2020 Grocery Trends: Artificial Intelligence

When we attended the National Retail Federation (NRF) Big Show earlier this year, artificial intelligence, also known as AI, was a major topic of conversation. Every session that discussed the technological advances that were on the horizon for the retail industry included a hefty examination of AI. 

AI holds a lot of promise for the retail industry. From the ability to accurately predict a shopper’s behavior using data from their previous transactions to being able to serve personalized ads to shoppers in-store as they’re wandering the aisles. However, many grocers have been hesitant to make the significant investment, as the technology often requires an outside vendor or technical expert in order to be put to use. 

To stay ahead of the curve, grocers need to have a greater understanding of the world of AI. Today, we’re breaking down this 2020 grocery trend.

 

What you need to know about artificial intelligence in the grocery industry

While AI has been promised as a gamechanger for the entire retail industry, much of the grocery sector hasn’t been quick to implement and adapt to technology, nor push the boundaries of what the tool could be used for. 

One example: AI’s predictive abilities. Grocers have had a tough time throughout the years of predicting the demand for specific products in their inventory, “with forecasts often containing errors ranging from 40 to 60%”. While transactional data can be a good indicator, it may not take into account all of the factors that could influence a shopper’s buying decision. AI has the ability to integrate factors like weather patterns, changes in social climate, and brand perception into predictive forecasts to give grocers a better idea of what they need to stock up on, and which products can be left off of the next purchasing order.

 

How grocers are using AI

The most-talked about use of AI in grocery lies with Amazon Go, a series of concept stores that use artificial intelligence to allow customers to pick items up off the shelves and walk out of the store without the traditional process of queuing, scanning, and bagging. The customer’s Amazon account is charged for the total of their purchase, and they experience a completely frictionless shopping experience, all thanks to AI. This concept was quickly picked up by grocers like H-E-B and Kroger.

In other grocery AI news, Ahold Delhaize announced a partnership with the Innovation Center for Artificial Intelligence, which would allow them to “make product recommendations to consumers and manage goods flows and optimize the supply chain”.

Other notable uses of AI in grocery:

 

Pros and cons of artificial intelligence in grocery

Artificial intelligence holds a lot of promise for every industry, but particularly for retail, and, even more specifically, for grocery. However, like every 2020 trend, it has its pros and cons.

Many of the benefits of AI are specific to to the grocer, including increased data collection on customer behavior, preferences, and influencing factors. This data can inform grocers on their inventory decisions, as well as marketing messages and discounts. These benefits can also be passed on to the consumer, with more targeted specials.

Artificial intelligence could change the way grocery retail runs, but for it to have a major impact it would require a major technology investment from the grocers. As artificial intelligence becomes more widespread, costs may subside, but for now grocers who want to get in on the trend must set aside significant funds. 

An additional downside of artificial intelligence could be the tendency for technology to replace grocers’ focus on person-to-person interaction, which is at the heart of a successful grocery experience.

As you look ahead to 2020, artificial intelligence may be on your wish list for innovation in your store. Consider the successful use cases that already exist in the grocery space, along with the aforementioned pros and cons, and you’ll be able to make the correct decision for your business and your customers.