For the past several years, the grocery industry has been in the midst of a tech-driven whirlwind—one which has modified the best way retailers operate and interact with customers. Mobile apps connect shoppers with loyalty programs, online ordering, recipe inspiration, and more. In-store technology makes the shopper experience smoother and more efficient. In some ways, the industry looks nothing prefer it did 20 years ago.
AI has a task to play, too, and consumers are enthusiastic about it. Emerging use cases have the potential to rework the best way grocery shopping happens. If shoppers take an image of a recipe they’d like to arrange, AI can generate a digital shopping list for them. Lobyco’s 2024 research found that 70% of shoppers were interested in using AI this manner.
If consumer interest is any indication, we’re sure to see a heightened degree of AI integration in grocery technology over the following few years. But this isn’t all of the technology can do. For grocers, essentially the most powerful application of AI lies in driving personalized engagement with customers. But this use case will not be yet the norm in North America.
Around the globe, grocery retailers have fully embraced AI as a key partner of their engagement strategies. Stores send consumers highly personalized offers and promotions based on their personal shopping profiles. If, as an illustration, a given shopper all the time buys a Weight loss plan Coke with their weekly groceries, they could receive a coupon for a free Weight loss plan Coke during their next visit. Shoppers appreciate and have come to expect this level of personalization, whether of their weekly digital promotions or as prizes from app-based mini games. They feel like their local stores really them and anticipate their individual shopping needs.
For a lot of North American consumers, this reality could also be a piece in progress. That’s because many North American grocers haven’t adopted AI in this manner. They don’t offer personalized promotions like their counterparts across the globe. Moderately, they issue mass coupons—sometimes in printed newspaper inserts or mailers, other times in digital formats—and hope that a select few will resonate with the patrons who receive and pore over them.
Why is the industry like this in North America?
An enormous a part of the personalization puzzle is, in fact, the logistical feat required. While many North American grocers do have already got an amazing deal of anonymized customer data in-house (i.e., aggregate purchase records), they is probably not applying that data in a way that facilitates AI evaluation.
Currently, these grocery teams use manual, inefficient processes to create, update, and share spreadsheets amongst themselves. They might have digital tools at their disposal to assist analyze the information, but not in a meaningful way—not at scale.
Moving forward with AI-driven personalization means creating and embracing a single source of truth; one which lives within the cloud and updates in real time. From there, it’s about vetting and implementing AI and ML solutions that may comb through the information, discover patterns, and create customer niches based on purchasing profiles. For example, a segment could be created for purchasers who exclusively purchase organic items.
With customer segmentation underway, grocery teams then must partner with AI and ML to develop ongoing promotions campaigns that resonate with each segment. This becomes a science; a precision game. Unlike the normal North American couponing model, AI-powered personalization is about quality, not quantity. Retailers may only give each customer five promotions per week, but, because of AI, those promotions are all slam dunks. For many consumers, this is able to be an enormous change, as they could usually review dozens of offers before finding one which aligns with their preferences.
Moving from the “before” to the “after” of AI-powered personalization is an enormous undertaking. Teams might want to learn latest tools, leaders might want to carve out latest workflows, and marketing teams might want to develop customer-facing messaging that transparently communicates how data is now getting used.
Getting the precise technology in place will probably be a sizeable operation for North American grocers. But this isn’t all that’s required to maneuver forward with personalization. What comes next will fundamentally change the best way retailers partner with their suppliers.
To implement AI as the important thing driver of customer promotions, retailers may also must deconstruct their existing promotions strategy.
It’s not unique for grocers to partner with their suppliers on customer promotions. Suppliers clearly have an enormous stake in the sport here; their products are being offered at discounts, and even without spending a dime. What is exclusive, though, is that many North American suppliers are accountable for which items get promoted and when.
Traditionally, when grocery stores issue coupons, they accomplish that based on suppliers’ marketing strategies and initiatives. Products could also be chosen to align with a seasonal marketing campaign, a brand new flavor launch, or a KPI that should be met. Consumers may thoroughly find yourself appreciating the coupons they’re offered, but their preferences should not the highest priority.
That is what must change for AI-powered personalization to work; with latest technology comes latest ways of considering. The identical capabilities that drive customer segmentation (pattern recognition and data evaluation) might be seamlessly applied to drive promotions strategies, too. Grocers can easily learn which products are most favored and when, based on internal and external aspects like weather, upcoming holidays, price elasticity, and more. This intel can directly support promotions strategies, putting consumers squarely in the motive force’s seat.
Though suppliers won’t be directing promotions anymore, they’ll still be winning. Realigning promotions strategies leads to a more efficient, resonant use of resources. Shoppers will only be offered promotions they’re prone to redeem. They may still be encouraged to try latest varieties, flavors, and products, but in a way that’s data-backed and prone to succeed. Suppliers will experience all the advantages of brand name loyalty and marketing, but without wasted resources.
Moving forward with AI-powered personalization will help even large supermarkets instill a small-town feel of their customer engagement. By making customers feel more valued on a person level, North American grocers can do wonders for store loyalty.
This approach has been used around the globe for years, with enormous success. It now comes all the way down to the late adopters. The retailers that adopt AI personalization will quickly outpace people who don’t. It’s only a matter of getting began.
