Introduction

Groceryshop is an annual retail conference focusing on the trends, business models and technologies shaping the future of the grocery sector. This year, the event occurred September 19–21 in Las Vegas, Nevada, US. Coresight Research is a research partner of Groceryshop 2023.

In this report, we present our top insights from the conference across five key themes in grocery retail, as identified by Groceryshop: unified shopping experiences, game-changing efficiency and future-proofing, new growth opportunities, win-win relationships and organizational evolution.

Groceryshop 2023 Wrap-Up: Coresight Research Insights

1. Grocers Are Prioritizing Unified Shopping Experiences Across All Channels

Many in the grocery sector have recognized the significance of combining physical and digital channels to offer consumers seamless, convenient and personalized shopping experiences. This trend means that retailers must focus on having unified inventory and pricing strategies, as well as personalized promotions, across all touchpoints. The term “unified shopping” was offered at the conference as a replacement for omnichannel, which carries multiple connotations and is often understood simply to represent online plus offline retail. A customer-centric shopping experience across all channels, QR codes, and smart shelves and shopping carts are just a few of the innovations that are helping reshape the traditional grocery store and create a unified experience.

Channel Strategy

Consumers are expanding the ways in which they shop for groceries by utilizing both physical and digital channels in order to make grocery shopping more convenient. While online grocery shopping penetration rates are increasing, highlighted by the success of companies such as Instacart, retailers should not focus on achieving specific online penetration rates but rather shift their attention to meeting consumers where they are, whether physically, digitally or somewhere in between.

JJ Fleeman, CEO of Ahold Delhaize USA, stated that there is no perfect ratio of online to in-store penetration; he explained that retailers should instead focus on delivering a consistent brand experience while simultaneously recognizing the reasons consumers shop via the channels they do. Retailers must balance both providing shoppers with the differentiated value adds they expect when shopping through a specific channel and prioritizing a unified, continuous shopping and brand experience that persists throughout the shopping journey.

Fleeman discusses how to deliver connected omnichannel experiences
Source: Coresight Research

 

In today’s retail world, the success of a retailer’s in-store strategy is interconnected with the effectiveness of its online presence, which can help the retailer reach a broader audience, including younger and tech-oriented shoppers. Steve Henig, Chief Customer Officer at Wakefern Food Corp, the largest retailer-owned cooperative in the US, emphasized the value of shoppers who engage in both in-store and online shopping, stating they are 2X as valuable as brick-and-mortar-only shoppers. When engaging with these shoppers, it is crucial that they feel a unified experience when switching between channels, meaning companies must ensure that pricing, promotions and inventories are consistent across all channels. Wakefern, specifically, is accomplishing this by leveraging customer data to deliver personalized experiences that seamlessly merge the online and brick-and-mortar channels.

Emerging Technologies and Retail Media Networks

Various emerging technologies are helping grocers create unified shopping experiences. For instance, the fusion of QR codes on in-store labels and mobile app technology is helping replicate the experience and level of information provided online while shopping in stores—when shopping online, consumers are often provided with a higher degree of product information than the limited information presented on real-world product labels, a problem QR codes can solve. Additionally, QR codes and mobile technology can allow shoppers to access personalized offers, promotions and recipes, helping foster a consistent and interconnected shopping journey that covers both online and physical stores. Mobile apps are pivotal in a unified strategy as they can offer efficient in-store navigation—ensuring customers swiftly locate products—and facilitate product ordering, helping eliminate checkout queues. Given their current prevalence, smartphones are likely to be a key part of constructing the in-store grocery experience of the future, as mentioned by John Phillips, SVP of Customer Supply Chain and Go-To-Market at PepsiCo.

As stated, ensuring consistent pricing and promotions across all retail channels is crucial for crafting a unified omnichannel experience. During the “Shark Reef” Startup Pitch, AI (artificial intelligence)-powered co-pilot provider Luca emphasized the power of insights provided by AI in guiding pricing decisions, while also highlighting the challenge many retailers have in quickly implementing these changes, particularly in physical stores. Smart shelves—shelves equipped with digital sensors and displays—have emerged as a solution to this problem. Smart shelves enable retailers to quickly change prices on store shelves, helping them keep prices consistent across all channels. Smart shelves can also actively monitor product stock and consumer interactions, allowing retailers to adjust prices in real time based on factors such as demand, inventory levels or even the time of day.

