The grocery sector is primed to benefit significantly from the opportunity that AI presents, both for retailers and shoppers alike. Grocery stores have voluminous catalogs and their many products have a wide range of attributes. Whether it’s ground beef, canned goods or frozen food, the distinctions inherent in these very dissimilar categories must be handled differently.
It’s no wonder that food retailers are taking a close look at AI-powered personalization. For example, Loblaw, which operates 2,455 stores in Canada, has already made a foray into AI-powered personalization, according to its division head Lauren Steinberg. This is not surprising considering the business’ big online shopping push, powered by its team of 700 Loblaw Digital employees who are focused on bringing in billions of dollars in ecommerce revenue annually.
So what benefits does AI offer to grocers? And can lean teams — not just the established digital behemoths like Loblaw — effectively leverage the AI experience advantage to facilitate a synergistic relationship between brands and grocery shoppers?
How AI is Reshaping Product Discovery in Commerce
With many assuming that AI’s role in commerce will only grow in significance and positive impact, grocers are in a strong position to benefit from AI investments and partnerships. The latest AI models have grown more sophisticated. Commerce features have become more powerful, with increasing precision and the ability to seamlessly optimize product rankings for revenue per visit, profitability or other business objectives while balancing relevance and meeting the needs of the shopper. Beyond simply layering business rules on top of AI, retailers across sectors are becoming more effective at using AI to scale and maximize the outcomes they care about without impacting the shopper experience.
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Balance is Critical: AI Should Benefit Both Grocers and Shoppers
When it comes to revenue and profit optimization, the grocery sector is challenged not only with slim profit margins but also the need for its products to be accessible to a wide variety of customers, despite economic fluctuations. Due to these nuances, grocery brands should ensure that they are not solely focused on margins, but rather on the full shopping experience, and providing efficiencies for the customer that will ultimately lead to profitability.
To achieve a best-of-both-worlds balance, new AI algorithms that optimize experience and business KPIs are currently being tested in the grocery sector. Considerations in the grocery-specific setting may include predicting the likelihood that a shopper will buy a particular item based on their history and preferences. These probabilities and outcomes are key to gaining deeper understanding of customer needs and designing more AI algorithms that optimize listing pages, search recommendations and product sequencing accordingly.
Tips for AI Success in the Grocery Sector
The precision and personalization that AI brings to the grocery industry should not only facilitate money-saving deals and offers for shoppers but also simultaneously safeguard the store’s brand health and business goals. Grocers considering layering AI into their digital experiences should:
- Understand how AI tech can benefit grocery shoppers today: Now that AI has been around for some time, there are many learnings for its role in search, recommendations, and now, generative answering. So, first and foremost, gain a deep understanding of what the latest AI-led capabilities and tools are offering with regard to shopper experience enhancements. For instance, an advanced AI platform can provide a new level of personalization to grocery shoppers, toggling between their specific brand preferences and presenting offers based on their shopping behavior patterns. This will also help avoid irrelevant offers and faux pas such as serving up beef coupons to a vegan.
- Design an AI strategy around leveraging cyclicity: When it comes to groceries, routines often dictate the staple items that customers buy regularly. Shoppers can have a tendency to simply duplicate their grocery shopping list week after week, which can be a challenge in terms of exposing customers to new and exciting products; however, the pre-populated list from prior weeks can also be a helpful source of data for AI in generating savvy product recommendations and deals that are based on real probabilities.
- Get creative with rich content strategies using GenAI: AI, particularly GenAI, holds significant potential for creating rich content and amplifying shopper engagement. For instance, shoppers may want recipe ideas that use ingredients already in their cart or avoid allergens – say almond butter and brown sugar. Vice versa, shoppers may want to see what ingredients are missing from their cart in order to follow a particular recipe. The way that AI can seamlessly manage these complex requests to generate new ideas is advancing product discovery, leading to larger basket sizes while increasing shopper satisfaction.
With the right AI technology, grocery brands can scale shoppers’ ever-changing and evolving expectations to meet business goals without an overreliance on price increases by focusing on high-quality relevant experiences.
Sergio Iacobucci is the Senior Director of Commerce Marketing at Coveo, a leading provider of enterprise AI platforms that enable individualized, connected and trusted digital experiences at scale with semantic search, AI recommendations and GenAI answering. Over his 10-year career in commerce, he has advised some of the largest brands in the world. In his current role, Iacobucci spends his time keeping up to date on the latest trends and educating the market on how to boost KPIs.
