This century has seen the rise of digitization and technology across countless businesses and sectors. While tech companies and online retailers have driven much of this transformation, the past decade has also brought these changes to brick-and-mortar establishments as well.
As such, supermarkets have increasingly turned to digital technology to improve the shopping experience – everything from self-checkout kiosks and electronic shelf labels to smart shopping carts and inventory tracking systems. These innovations have made shopping easier and faster, changing shoppers’ habits and expectations in turn.
Fast forward to 2024 and industries everywhere are being disrupted not just by technology in general, but by AI in particular. Supermarkets are no exception, with AI poised to streamline operations, boost cost efficiency, and improve the shopping experience even further.
According to a research report from Grocery Doppio, AI is expected to add $113 billion in value to the grocery industry by 2025, and 82% of grocers expect AI to be embedded in most, if not all, of their software in the next two years.
This transformation couldn’t have come at a better time, arriving amid rising inflation, labor shortages and supply chain disruptions, all of which are plaguing grocers around the globe. Fortunately, AI is proving itself effective at keeping all of these challenges at bay by optimizing prices, managing inventory and revolutionizing shelf placement of perishables to reduce financial loss and food waste.
Personalization Alleviates Primary Supermarket Challenges
In an increasingly competitive retail market, personalization is the critical factor for effectively engaging with customers and earning their loyalty as repeat patrons.
Personalization leverages data analysis techniques such as purchase history analysis, customer feedback and assessment of browsing behaviors to identify personal shopping patterns. Today’s customers often prioritize price above all else, so the ability to meet the needs of their unique budgets in real time and offer personalized promotions that match individual customer preferences can make or break a supermarket’s ability to retain their shoppers. Research shows that 78% of today’s shoppers are actively seeking the best deals, making personalization crucial for grocers to increase customer satisfaction, boost sales, and stay competitive.
AI can create tailored shopping lists or product deals based around the unique habits of individual repeat customers or families. For instance, an analysis of a customer’s purchase history may reveal their dietary preferences, what days they visit the supermarket each week, whether they respond better to text-message coupons or traditional in-store pamphlets, and much more. Let’s say a supermarket has a promotion on baby products which leads to increased sales. AI can then suggest targeted promotions that bundle these items together to the shoppers who initially engaged with the original promotion. By continuously refining personalized experiences, AI helps supermarkets build stronger relationships with customers and fosters long-term loyalty too.
Dynamic Pricing Transforms Retail Profitability and Sustainability Too
Dynamic Pricing is a relatively new concept in the world of grocery stores. It was introduced to help tackle food waste, and boost profit margins in supermarkets. Now, it is undergoing an AI-driven revolution as more and more retailers have begun implementing this tech solution – it is poised to become even more effective at helping businesses maximize sales potential within retail establishments.
Dynamic pricing with AI allows retailers to optimize price markdowns, maximize profits and reduce waste through enhanced inventory management. The concept is that the prices of goods shouldn’t necessarily be static but rather that by shifting prices around variables that change throughout the year, sales will increase. AI-based dynamic pricing is not so different in practice, but the performance enhancement is radical in terms of speed, efficiency, and overall effectiveness.
AI-based dynamic pricing allows retailers and, specifically, supermarkets to intuitively optimize prices in real-time, responding to factors such as expiration dates alongside demand, competitor pricing, seasons, brand strength, shelf capacity, and much more. It can also optimize the timing and discount rates for fresh products in real-time. At the click of a button, this technology is capable of deciding on its own “what to discount,” “when to discount,” “by how much to discount,” and even “how to fine-tune the initial discounts.”
Simply put, strategic deployment of AI-based pricing makes grocery retailers more profitable and more sustainable. By removing the guesswork from applying markdowns to items in a store, discounts will be determined at the optimal rate to move fresh products before expiration and capitalize on other deals and promotions, significantly reducing food waste and cutting surplus costs.
AI-Driven Shelf Monitoring Enhances Customer Satisfaction
Finally, no matter how “smart” supermarkets become, one thing that will always remain the same is the need for food to be organized and displayed. AI-driven shelf monitoring addresses the critical need to maintain well-stocked and organized shelves.
Supermarkets consistently struggle to ensure that products are always in stock and correctly placed, as out-of-stock or misplaced items can lead to lost sales and dissatisfied customers. AI-supported computer vision technologies can scan shelves continuously to monitor stock levels, product placement, rate of purchase for particular products and more. Store managers subsequently receive detailed reports, which include photos and specific information about items that need to be restocked or moved.
This real-time reporting on the flow of goods enables store managers to address discrepancies and optimize item stocking, ensuring shelves are always well-stocked and organized. These systems also offer actionable insights by analyzing customer traffic patterns and historical sales data. Regardless of their layout, now any grocery store can predict demand surges and suggest the best times for restocking, enhancing operational efficiency.
By automating shelf scanning and reporting, AI shelf monitoring reduces the time employees spend on continuous inventory checking, allowing them to focus on more important tasks. This approach helps improve customer satisfaction by ensuring product availability and organization while also maximizing sales and profitability. Shelf space management is a vital aspect of modern grocery retail operations, and AI makes it better.
Ret(ai)l Therapy
The benefits of AI are revealing themselves across countless industries, and grocery retail is as primed as any sector to reap the rewards.
By leveraging AI, grocers can achieve significant cost savings, boost sales and contribute to a more sustainable and efficient retail environment, allowing them to stay competitive, meet ever-changing consumer demands and foster a more innovative and adaptive business.
With AI in the AI-sles, grocery shopping will be smarter, easier, and more sustainable than ever before.
