Laggards Beware: The Danger of Not Leading in the Application of AI

The use of artificial intelligence (AI), big data, and machine learning is quickly disrupting grocery marketing, driving significant benefits for retailers and dramatically changing shopper expectations. This was most recently clear given the prevalence of AI at Groceryshop 2024.

AI Drives Innovation at Groceryshop 2024

AI is often touted as an end-all solution across industries and at Groceryshop, conversations regarding AI were unsurprisingly prevalent. But when implemented the right way, AI and other data-driven approaches really can upend traditional grocery marketing and customer engagement.

In addition to AI, here are three of Birdzi’s biggest takeaways from Groceryshop 2024:

Retail Media continues to be a hot topic across grocery retail as CPG brands look for increased spend effectiveness and retailers look to access new incremental marketing funds from brand manufacturers. The challenge here is defining an audience based on purchase behavior. Knowing how to target customers across one or more digital channels, and then deliver the promotion discount at the point of sale is crucial for grocers to succeed today.

Achieving Seamless, Unified Shopping across a variety of digital devices and in-store is still every grocer’s goal. The largest retailers are increasingly cracking the code on this strategy, but retailers of all sizes can make use of their data to provide unified, adaptable experiences that foster true loyalty with customers.

Health & Wellness was a notable omission at Groceryshop 2024, given the increased activity around health & wellness on both social media and in the news. Technology plays a growing role in understanding nutrition and guiding shoppers to beneficial foods and products that align with their health profiles.

With these Groceryshop takeaways in mind, dynamic, forward-thinking executives are quickly creating insurmountable advantages over slower-moving counterparts. This divide is already evident in the grocery industry, and those who lag behind will find themselves forever in the wake of the early AI adopters.

Shoppers Already Expect Data-Driven Personalization, Even If They Don’t Know It

Shoppers have become accustomed to relevancy and personalization in the online world. Visiting Netflix, Amazon, or countless other websites, visitors find that the products or services presented are curated based on past purchases, searches, and browsing habits. Imagine the power of bringing that kind of curated experience to grocery shopping, turbocharging the experience by providing meaningful savings on the products each unique shopper wants to buy in that store visit. The change in shopper experience is transformational, resulting in greater customer satisfaction, engagement and loyalty.

The shopper is now faced with a choice, "I have the option to visit Store A, which offers traditional weekly ads with perhaps a few products on sale that I might want to purchase. Alternatively, I can choose Store B, which consistently provides savings on a wide range of products I frequently buy." The choice is clear.

Picture the ripple effect of positive word-of-mouth as the shopper starts sharing their experience of consistently saving money on their desired products every week with a retailer that genuinely understands their preferences.

Are You Maximizing Your Shopper Universe?

Now, consider the traditional approach that grocery retailers have employed for most of the last century, in which grocers promote a limited selection of products to potential customers within their market region. As the world has become more digital, this weekly ritual of mass sales flyer distribution has transitioned into the digital realm. Frequently, the printed advertisement has been converted into a PDF format, accessible to shoppers through email or the retailer's website.

However, this process has major limitations. Each shopper in the marketplace has their brand preferences, purchase cadence, and regularly purchased items. The retailer simply hopes that at least some of the products featured in their weekly ad will be relevant and align with the purchase intentions of a large enough portion of their shoppers to make the whole endeavor worthwhile. 

The result: Only a small percentage of the total universe of shoppers in the retailer’s market area are drawn to shop because potential customers do not receive the degree of personalization that aligns with their evolving preferences and expectations.

Birdzi: A Customer-Specific Retail Ecosystem

For the first time in retail’s history, AI makes true customer-specific retailing possible. 

Let’s delve deeper into the outcomes and impacts of customer-specific retailing, using Birdzi’s VISPER technology as an example. Birdzi’s data-driven technology can identify which products from a store’s entire catalog are the right products to promote to each shopper.

