The grocery industry’s biggest dealmakers, generative AI innovators, Wall Street analysts and e-commerce disruptors gathered in Las Vegas this week for the sixth annual Groceryshop conference.
The event has cemented its status as destination for future focused grocers eager to understand and gain fresh perspective on a rapidly evolving industry while also discovering the potential of innovative technologies. Event organizers deliver on that value proposition with a unique format that creates conversations and facilitates connections that advance the industry, according to Sophie Wawro, global president of Groceryshop and Shoptalk.
In keeping with that mission, this year’s event features 175 speakers, more than half of whom are founders or C-level executives, participating in 50 sessions comprising 35 hours of content. Here’s a look at first day highlights, key themes and notable speakers:
What a difference a year makes
This year’s Groceryshop is taking place against a backdrop no one envisioned last year. Shortly after Groceryshop 2022 ended last September, The Kroger Co. announced its blockbuster deal to acquire Albertsons Companies and a few months after that OpenAI released ChatGPT and introduced the world to generative AI.
“It’s incredible how much has changed over the past 12 months,” said Kristina Gustafson, Groceryshop’s SVP of content. “AI is going to be front and center of many of the conversations taking place on our stages.”
As for other changes, last year SymphonyAI Retail CPG described the event as, “occurring against a backdrop of rampant inflation, lingering supply chain issues, dynamic shopper behavior and economic uncertainty.” Conversely, this year food-at-home inflation was just 3% in August, down from the 40-year high of 13.5% last August. Supply chain disruptions are largely resolved, but retailers face new pressures to improve productivity and transportation costs are rising.
Shopper behavior is as dynamic as ever and impacted by new forces such as economic uncertainty, elevated interest rates and surging energy prices. Even the prospect of benign inflation brings new challenges for retails who must compensate for the loss of inflation tailwinds by growing unit volumes, potentially through increased promotions to entice increasingly price sensitive shoppers.
We’ll lower prices
Kroger Chairman and CEO Rodney McMullen was the marquee speaker on Groceryshop’s first day and he used the platform to vow that the company would invest in wages and lower prices the day after its merger with Albertsons closes. The company expects that to happen in the first quarter of 2024 after it recently announced it was willing to divest as many as 650 stores to C&S Wholesale Grocers.
Whether that is enough to placate regulators’ competitive concerns remains to be seen, but McMullen said C&S checks all the boxes. The company is a proven operator with a strong balance sheet and has made a commitment to recognize the contracts of Kroger’s unionized labor force.
In another proactive move to appease regulators, the morning of McMullen’s presentation the company announced a new commitment to local products. After the deal closes, Kroger said it would increase the number of local products in its stores by 10%, or roughly 30 new local products per store.
Ultimately, the Kroger/Albertsons deal is about creating scale to invest in price, leverage investments in technology and improve its expense structure to deliver on its “no compromise” value proposition and provide a seamless customer experience.
“Customers love going into a store and discovering new items, but long term we are totally confident that more and more people will shop online,” McMullen said.
Unified commerce done right
The other headliner from Groceryshop’s opening day was Ahold Delhaize USA CEO JJ Fleeman. A 33-year veteran of the company, Fleeman was elevated to his current position in April after previously leading the company’s Peapod Digital Labs business as chief digital and e-commerce officer.
“I like the term unified commerce and I think we are really good at it,” Fleeman said of the retailer’s ability to offer a seamless experience. “If you look at our banners and brands we are leaders in e-commerce share.”
However, Fleeman doesn’t think about e-commerce in terms of a target or penetration rates as much as overall digital engagement because, as everyone in grocery knows at this point, omnichannel shoppers are more engaged with a retailer and spend more.
Although still new in his tenure, Fleeman said he has spent a lot of time listening and likes to keep things simple. That philosophy extends to technology and its use to support people.
“Our people make the difference and our key to our success, so we have to make sure they have the tools and technology to be successful,” Fleeman said. “Our job when we are investing in technology is to make (our employees) lives easier.”
Transforming the tech stack
The Loblaw Companies is Canada’s largest retailer with roughly $42 billion in sales and 2,400 stores. Lauren Steinberg serves as SVP of Loblaw Digital, a role that involves leading a team of more than 600 colleagues across design, product, technology and operations who are building and operating a $3 billion digital business.
