Groceryshop Day 2 recap: AI does indeed have ROI

There continued to be more talk about AI during the second day of Groceryshop 2024 at the Mandalay Bay Convention in Las Vegas. But where is all the action?

Grocery retailers were on stage to let attendees hear about what they have been doing to produce an ROI behind the AI technology.

Caleb Carr, head of Data Science & Engineering at St.Louis-based Schnucks Markets, said the retailer has used generative AI in three areas: copywriting, coding, and survey analytics.

Marketers at Schnucks are using the tech to generate copy in the voice of the brand. The retailer spends a lot of time with prompt engineering to be able to message not just in a personalized and customized way, but to do it in a way to make it sound like it’s coming from Schnucks.

On the IT side, generative AI is used to create a coding assistant throughout the entire organization, and Schnucks has seen about a 30% increase in productivity, according to Carr.

Schnucks has also been leveraging generative AI to conduct audits, identify risks within its ecosystem to make sure the retailer has accurate documentation, and conduct troubleshooting steps.

“It has proven to be really, really powerful, and candidly, it’s low-hanging fruit because when you give a bunch of IT folks a cool new toy, they’re generally really good at playing with it,” said Carr.

With survey analytics, Schnucks uses feedback from thousands of customers a day, and the retailer has developed a system to take in the real-time actions and process the data so it can identify trends at the store level, at the division level, and call out teammates that are mentioned by name and be able to integrate it with Schnucks’ employee rewards program.

Establishing partnerships in the generative AI world has also been key to Schnucks, which works with rewards app Upside and Google.

“Freeing up those little friction points and automating those little friction points allow our teammates and our stores across the organization to build those relationships with our customers,” said Carr. “That’s really the point of differentiation for our brick-and-mortar retailer…building those relationships to make sure that we’re set up to know our customers and better serve our customers.”

Carr outlined how Schnucks will be using generative AI over the next year, and one of the areas the tech will be used will be in what he called “teammate productivity.” The retailer has a vast number of policies and safety guides and other areas of opportunities it has documented through the organization, but how can one disseminate all the information when they need it? Generative AI will be able to help.

“If I’m a new teammate working in the deli, where do I find the answer to when I need to wear a cut glove? If I’m on point-of-sale how do I deal with this issue or process an order in this fashion?” Carr asked. Conversational commerce I think is definitely the industry buzzword.”

Customer interaction is another area where Schnucks is looking to capitalize. Giving shoppers the ability to use generative AI to find ingredients to specific recipes, and on the flip side giving associates the right information to answer any question the customer may have.

Generative AI still needs a human touch. Carr summed up his presentation by showing a picture of a caramel apple sold at Schnucks. The marketing department asked generative AI to come up with pictures of happy caramel apples, and the results were more freaky than successful.

“Those are some happy, scary apples,” he said. “One of the biggest lessons we’ve learned is really validating [generative AI] throughout our journey. We’re making sure that we have humans in the loop across the board to make sure that we aren’t, A, scaring our customers and, B, that we’re producing quality content and quality interactions across the board.

Productivity with robots

BJ’s Wholesale Club, based in Marlborough, Mass., has an AI-enabled robot in every one of its 260+ stores and Krystyna Kostka, senior vice president of Operations at BJ’s Wholesale Club, was at Groceryshop 2024 to talk about the experience.

“Essentially Tally unlocks a whole variety of in-store intelligence solutions,” she said. “Tally basically traverses our store environment three times a day gathering data and we’re able to use that across a variety of AI applications that our associates are using within our clubs.”

When BJ’s first began using the AI-enabled robot it focused on four areas: near-real-time remote visibility into the club, which allows for remote inspection; commercial compliance, including planogram accuracy, price accuracy, and promotional compliance across all stores; inventory; and efficiency among associates.

Here are some other takeaways from Kostka’s session:

Making customers feel special

Blending in-store and online grocery was another day two topic, and Kristin Popp, executive vice president at Janesville, Wis.-based Woodman’s Food Market, and Matt Van Gilder, director, Ecommerce & Digital Experience, at SpartanNash, headquartered in Byron Center, Mich., shared their experiences and here were some of the key takeaways:

Instacart’s tech muscle

Instacart, which went public last year, now powers ecommerce operations for some 1,500 grocers on its marketplace and more than 600 retail banners, she said. 

Simo said that in an era of inflation and high grocery prices, affordability is holding back the grocery industry from moving online. “There is no silver bullet to that problem, as we all know in this room, but we are taking a very structured approach to chipping away at this,” she said.

Instacart invested early in advertising to establish a sustainable business model that allows the tech company to pass some of the savings on to retailers and customers. “Now that we've built this entire tech stack and this entire ad sales team, we are making that available to grocers on their own integrated sites,” she said, adding that the company’s Carrot Ad tech powers 100 retailer sites “and that means that if you are a retailer, you can create a retail media business literally overnight, using our technology, leveraging our sales team, and get a revenue shift from that.”

Amazon doubles down on grocery

At a different forum, Claire Peters, Worldwide vice president at Amazon Fresh, said the online retail giant is listening to customer feedback to improve its brick-and-mortar locations, and beginning to open physical stores after putting its expansion on pause in 2023.

The integration of Whole Foods Market has helped increase Amazon’s selection and private-label brands, including the recent release of Amazon Saver, a brand that offers more than 100 new products, most of which cost less than $5.

“We needed to listen to customers. We needed to see what resonated more. And that is when we put the expansion on hold,” she said. “Over last year, we learned lots around what we needed to improve, selection, promotions, price, layouts in stores, and we took that new design to Chicago and L.A. 

“Last year, customers gave us great feedback around how that was resonating…that then helped us push forward this year into renovating all of our U.S. and U.K. stores.”

She said customers are responding positively, but the retailer still has “plenty to do” to improve the physical brand. 

Amazon’s purchase of Whole Foods Market in 2017 has helped “anchor down and share some of that capability between the two businesses” in both supply chain management and private-label offerings, Peters said.