AI-Powered Insights Give Grocers An Omnichannel Advantage

07.26.2022 | By SymphonyAI team

Grocers have been on an e-commerce roller coaster ride the past three years. It began gently following a ramp up in digital efforts that unfolded while market conditions were stable. Then, as is the case with roller coasters, the ride changed abruptly in early 2020 with the onset of the pandemic and the industry was thrown into a series of gut-wrenching twists and turns.

Things have settled down considerably since then, but making sense of all the gyrations and marketplace distortions caused by the pandemic has led to a simple question; “What’s really going on with grocery e-commerce?” There is a good way to find out – and it involves using next generation AI-powered analytics that provide grocers with a major source of competitive advantage.

Quantifying the Value of Omnichannel Shoppers

Everyone knows what happened with e-commerce adoption and shopper behavior during the pandemic. There was a surge of adoption and distorted spending behavior as restaurants closed and office workers and students worked and studied from home. Online transaction sizes spiked, and store traffic tumbled. Product shortages led to brand switching and a unique promotional environment. When the pandemic eased, restaurants, schools and offices re-opened and store traffic rebounded, but supply challenges lingered, and shopper behavior again changed as inflation surged.

What’s missing from this summary are truly useful insights into e-commerce trends, patterns, and correlations in behavior that if better understood could be leveraged to inform a wide range of strategic decisions. To get at those insights, Symphony RetailAI analyzed 585 million transactions that took place with retailers in the U.S. and Europe during the first quarter this year. Notable highlights include:

  • E-commerce remains elevated: Online household penetration was at 6.4% in the first quarter, down from a peak of 7.7% in the second quarter of 2020, but 60% higher than pre-COVID levels.
  • Omnichannel shoppers are essential: As omnichannel shopper engagement improved, incremental spending increased 16% due to greater frequency and larger transactions.
  • First impressions matter: 40% of customers who shopped online for the first time in the second quarter abandoned the channel after one visit. When they returned to the store, they spent 2.5% less.
  • Targeted customer acquisition is key: AI determined that only 6% of store-only customers had the perfect profile to become omnichannel customers, thus unlocking 1.4% of additional revenue growth.
  • Online and in-store behaviors differ meaningfully: Product and pack size preferences vary considerably based on the first quarter analysis. This knowledge is useful to understand category roles, optimize assortments, and personalize promotions to improve marketing ROI.

More Data Per Se Isn’t the Answer

While Symphony RetailAI analyzed a massive amount of data and the examples above only scratch the surface, grocers already have all the data they need to win with omnichannel shoppers and improve e-commerce profitability. That’s because there has been exponential growth in data sources and volumes over the past decade. When the pandemic arrived and e-commerce surged, the nature of digital channels meant grocers gained even more data about shopper behavior. The reality for most retailers is they have an abundance of data, but it is seldom put to the highest and best use.

It is a phenomenon described as being data-rich and insights-poor. The solution is to improve how value is extracted from data rather than chase after more data. This ability enabled by AI will let some grocers make smarter, better decisions faster and promises to be a source of great competitive advantage in the years ahead.

The Right Side of the Digital Divide

There has always been a digital divide in the retail industry. Those who recognized the potential of technology and innovation and acted sooner than competitors gained a competitive advantage. It’s no different today except that technology changes faster than ever, so new sources of potential advantage emerge even more quickly.

It’s why, as we noted earlier this year in the Grocer’s Guide to AI, the Latin proverb “fortune favors the bold” has been proven accurate time and again in retail. Pick any point when an innovation opportunity presented itself and important decisions had to be made about whether, and how fast to move forward. Some companies acted decisively while others dawdled.

That is the case with AI today and it is well illustrated by the research that quantified the value of the omnichannel shopper and produced insights that can be used for competitive advantage. No grocer really needs more data, but they do need the capability to make better, more strategic decisions based on the information they have. That’s is the core value proposition of AI.

Make sure your organization is on the right side of the digital divide. See what AI-powered insights can do for your organization by connecting with a solution consultant.

For a deeper dive on the Q1 research involving 585 million transactions, join top experts from Symphony RetailAI for the webinar: Fact vs. Fiction: What’s Really Going on with Grocery E-Commerce. Watch the recording, or view the analysis in our just-released E-Book.

Latest Insights

AI helps category managers optimize retail operations
07.11.2024 Blog

AI helps category managers optimize retail operations

Retail / CPG Square Icon Svg
Shelf planning innovation fuels shopper satisfaction
07.08.2024 Blog

Shelf planning innovation fuels shopper satisfaction at Associated Wholesale Grocers

Retail / CPG Square Icon Svg
A woman in business attire using a tablet to check inventory in a warehouse aisle, surrounded by tall shelves filled with boxes.
06.20.2024 Blog

Supply Chain product suite data sheet

Retail / CPG Square Icon Svg