AI in Grocery Session Recap: Turn Your Assortment Into Your Greatest Asset

The future of grocery retail is rapidly evolving with the integration of artificial intelligence (AI) technologies. To delve into the potential of AI in revolutionizing the grocery industry, a thought-provoking panel discussion titled "Turn Your Assortment Into Your Greatest Asset" was recently held as part of Grocery Doppio’s "AI in Grocery" virtual event. The panel brought together esteemed industry leaders who shed light on how AI can empower grocers to curate exceptional assortments that meet customer demands and captivate shoppers with exciting discoveries.

Moderated by Tim Denman, chief editor of Grocery Doppio, the panel featured notable figures in the grocery realm. Kirk Ball, EVP and CIO at Giant Eagle, joined the discussion, leveraging his expertise in driving Giant Eagle's IT solutions and fostering innovation. Accompanying him was Suzy Monford, CEO of Food Sport International, renowned for her exceptional leadership in the grocery sector, having held high-ranking positions at prominent grocery chains such as Kroger, HEB, and QFC. With their vast experience and profound industry insights, Kirk and Suzy provided invaluable perspectives on leveraging AI-powered merchandising to set grocers apart from the competition. 

Below, we will explore some highlights of the panel discussion, uncovering how AI can optimize grocery assortments for enhanced omnichannel experiences and profound customer satisfaction. 

Merchandising stands out as a prime area for AI innovation in the grocery industry. According to Grocery Doppio’s ‘Impact of AI in Grocery’ report, 81% of surveyed professionals recognize merchandising as a high-impact AI use case. Adopting AI-powered merchandising capabilities is predicted to contribute nearly $21.2 billion in value to the industry by 2025. Research further highlights pricing and promotions, assortment optimization, and planogram optimization as the most promising areas. 

Ball mentioned how by leveraging AI, grocers can analyze vast amounts of data across the enterprise to personalize the shopping experience and tailor assortments on a store-by-store basis. By understanding buying patterns and customer preferences unique to each location, grocers can create optimized assortments that cater to the specific needs of local clientele. This is where the magic happens.

AI unlocks immense potential for the grocery industry, transforming merchandising and operations. By harnessing the power of data, AI enables retailers to bring their merchandising vision to life and tailor assortments to individual stores and geographic locations. The possibilities are endless, with AI algorithms scaling human expertise and leveraging generative AI for creative solutions. Moreover, AI facilitates the detection of changing patterns in customer behavior, reducing the time it takes to adapt assortments accordingly. While digital grocery shopping provides valuable customer insights, brick-and-mortar stores remain the backbone of the industry. 

Monford highlighted the use of electronic shelf labels, an AI-enabled technology that captures data directly from the shelves, offering insights into shopper behavior and facilitating assortment decisions. The integration of AI in merchandising and operations is revolutionizing the grocery industry's approach to data-driven decision-making. She further threw light on the power of combining electronic shelf labels (ESL) with computer vision cameras to capture and analyze a wealth of data in real time. This integration enables retailers to track stock availability, observe customer selection processes, and analyze pricing and promotional effectiveness. AI-powered algorithms provide insights into shopper behavior, allowing retailers to make data-driven decisions on assortment, pricing, and replenishment. 

During the panel, the question was raised on data quantity versus relevance for understanding meaningful patterns in shopper behavior. Ball emphasized that while more data is generally better, its structure, cleansing, and association with other data are crucial. Understanding traffic patterns, dwell times, and purchase information helps identify areas of high sales potential and optimize digital traffic patterns. Ball also mentioned the use of computer vision for inventory analysis and highlighted the importance of data association and algorithm utilization for effective AI implementation. 

Monford envisioned a scenario where electronic shelf labels, shelf cameras, and digital rails with AI capabilities are integrated to provide real-time data feeds to customers through retailer apps. AI algorithms trained on vast amounts of data can personalize the shopping experience, offering customized recommendations and promotions based on individual preferences and nutritional needs. This creates a guided shopping trip similar to the online experience, enhancing customer satisfaction and value. Ball emphasized that leveraging AI-driven data improve assortment planning and helps optimize pricing, promotions, and store layouts. The sheer volume of data requires AI's computational power to uncover patterns and associations that would be challenging for humans to process manually.

Ball and Monford discussed the importance of humans being in the loop and working alongside AI rather than being replaced by it. They believe that AI is an accelerant that helps scale human intelligence and enables individuals to become superhuman in their roles. While AI can provide powerful tools and insights, it is still not mature enough to completely replace human decision-making and expertise. They also addressed concerns about job threats and upskilling by highlighting that AI is a saving grace for the grocery industry. With labor constraints and limited time for training and development, AI and data-enabled tools can help alleviate these challenges and enable better training and development of team members. By using AI to streamline processes, improve merchandising, optimize supply chain, and enhance sustainability, grocery retailers can attract and retain top talent.

Ball and Monford agreed that assortment should vary depending on the specific store and its customer base. While some stores may have an excess of assortment with too many options, others may prioritize a wide variety of choices based on customer preferences. They explained that AI and AI-enabled tools play a crucial role in understanding customer preferences and helping retailers make informed decisions about assortment. By utilizing electronic shelf labels, shelf cameras, and other AI tools, retailers can gather real-time data and insights that bring them closer to the customer. This enables them to understand customer choices, preferences, and buying patterns more effectively.

The integration of short-loop science, which includes real-time data such as current purchases and online browsing behavior, along with long-loop science, which encompasses historical purchase patterns, allows retailers to identify and analyze patterns they may have previously missed. This combination of data sources helps retailers make more accurate assessments of customer tastes and preferences and adjust their assortment accordingly.

Ball and Monford suggested grocers demonstrate AI's potential ROI by delivering quick wins in areas like space planning and gradually expanding to pricing, promotion, and assortment optimization. They highlighted the importance of showcasing value early on to gain support for larger AI projects. They also mentioned leveraging AI to establish collaboration with suppliers for improved forecasting and supply chain efficiency. Overall, AI's ability to uncover previously unseen patterns across the entire business ecosystem offers significant opportunities for optimization in the grocery industry.

To put AI initiatives into motion within the next 90 days, grocers should start by conducting research and reaching out to companies that offer relevant AI technologies. Consider conducting a formal or informal RFP process to gather information and identify potential partners. Select a proof of concept store where you can test and learn with the right leadership in place. Don't hesitate to explore startups and partnerships with venture capitalists or private equity firms. Start with less complex areas such as marketing, leveraging AI for content creation and campaign acceleration. Gradually expand into more advanced areas like assortment optimization while keeping the human element involved.