Introduction

Coresight Research is a research partner of Groceryshop 2023, which is taking place September 19–21, 2023, in Las Vegas, Nevada. Groceryshop is an annual conference that helps businesses navigate the evolving grocery landscape, exploring the latest business models, advanced technologies and shifting consumer behaviors.

In this report, we present our top insights from the first day of the event, including highlights from the “Shark Reef” Startup Pitch competition.

Groceryshop 2023 Day One: Coresight Research Insights

The “Shark Reef” Startup Pitch Competition

The “Shark Reef” Startup Pitch competition at Groceryshop 2023 saw 12 early-stage innovators compete to win the Judges’ Choice and Audience Choice awards. The 12 competing innovators—3mint, AndesML, Bevz, Crafted, Envelope, Guac, Instock.com, Luca, Mammoth, Native AI, Swish Brand Experiences and TAINR—were categorized into four areas of retail disruption: artificial intelligence (AI), inventory management and supply chain, marketing and loyalty, and e-commerce fulfillment.

The event, emceed by Deborah Weinswig, CEO and Founder of Coresight Research, was comprised of two rounds: all competitors presented for three minutes in the first round, followed by a short Q&A, after which six companies progressed to the next round. In the second round, the finalists each participated in a more in-depth Q&A session. Alongside Weinswig, the expert panel of judges included: Matt Nichols, General Partner at Commerce Ventures; Ashley Hartman, Managing Partner at Bluestein Ventures; and Carle Stenmark, General Partner at VMG Partners.

Of the 12 innovators, Bevz, Envelope, Guac, Instock.com, Luca and Swish Brand Experiences made it to the finals. After the second round of questions and answers, and intense deliberation, Guac emerged as the Audience Choice winner, and Instock.com earned the Judges’ Choice award.

Guac specializes in AI-powered demand forecasting for grocery retailers, aiming to help retailers cut food waste, increase on-shelf availability and reduce manual ordering mistakes to increase revenue. According to the company, inventory distortion costs are equivalent to 7.0% of a grocer’s annual revenue, and 26.0% of inventory distortion is due to bad demand forecasting systems. Guac aims to change this by capturing hundreds of consumer and external variables, including crime variables, to optimize demand forecasting. Per its question-and-answer session, the impact of its forecasting is a 33.0% food waste reduction, 25.0% margin increase and “98.0% forecast accuracy.”

Euro Wang, Co-Founder and CEO of Guac (left); Stenmark (center); Weinswig (right)
Source: Groceryshop

Instock.com is a robotics-as-a-service company that aims to help retailers reduce the cost of picking and packing orders through automation, which is especially important as less than 20.0% of warehouses have any type of automation. Previously, robots were too expensive, and Instock.com has found that affordability is incredibly important to its clients. Its robots are specialized to work in tight and imperfect places, according to the question-and-answer session, and its customers can even share robots.

Yegor Anchyshkin, CEO of Instock.com (left); Weinswig (right)
Source: Groceryshop

• For more information on all the startups that competed, please see our preview of the event.

Unified Shopping Experience: An Imperative for the Grocery Sector

A consumer-centric retail strategy takes full advantage of physical stores and consumer data to create engaging experiences. When creating unified shopping experiences, retail companies must ensure data integration, inventory visibility, seamless checkout, a user-friendly website and mobile app, social commerce integration, flexible fulfillment options, analytics and employee training.

Unified Shopping Takes Center Stage on Day One

It is more important than ever for retailers to focus on unified shopping, another word for omnichannel shopping: according to Steve Henig, Chief Customer Officer at Wakefern Food Corp, omnichannel shoppers are “2X more valuable” than brick-and-mortar-only shoppers. Manish Sharma, VP & GM Omni-Commerce at The Kellogg Company, made a similar remark, stating that omnichannel shoppers spend between 2X and 4X more than non-omnichannel shoppers.

To meet these shoppers’ needs, retailers must devise multiple ways to engage with shoppers across all channels. For instance, at Wakefern, the company is:

• Using QR codes to enhance the in-store experience
• Enabling customers to create personalized shopping lists and elevating its mobile technology to help customers swiftly navigate stores while shopping
• Offering order-ahead and delivery options for made-to-order items, such as sub sandwiches
• Providing real-time updates and seamless communication on orders

Sharma stated that, at Kellogg, the company is still experimenting with omnichannel strategies, including its recent collaboration with the video game Minecraft. “It’s a journey,” Sharma stated in regard to the company’s unified retail strategies. “We’ve made strides in the right direction, but we haven’t solved [the problem] yet.”

Henig discussing unified shopping experiences
Source: Groceryshop

Unified shopping was also discussed by JJ Fleeman, CEO of Ahold Delhaize USA, during the “Moments that Matter: Delivering Connected Omnichannel Experiences” panel. Per Fleeman, Ahold Delhaize’s top priority is a unified commerce strategy. For instance, the company has strategically invested in various technologies, such as Prism, to achieve a seamless, unified commerce experience, reflecting the importance of retailers providing consistent shopping experiences across all channels. This is especially important as omnichannel shoppers are highly engaged and tend to spend more, according to Fleeman. Moving forward, technology investments will become an increasingly significant part of the company’s portfolio as it adapts to the evolving retail landscape. Fleeman also mentioned that consolidation will be a key focus area, as it recognizes the importance of size and scale in the grocery business, especially at the local level.

