Why AI Should Be in the Cart of Every Grocer

As grocers look to retain customers while increasing operational efficiencies, the use of AI can enhance several aspects of their business and help mitigate the effects of market volatility. From smarter inventory management to pricing, grocers can use AI to meet changing consumer demands and enhance operational agility. Here are four ways that AI is poised to benefit the industry.
 

Streamlining Inventory Management

While inflation is softening, the price of groceries is not. This is causing consumers to rethink what goes in their baskets in favor of lower-priced, sale or cheaper items – and wreaking havoc on historical buying patterns. By deploying inventory management and intelligence tools, including AI, generative AI and automation, grocers can gain a better understanding of real-time inventory changes and needs to ensure they’re stocking the shelves accordingly.

In the same vein, AI can offer integrated capabilities such as intelligent pricing to support more efficient inventory optimization. This can encompass tasks such as predictive and prescriptive recommendations to adjust promotional and shelf pricing to not only move product, but also to provide more value to customers. 

These responsive and intelligent AI-driven inventory management and merchandising systems will enable grocers to optimize margins while gaining more agility to capitalize on market signals faster.

AI can also streamline investment mix decisions. By analyzing historical data such as sales, inventory and markdowns, AI leverages optimization models to provide retailers with proposals and recommendations for optimal budget allocation.

[Read the complimentary ebook "7 Steps to Make Grocery Stores Profitable"]
 

Increasing Brand Loyalty

Many grocers were early to launch and take vantage of loyalty promotions such as “club cards.” Some have even enabled shoppers to extend discounts beyond the walls of the store in partnerships with gas stations and more. However, most have only scratched the surface of what is possible with the rich customer data they have. As such, many will focus less on adding or adjusting loyalty programs the rest of this year, in favor of optimizing existing programs. Using generative AI tools to analyze existing loyalty program data, grocers can have a 360-degree view of each customer’s buying behavior and make more personalized, timely offers at the optimal time and place. For example, right now many deals are presented within a grocer’s app. But what if the grocer proactively brought those prompts to the customer via text, email or social media on the day of the week the consumer most often shops, along with a special promotion? Or, as with clothing retailers, shoppers were prompted with “bundle” deals? For example, a special deal with cereal and a coupon for milk. These scenarios are not far off as grocers look to foster loyalty to balance margins.  

AI technology allows retailers to dive deeper into customer behavior analysis beyond the traditional hierarchies. Customer-tagged transactions analysis brings valuable insights into what drives customer loyalty. By looking at product and SKU-level attributes, grocers can determine which drives loyalty. A loyalty score for each product attribute provides a comprehensive view of consumer preferences, enhancing engagement.

Decoding Delivery

A Statista survey showed that 39% of U.S. consumers and upwards of 60% of shoppers in India were grocery delivery users. As delivery becomes more prominent, grocers need to navigate both the complexity and high cost of fast, efficient service. Using AI, retailers can better predict and coordinate the best delivery options for customers based on not only their preferences, but also on inventory availability. With more grocers looking to minimize costly warehouses in favor of better using existing stores, AI could trigger fulfillment at a slightly further-away location to move product while still serving customers quickly. 

[Watch on demand "How Grocery Retailer Flink Takes the Fast Lane to Transform Online Business"]

Simplifying Hiring and Retention of Staff

To address labor shortages, grocers can expedite the process by using advancements in AI to find more targeted candidates to consider for employment. By inputting experience and skillsets that they have found in their most successful talent into generative AI tools, grocers can create more targeted job posts for human review and approval. AI can also help current employees by automating mundane tasks just as reviews, freeing up the employees’ time to focus on more high-value projects such as training.

The key to these new AI enhancements across the industry is data. To fully leverage the potential of these new technologies, it’s imperative for grocers to unify their data from various platforms and applications into a singular data foundation. This will enable them to take full advantage of AI and generative AI in their operations to unlock new value, elevate their workforce, optimize their operations and boost the bottom line. 

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