Tanvi Surti of Luca speaks to judges during the final round of the “Shark Reef” Startup Pitch competition
Source: Coresight Research

 

Smart shopping carts are another interesting opportunity for retailers to provide better experiences for their shoppers and enhance their data-capturing efforts. Shariq Siddiqui, Founder and CEO of Veeve, an in-store shopper engagement platform, explained how the introduction of retail media videos within shopping carts can take personalization to the next level by displaying tailored deals, using computer vision to understand a shopper’s location and providing real-time, location-based promotions. Shoppers simply connect their shopper account to the cart via their mobile phone, allowing retailers to offer personalized experiences based on their purchase history.

Furthermore, retailer intelligence tools enable effective content management, cart, shopper and basket analytics, and ad performance monitoring, all of which can be combined to continuously enhance the in-store shopping experience while also better connecting it to a shopper’s online experience. This synergy of emerging technologies and shopping carts ensures that consumers enjoy a consistent, convenient and personalized shopping experience while providing retailers with the key data points they need to make decisions.

2. AI and Other Technologies Are Helping Retailers Enhance Efficiency and Future-Proof Their Business

The grocery sector, which has been historically reticent to embrace technological innovation and replace legacy systems, is now actively pursuing game-changing efficiency and future-proofing strategies. This transformation involves adopting advanced technologies, such as AI and generative AI, to enable data-driven decision-making, revolutionize supply chain management, enhance customer experiences, drive efficiency and meet the growing demand for sustainability.

AI and Generative AI

AI and, more specifically, generative AI emerged as a prominent topic of discussion at Groceryshop 2023, with many speakers highlighting its role in bolstering organizational efficiency.

Before generative AI is used for external, customer-facing applications, businesses should explore using the technology to enhance internal productivity. Monica McGurk, CEO of Tropicana Brands and Mainstream, discussed “TropGPT,” the company’s internal generative AI tool that leverages natural language processing to streamline performance management and trend identification. While identifying trends is important, it is also critical for companies to implement changes based on AI-generated insights in a timely manner. McGurk underscored the significance of democratizing retailer data and analytics—enabling broader accessibility throughout the organization rather than limiting it to upper management—in regard to implementing changes based on AI-powered, data-driven insights. McGurk also detailed the use of generative AI in various areas, including sales training, customer contact resolution, content generation and customization, illustrating how the technology can help retailers embrace digitization and automation, transforming and augmenting their business practices.

McGurk discusses the importance of data-driven strategies and AI
Source: Groceryshop

 

Generative AI could also reshape the grocery and consumer packaged goods (CPG) industry by ushering in a new era of shopping experiences. Retailers must understand that this transformation could come sooner rather than later—as Krystina Gustafson, VP of Content at Groceryshop, explained, “with generative AI, the long term is months.” Within this transformation, AI-powered tools will take center stage, refining and optimizing a wide spectrum of functions, including elevating customer engagement and simplifying supply chain management. Data readiness and fruitful collaborations are essential to the productive integration of generative AI into the grocery and CPG sectors. It is also important for retailers not to wait until the technology is perfect to start understanding and experimenting with generative AI, as their competitors may not be willing to wait, giving them a head start in understanding how to better leverage generative AI practically.

In general, AI/ML serves as a powerful tool for analyzing historical sales data, market trends and external variables, such as weather and social events, enabling companies to make highly accurate predictions about future demand. Generative AI goes one step further by empowering businesses with insights and guidelines on how to fine-tune inventory levels, thereby cutting carrying costs and helping eliminate stockouts, resulting in more efficient supply chains and heightened customer satisfaction. Ben McKean, CEO of Hungryroot, an online grocery service, showcased the power of AI by describing how AI-driven algorithms are rapidly generating grocery baskets personalized to individual shoppers. McKean believes that consumers will increasingly rely on AI for a broad range of grocery shopping tasks in the future. This transformation will be driven by AI’s potential to reduce food waste, enhance the shopping experience, mitigate impulsive purchases, and offer sustainable and eco-friendly recipes and product alternatives.

Automation and Supply Chains

When it comes to automation, retailers need to establish their business goals before implementing technology that will result in that desired impact. As stated, AI can significantly enhance decision-making processes; however, it should not be seen as a replacement for human input, which will remain a valuable asset to retailers. Automation is being used across the grocery space, from improving operational efficiency to enhancing the overall shopper experience. Moreover, tech investments that may have seemed impractical just a few years ago, such as radio-frequency identification (RFID) and automated checkout software, now have stronger use cases due to AI’s influence.

