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Six things grocers must do to win with Generative AI

07.24.2023 | Mike Troy, Sr Director of Content and Thought Leadership at SymphonyAI
 

Ensure success with the greatest technology disruption since the Internet by following these simple guidelines

Generative AI has quickly earned a reputation as a disruptive force that will affect all aspects of how retail and CPG companies operate their businesses. So great is the anticipated impact of Generative AI that it is seen rivaling or exceeding e-commerce, but on a greatly accelerated timeline.

If that sounds like a case of AI exuberance it is worth remembering a few things about e-commerce and the nature of technological innovation. Recall the growth trajectory of e-commerce was quite gradual following its arrival in the late 90s. Consumers had to adjust to an entirely new way of interacting with retailers, gain trust in online payments and cope with slow internet access to navigate clunky web sites with incomplete product information. It took retailers years to build new distribution capacity and establish order fulfillment processes to satisfy shoppers’ elevated expectations. Then came the mobile revolution and a new layer of complexity and opportunity.

After all of that and nearly three decades since Amazon’s first online sale, e-commerce sales in the U.S. during the first quarter of 2023 represented just 15.1% of total sales, according to the Census Bureau of the U.S. Department of Commerce. The penetration rate is even lower in grocery, according to SymphonyAI Retail CPG research which examined first quarter shopper data from 58 million households in the U.S. and Europe. Only 6.5% of households in the US and Europe shopped online for groceries during the first quarter, down from a pandemic-induced peak of 8% in early 2020.

Generative AI will be different

The impact of Generative AI (Gen AI) will be felt much faster and in vastly different ways that are important for grocers to understand if they are to realize benefits faster than competitors. For starters, a lengthy shift in consumer behavior isn’t required because Gen AI will be driven by grocers’ desire to create value through enterprise-wide process improvement, automation, productivity gains and increased speed and accuracy of decision-making as well as customer-facing interactions.

That means grocers must make well-informed strategic choices faster than ever or risk falling behind as Gen AI evolves and advances at a blistering pace. Given such high stakes, Gen AI experts at SymphonyAI Retail CPG advise grocers looking to chart a way forward consider the following:

  1. Understand Gen AI and why it is different: The reason Gen AI is so exciting and why the hype is real comes down to the fundamental difference between the ability of AI to interpret data and Gen AI’s ability to create. For example, with AI and machine learning the emphasis is on analysis, pattern detection from large data sets, and in some cases, prescriptive recommendations about actions to take based on historical info. Gen AI takes things to another level by creating new sources of content based on existing sources of information, the results of which are insights that are accurate, relevant and actionable.
  2. Understand the quality of your data: When business critical decisions are being made data accuracy is imperative because Gen AI models rely on large datasets to learn patterns and generate content. The quality and integrity of the training data underlying the development of models is essential because if the training data is incomplete, inaccurate or biased, the content generated will be flawed. Grocers must be highly proficient with master data management of their existing sources as a Gen AI starting point. Over time, more trustworthy information sources can be integrated, thus creating a multiplier effect as Gen AI is trained on larger data sets to create more valuable and accurate recommendations.
  3. Identify optimal use cases for efficiency gains and value creation: Gen AI will impact all areas of grocery – supply chain, merchandising, category management, shopper insights – so it is essential grocers create their own roadmap that prioritizes value creation opportunities. One major area involves store operations where the use of Gen AI can solve labor challenges by creating, prioritizing and directing tasks or eliminating mundane processes that are an ineffective use of increasingly costly and scarce labor. An added benefit is newer workers can become more proficient at their jobs faster, resulting in a tremendous boost to productivity.
  4. Be selective about strategic partners: Change is happening fast in the Gen AI world, so it is essential grocers work with partners who are at the forefront of responsible change. Look for companies with an AI track record of investment, AI models proven in the grocery industry and a clear roadmap of innovation in mission critical areas that matter most to your organization. Deep domain expertise in grocery and fast-moving consumer goods is also critical.
  5. Copilots are key and increase AI usability: The copilot metaphor is a useful way to think about how Gen AI capabilities are accessed by users. Copilots serve as virtual assistants to dramatically increase the productivity and decision-making ability of humans at all levels of an organization by making it easier to tap into the content creation powers of Gen AI. For example, a merchant creating a new planogram or marketer seeking to uncover insights from shopper data can do so faster and more accurately with the aid of a Gen AI copilot. Those are just two examples, but any area of an organization where there is a need to speed up the consumption and usability of information is an ideal situation where a copilot can be called on to get work done faster with a better outcome.
  6. Focus on process improvement: Generative AI gives grocers the ability to increase automation and reduce or eliminate the time needed to perform administrative functions. Automation is an accelerant of change because reducing or eliminating the time associated with functions like product reordering, shopper insights generation, or planogram development yields major time savings.

Will Gen AI really have a greater impact on grocery than the Internet and e-commerce? That thesis could be debated but given the pace of change in the technology world, especially with Gen AI, it won’t take long to find out.

To learn more about how Gen AI can improve the performance of your business please get in touch.

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