The grocery industry has been in a technology-oriented whirlwind for the past few years – a way that has changed the way retailers operate and interact with their customers. The mobile app connects shoppers to loyalty programs, online ordering, recipe inspiration, and more. In-store technology makes the customer experience smoother and more efficient. In many ways, the industry doesn’t look like the ones 20 years ago.
AI also has role-playing, and consumers are excited about it. Emerging use cases have the potential to change the way grocery shopping is. If shoppers take pictures of the recipes they want to prepare, AI can generate digital shopping lists for them. Lobyco’s 2024 study found that 70% of shoppers are interested in using AI.
If there are any signs of consumer interest, we will certainly see an increase in AI integration in grocery technology in the coming years. But that’s not what all technology can do. For grocery stores, the most powerful AI application is to drive personalized interactions with customers. But this use case is not the norm in North America.
Worldwide, grocery retailers have fully embraced AI as a key partner in their engagement strategies. Stores send highly personalized offers and promotions to consumers based on their personal shopping profile. For example, if a given shopper always buys diet coke with weekly groceries, they may get a free diet coke coupon during their next visit. Shoppers love and expect this level of personalization, whether in weekly digital promotions or as prizes for app-based mini-games. They feel their local shop Know They and look forward to their personal shopping needs.
For many North American consumers, this reality may be underway. That’s because many North American grocery stores don’t adopt AI in this way. They do not offer personalized promotions, such as peers around the world. Instead, they issued mass coupons (sometimes in printed newspaper inserts or mails, other times in digital formats) and hope that a few people would resonate with shoppers receiving and pores.
Why in an industry like North America?
Of course, a large part of the personalized puzzle is the logistical feat required. While many North American grocery stores do have a large amount of anonymous customer data internally (i.e., total purchase records), they may not apply that data in a way that facilitates AI analytics.
Currently, these grocery teams use manuals, inefficient processes to create, update and share spreadsheets between. They may have digital tools that can help analyze data, but not in meaningful ways, not at large scale.
Advance forward with AI-driven personalization means creating and embracing a source of truth; a living in the cloud and updating in real time. From there, it’s about AI and ML solutions that can be made by buying profiles to comb data, identify patterns, and create customer wall nis. For example, a market segment might be created for customers who specialize in buying organic items.
As customer segmentation progresses, the grocery team must work with AI and ML to develop ongoing promotions that resonate with each segment. This becomes a science; a precise game. Unlike the traditional North American coupon model, AI-driven personalization is about quality, not quantity. Retailers can only offer five promotions per customer a week, but these promotions are grand slam dunks thanks to AI. This will be a big change for many shoppers, as they may review dozens of quotes regularly before finding one that matches their preferences.
Moving from “before” to “before” “initiating personalization” to a difficult task. Teams will need to learn new tools, leaders will need to develop new workflows, and marketing teams will need to develop customer-facing messaging that transparently conveys how data is used now.
For North American grocers, building the right technology will be a massive operation. But that’s not everything to be personalized. What happens next will fundamentally change the way retailers work with suppliers.
To implement AI as a key driver of customer promotions, retailers also need to deconstruct their existing promotional strategies.
For grocers, working with suppliers for customer promotions is not unique. The supplier obviously owns a large stake in the game here. Their products are available at discounted prices and are even free of charge. But, uniquely, many North American suppliers are controlling which projects are promoted and when.
Traditionally, when grocery stores issue coupons, they do so based on the vendor’s marketing strategies and plans. Products can be selected to align with seasonal marketing campaigns, new flavor launches or KPIs that need to be met. Consumers will most likely end up appreciating the coupons they offer, but their preferences are not the top priority.
This is what AI-driven personalized work must change. With new technologies, new ways of thinking bring new ways of thinking. The functionality of customer segmentation (pattern recognition and data analysis) can be applied seamlessly to drive promotional strategies. Grocery stores can easily learn which products are the most popular, and when based on internal and external factors such as weather, upcoming holidays, price elasticity, etc. The Intel can directly support promotional strategies, allowing consumers to enter the driver’s seat directly.
Even if the suppliers will no longer direct promotions, they will still win. Re-adjusting promotional strategies leads to more effective and resonant resources. Shoppers will only get promotions they may redeem. They will still be encouraged to try new varieties, flavors and products, but in ways that data supports and may succeed. Suppliers will experience all the benefits of brand loyalty and marketing without wasting resources.
Advances through AI-driven personalization will help the big supermarkets instill a sense of small town in customer engagement. By making customers more valuable on a personal level, North American grocery stores can do wonders for store loyalty.
Over the years, this method has been used worldwide and has achieved great success. Now it comes down to the late adopter. Retailers that adopt AI personalization will quickly surpass those that do not. This is just a question of getting started.