David von Laskowski, President and CEO of Picadeli and Greenfood Group, a health food producer, spoke about AI’s valuable data-driven insights and how they empower retailers to fine-tune shelf stocking and prevent out-of-stocks. Additionally, adopting AI-powered robotics and other technologies, such as automated shelf intelligence, has proven highly effective in reducing out-of-stock occurrences and improving store performances. With a combination of data collection and AI, retailers are gaining invaluable insights into customer behavior, reducing wastage and providing associates with actionable information that helps them serve customers better.

AI can also assist with demand forecasting, traceability and inventory management, helping with the massive food waste issue in the US. However, implementing AI in supply chains requires careful consideration of a company’s technology readiness, people, skills and tools—companies that can manage these four specific areas in tandem are best positioned to achieve greater visibility and decision-making.

To achieve optimal results, it is important that retailers carefully select technology solutions that can be seamlessly integrated with their existing technology stack and operations, thus helping achieve a comprehensive, end-to-end impact. With many consumers now demanding rapid grocery delivery services, including same-day delivery, industry participants must position themselves to meet these demands. Coresight Research recommends that companies determine their desired outcomes before choosing the appropriate technologies. Moreover, it is important that retailers test technologies on a smaller scale before undertaking a broader implementation, which can serve as a cost-effective strategy, particularly in a high-interest-rate environment.

3. Health and Wellness, Sustainability, Retail Media and Other Growth Opportunities

There are several new growth opportunities in the grocery sector that cater to evolving consumer behaviors and preferences. Retailers are diversifying their product offerings and adopting various channels to connect with on-the-go shoppers, while smaller CPG brands are gaining prominence as consumers seek unique and niche products that cater to their specific tastes. Additionally, the number of health-conscious consumers is rising, leading to an expanded selection of organic, plant-based and dietary-specific products.

Social media platforms and secondhand markets are also emerging as potent shopping avenues, ones that allow retailers to meet and engage consumers where they already spend a great deal of time. Influencer collaborations and advertising through these channels are examples of ways to engage through these channels. Furthermore, personalization, driven by AI and first-party data, is becoming crucial to fostering customer loyalty. Retailers should look at the plethora of growth opportunities and carefully select which, if any, would integrate well into their business.

Health and Wellness and Sustainability

The health and wellness trend presents a unique growth opportunity for retailers looking to meet consumer demand for cleaner and healthier products. Heather Wallace, CEO of Curology, a skincare company, and Katerina Schneider, Founder and CEO of Ritual, a health products company, underscored the ongoing trend of the health and beauty categories coming together, a trend fueled by proactive, health-focused consumers and the accessibility of telehealth offerings. Increased reliance on scientific and medical guidance in the health and wellness industry is another key prospect for the grocery industry, as it helps increase consumer confidence in products. For example, Ritual is aiming to subject all its products to clinical testing in the near future.

Wallace (left) and Schneider (middle) discuss strategies for digitally native brands
Source: Groceryshop

 

When prioritizing growth, retailers must stay true to their brand and mission. Seth Goldman, Co-Founder and CEO of Eat the Change, a healthy snack company, emphasized the importance of scaling mission-driven brands. To do so, Eat the Change embeds its mission in each of its products and involves stakeholders who are committed to the mission, which Goldman stated is a powerful way to keep a brand’s core principles while scaling. Goldman also stated that plant-based products, such as Beyond Meat, continue to show promise, especially in regions known for readily adopting health-conscious trends, such as Europe. It is key for retailers to look at different geographic areas for insights into trends and growth opportunities that have not fully evolved in the markets in which they currently operate.

Growth Opportunities Through Advanced Technology

It is essential for retailers to understand the link between frontline workers and the customer experience. At Groceryshop, Sam’s Club highlighted that technologies linked to automation should not be viewed as a way to remove jobs but rather as ways to empower employees by removing time-consuming, tedious and mundane tasks and allowing them to complete more fulfilling tasks, such as spending time with shoppers. Retailers should prioritize the strategic fusion of humans and technology—based on their respective strengths—to amplify overall business productivity. In doing so, retailers enhance their ability to increase customer loyalty and drive higher net promotor scores (NPS).