The process begins with a retailer gaining a true understanding of the shopper's purchase behavior and preferences. These knowledge points are then combined with key metrics that are tracked to objectively measure their level of engagement and loyalty.

Increased Basket Sizes and Higher Profits

Upending brand-driven, mass promotion marketing in favor of a true customer-first philosophy has been proven to pay multiple dividends - for both the retailer and the shopper. No longer does the shopper have to visit multiple stores to save money on sought-after products. Time savings, gasoline savings, and less hassle all come together to powerfully change shopper expectations. Retailers would expect, and do indeed realize, significant gains in basket size and shopping trips. Birdzi has found that basket sizes increase, on average, by 30%, while store visits double and customer retention rates increase by 2.5 times.

Let’s look a little deeper at how shopping behavior changes. Along with basket and shopping trip increases, Birdzi’s customers realize greater shopper engagement in several areas:

1. Retailers have seen a 10% increase in the number of categories shopped, illustrating greater store engagement. A massive increase in digital engagement exemplifies shoppers’ readiness for this level of personalization. 

2. VISPER emails, or 1-1 personalized marketing emails Birdzi customers can send to their shoppers with promotions, have a 62% open rate. In addition, 36% of email recipients activate their personalized offers by loading them right into their digital wallets.

3. 45% of shoppers who activate these offers go on to purchase the featured products and successfully redeem their offers. When Birdzi evaluates the impact of VISPER personalized offers, retailers realize a 37% increase in shoppers visiting the store and redeeming offers. 

More shoppers, spending more, and shopping more often. What more could a retailer want?

Rethinking How "We've Always Done It"

Long-held beliefs and practices often prevent grocers embracing new capabilities. One such belief is that CPG brands and vendors should fund nearly all product discounts. This belief creates a barrier for retailers to provide true, customer-specific savings on the products each shopper wants to buy.

When Birdzi generates unique offers with customized discounts for each shopper, the retailer assumes responsibility for funding those discounts. And that can be a scary scenario for many grocers. Today, the increasing adoption of VISPER among grocers demonstrates that those willing to invest in additional discounting expenses will reap substantial returns. 

We are not suggesting that retailers leave money on the table from their vendors. Instead we suggest that grocers would be well-served to move past the “we’ve always done it this way” approach and brainstorm ways to best implement AI-driven personalization for maximum effect. 

For example, a grocer could shift all its trade and marketing funds into its cost of goods sold, lowering everyday product costs and using the expanded margin to fund personalized discounts for their shoppers. Another approach could be to use hybrid pricing on brand-supported products, showing less of a discount at the shelf on a temporary price reduction item and using the extra funds to help pay for personalized discounts.

Tying It All Together With Meaningful Data and Analytics

Think of Birdzi as an AI-driven Customer Intelligence Platform. In this Platform, a vast amount of data is compiled into sophisticated and extensive profiles of each shopper. That data provides grocers with incomparable shopper insights to help them effectively manage their business. 

The opportunity to mine this data and surface meaningful analytics is endless. For example, if a grocer has health attributes attached to each of its products, it can better meet the health and wellness needs of its shoppers, as outlined earlier. More specifically, if a retailer has a significant diabetic population in its market area, it can develop meaningful product assortments that encourage additional loyalty from the community. These are the types of Health & Wellness benefits that tie into overall industry trends while delivering real value.

In the fiercely competitive world of grocery retail, the implementation of data-driven technology has transitioned from a strategic option to an imperative necessity. AI, big data, and machine learning have ushered in a retail revolution, fundamentally altering the dynamics of the industry, at both this year’s Groceryshop and throughout the years. Grocers who embrace these innovations gain a decisive advantage, enabling them to anticipate customer preferences, streamline operations, and boost profits. 

As the market continues to transform, grocers must act swiftly to implement AI solutions to remain relevant, competitive, and capable of delivering the seamless, personalized shopping experiences that today's discerning customers demand. To delay is to risk falling irreparably behind the curve and becoming nothing more than a part of retail history.