.

“When we match a relevant offer, customers are now five times more likely to purchase the product compared to the traditional approach,” Quantium said.

More data more problems

This sort of targeted advertising has sometimes stepped over the ‘creepy line’ with inferences it can make about people based on their shopping habits.

In the US, Target famously worked out it could accurately predict when a woman was pregnant using her shopping data.

For the Target brand it was a valuable discovery because the birth of a child is a moment when shopping habits are forged or reinforced.

“We knew that if we could identify them in their second trimester, there’s a good chance we could capture them for years,” a Target data scientist told the New York Times in 2012.

“As soon as we get them buying diapers from us, they’re going to start buying everything else too.”

A year after Target put in place its system to detect pregnant women, an irate man walked into a Target store because his daughter, who was still in high school, was receiving coupons for baby products.

He thought Target was trying to encourage her to fall pregnant – but it turned out she already was pregnant.

To choose or not to choose

Data analytics in the retail sector also raises questions about consumer choice and whether you’re actually making decisions when you enter supermarkets or are being guided from shelf to shelf by AI designed to give you “what you want, when you want it”.

A 2018 literature review about consumer choice and artificial intelligence notes the potential empowering effects these technologies have for consumers but warns about the need to consider how they might affect our autonomy.

One downside to recommendation systems, the authors note, is the “narrow focus on past choices” which may “force consumers into more predictable patterns of consumption”, perhaps mitigating changes in taste and understand that usually evolve over time.

The authors warn that concerns over autonomy and artificial intelligence might be an overlooked aspect of this evolving technology, "in the same way that a lack of concern for privacy is generally associated with a lack of understanding.”

“The widespread adoption of recommendation systems and the absence of concern over a potential loss of autonomy might reflect consumers’ limited grasp of the stakes.”