Retail media networks (RMNs) present a growing opportunity for the grocery sector, providing retailers with a way to reach customers across channels and deliver personalized messages in innovative ways. RMNs can assist retailers by providing targeted advertising, valuable customer insights and enhanced customer engagement across various touchpoints, ultimately driving sales and brand loyalty. Supermarket chain Hy-Vee launched its RMN, RedMedia, at Groceryshop this year. RedMedia is an RMN that offers smart tools and customized solutions to target millions of customers directly, helping retailers message the ideal customer at the right time. Hy-Vee emphasized that the long, recently ended Hollywood writers’ strike could result in a huge drop in fall television content; however, consumers still want to see new content, creating an opportunity for RMNs to compete with established media networks, according to Donna Tweeten and Aaron Wiese, the Presidents of Hy-Vee. While RMNs provide retailers with a big opportunity, it is important to have standardized measurements of key metrics to enhance the opportunity further.

4. Strategic Alliances, Data Sharing and Consolidation Can Help Retailers Foster Win-Win Relationships

Effective, shopper-centric collaborations between retailers and suppliers are pivotal in responding swiftly to evolving consumer behavior and market trends. Strategic partnerships and consolidation in the industry are poised to reshape the grocery ecosystem by promoting data sharing and enhancing efficient sourcing. Meanwhile, grocers are championing cultural relevance by collaborating with technology solution providers and other industry players.

Strategic Alliances and Data Sharing

For retailers to effectively create win-win relationships, they must foster effective collaboration by aligning strategic goals and embracing data-sharing synergies. Strategic partnerships that align shared objectives and enable retailers to pool resources and knowledge ultimately benefit both parties, allowing them to navigate the grocery landscape more effectively. Data sharing is a key component of these partnerships as it enables retailers to gain insights into customer preferences, purchase patterns and market trends. At Groceryshop, Mars Pet Nutrition highlighted that cross-department data sharing is key to the growth of the overall business.

Kroger and Albertson’s Merger

Consolidation can often be an effective avenue for growth in the grocery industry. Rodney McMullen, Chairman and CEO of Kroger, emphasized the importance of Kroger’s merger with Albertsons, which is focused on similar values and the importance of scale for RMNs, data and technology investments, per McMullen. He also explained that Kroger continues to cater to customers of all income levels: for those under economic stress, the company offers better value than its competitors, and for its upscale segment, it offers enhanced convenience. Kroger is focusing on growth via retail media, as retail media is becoming one of its fastest-growing business segments. Lower prices, wage investments and improved shopping experiences, especially in regard to fresh products, are all key elements of Kroger’s strategy for the future and additional reasons for the merger with Albertsons, according to McMullen. Coresight Research believes consolidation in the grocery industry will be a key theme to watch in the coming years.

McMullen discusses the synergy created by Kroger and Albertson’s merger
Source: Groceryshop

 

5. Organizational Evolution Is Imperative to Retailers’ Success

In navigating the ever-evolving retail landscape, grocery retailers must cultivate a culture of adaptability and innovation to thrive. A critical component of this process is prioritizing innovation that empowers workforces with career advancement opportunities and engaging challenges. An unwavering dedication to customer centricity should also be the cornerstone of a retailer’s approach.

Elevating the employee experience hinges on technology-driven efforts to eliminate micro-frictions, ultimately fostering an environment where organizational adaptability and innovation are not just valued but are the very lifeblood of the organization.

Cultivating Agile Organizations

Retailers must emphasize the importance of cultivating flexible and agile cultures, systems and processes. It is not simply about spending on technology and data; retailers should also invest in change management and building a strong, resilient company culture. Partnerships are likewise important for expanding capabilities and staying nimble, as is refining organizational processes and structures to support a unified commerce experience. By hiring the right people, empowering employees to make decisions themselves and supporting workers with robust internal communication structures, businesses can effectively tackle challenges and drive success.

When hiring, retailers must emphasize the need for adaptable talent, especially in the face of digital transformations. By considering the effects of technology on company structure, culture and processes, retailers can better predict the change it will cause within their organization. Immersion programs that familiarize tech teams with on-the-ground impacts can also be a factor in the success of organizational evolution. While attracting tech talent can be challenging, retailers must focus on a potential employee’s aptitude for learning, rather than simply their skillsets.

What We Think

As consumers continue to shift their grocery shopping behaviors and patterns, including within which channels they shop, retailers should consider advanced technologies and processes to help them deliver the experience that shoppers desire. Retailers should continuously evaluate emerging technologies, including automation-focused tech, AI and generative AI, to make their organizations more efficient, while simultaneously pursuing new revenue opportunities in the grocery sector, such as RMNs and health and wellness products. As the grocery landscape continues to evolve rapidly, it is also important for brands and retailers to foster strategic and mutually beneficial relationships with other companies while finding new ways to make their organization more agile, in order to better navigate the shifting retail and grocery landscape.