“We’ve been on this incredible journey for the past 18 months migrating off of some pretty old technology that was kind of paralyzing us,” Steinberg said.
That old technology was what’s known as a monolith platform in which all components are interdependent and reside in a single application. It was the approach Loblaw took early in its e-commerce journey because it was easy to stand up, but the downside was lack of scalability.
As Loblaw’s digital business grew, its efforts were hindered by the monolith approach, so it took what’s known as a composable approach with interconnected services that are faster to develop and easier to maintain. The new platform is called Helios.
By taking a composable approach, Steinberg said the platform has full stability and there has been a 50% reduction in lead times when updates are developed and change failure rates have dropped.
“We used to have to prioritize because we could only do one thing at a time,” Steinberg said.
The company still has to prioritize, but because change is easier with Helios it has to prioritize differently or the digital group risks doing too many things.
Generative AI creates gets real
A year ago at Groceryshop almost no one had heard of generative AI and even though the event is future focused the topic was no where to be seen on the agenda. Contrast that with 2023 and during the final session of the day scheduled to end at 5:35 p.m., roughly 400 people gathered in a ballroom just off the event’s exhibit hall to hear two CPG executives talk about generative AI.
A session titled, “Tapping Generative AI to Elevate Shopping Experiences,” featured Surabhi Pokhriyal, chief digital growth officer, Church & Dwight and Veeral Shah, chief digital and e-commerce officer, Nestle USA.
“We are in the peak of the hype with generative AI,” said session moderator Nick Handrinos, vice chairman of retail and consumer products at Deloitte. Even so, a recent Deloitte survey of 100 grocers found the top five uses case were listed as customer assistance, supply chain, inventory management, private label creation and social media.
Both Pokhriyal and Shah confirmed Handrinos’ comment about hype, with Shah noting he receives several articles a day from senior Nestle executives questioning whether the company is moving fast enough.
“I believe (generative AI) is going to be one of the biggest technological advancements of our lifetime,” Shah said. However, he also believes it will be a bit like the situation with self-driving cars where tremendous long-term potential has yet to be realized and the timeline for doing so isn’t clear.
Ultimately, Nestle’s approach to generative AI will always start with the business value proposition and then if generative ai is the solution Shah said the company won’t be afraid to use it.
Church & Dwight is also taking a business led approach and to guide its process the company has created a cross-functional advisory council, said Pokhriyal.
The hype with generative AI is definitely real,” she said, noting there a wide range of sales and marketing use cases. The key is to be selective due to brand safety considerations. One promising use case involves situations where employees spend an estimated 20% of their time searching in data when generative AI could greatly aid in the process.
“We have to figure out how to get comfortable with generative AI,” said Pokhriyal
A concerning future for conventional grocers
Thriving in a New Grocer Environment was the title of a session featuring Wall Street analysts Scott Moses, partner and head of grocery, pharmacy and restaurants investment banking at Solomon Partners and Karen Short, a managing director at Credit Suisse.
Moses said he has been sounding the alarm bell about the rise of discount grocers for years and he outlined a concerning situation for operators of conventional supermarkets. For example, most of the growth in grocery has come from non-traditional players such as Walmart, Amazon, Costco, Dollar General, Aldi and even Target. All are well-capitalized players with strong valuations.
“Grocery does not equal supermarkets. Walmart is America’s number one grocer. Dollar General is undeniably a grocer,” Moses said. “Amazon is worth more than all (publicly held) US grocers combined.”
It’s why a tie up between Kroger and Albertsons makes sense as the structure of the industry has evolved considerably.
Moses noted that 20 years ago, 10 of the 15 top American grocers were supermarkets, but today 10 of the top 15 are national/discount grocers. Walmart alone has a $300+ billion grocery business.
It’s a sobering reality for conventional grocers and goes a long way toward explaining the interest in Groceryshop as a venue to discover solutions that help improve performance.
If we missed you at Groceryshop 2023, but still want to experience how AI is transforming retail, reach out today to connect with a solutions expert.