While Ahold Delhaize believes that physical stores remain important, it anticipated continued e-commerce growth acceleration in the coming years, which it is preparing for. However, the company also plans to use technology to better its in-store shopping experience, as well as invest in technology that will make its in-store associates’ jobs easier and more fulfilling. According to Fleeman, retail media is another key piece of the puzzle, and the company’s digital media income is up 70% year over year. As such, retail media should not be considered simply an alternate or separate revenue stream as it strengthens the relationships between CPG partners and aids in consumer discovery.

• Read all Coresight Research coverage of retail media.

Fleeman discussing retail media and its applications
Source: Groceryshop

Kristen Riggs, President of Salty Snacks at The Hershey Company, stated that when building a unified retail strategy, it is important for companies to consider why customers elect to shop in certain channels and modify their products and positions to reflect those decisions. Per Riggs, a successful omnichannel strategy is not just about having a consistent consumer experience across every single channel, but also understanding why consumers shop each channel and meeting those channel-specific demands.

Game-Changing Efficiency and Future-Proofing: Adopting Generative AI

The adoption of advanced technologies such as AI, generative AI and automation will redefine grocery operations by improving efficiency, enabling data-driven decision-making, elevating customer experiences and transforming supply chain management.

Generative AI: A Key Focus for Groceryshop 2023

From the opening remarks of Groceryshop 2023, it was clear that generative AI would be a key topic of discussion during all three days of the event. During the opening remarks, Sophie Wawro, Global President of Groceryshop, and Krystina Gustafson, SVP of Content at Groceryshop, mentioned that AI would be front and center during this year’s event, and the first day did not disappoint.

During the “Tapping Generative AI to Elevate Shopping Experiences” keynote, Surabhi Pokhriyal, Chief Digital Growth Officer at Church & Dwight, and Veeral Shah, Chief Digital and E-Commerce Officer at Nestlé USA, provided attendees with an overview of generative AI, including diving into the current hype surrounding this incredible technology. Additionally, the panel discussed some uses of generative AI not typically discussed within the grocery sector, including using generative AI to build better computer programming code.

Monica McGurk, CEO of Tropicana Brands and Mainstream Brands, also discussed the impact of generative AI. At Tropicana, the company uses “TropGPT,” an internal generative AI tool with natural language processing capabilities, which allows users to ask questions and receive answers very quickly, making it a valuable resource for performance management, historical analysis and trend identification. Additionally, the more the company uses the software, the better it becomes, as it can learn from common inquiries. McGurk stated she also sees TropGPT eventually extending to sales training, personalization and customization, and content generation, among other areas, in the future. Regardless of how companies implement generative AI into their processes, McGurk stated that they should consider the business process redesigns required to implement.

McGurk explaining the future of TropGPT
Source: Groceryshop

In a different panel, Tim Simmons, Chief Product Officer at Sam’s Club, dispelled rumors that generative AI, or automation in general, is about simply cutting jobs and costs. Instead, according to Simmons, they are about removing time-consumer, mundane parts of employees’ jobs, empowering them to be more productive and satisfied with their work. The frontline worker experience and the customer experience are inherently linked; by freeing up employees’ time and allowing them to better focus on customers, companies can drive loyalty.

• For more on generative AI, see all Coresight Research coverage of generative AI in retail.

Lessons from the Ongoing Kroger-Albertsons Merger

Rodney McMullen, Chairman and CEO of Kroger, discussed in detail the company’s current merger with Albertsons, the strategy behind the merger and how it will help the new entity adapt to the post-pandemic landscape. Both companies shared similar values, scale and views on technology adoption, which were critical factors; additionally, Kroger had a great deal of respect for Albertsons, which made the merger a strategic move. Beyond product and footprint expansions, McMullen stated that the merger will lead to immediate price reductions, stating prices would lower on “day one,” demonstrating the companies’ desire to keep customers post-merger and providing them with better value.

According to McMullen, Kroger recognizes modern consumers’ evolving expectations—shoppers now want a variety of seamless options, including online, pickup and in-store shopping options—and the need to meet them to ensure the combined company remains successful in the future. As such, Kroger and Albertsons are focused on creating a seamless shopping experience that will allow customers to transition effortlessly between channels, with both companies aiming to leverage their expertise to enhance customer experiences.

To further cater to all consumers, both lower-income and higher-income, Kroger plans to offer fresh, high-quality products at competitive prices, such as those under its recently launched “Smart” brand, as well as more locally produced products. The company believes that customers should not need to pick between quality, service and price.

Looking toward the future, McMullen said that the companies’ top challenges are not losing customers post-merger, maintaining profitability for both online and in-store sales, and having the same level of product discovery online that is seen in stores.

• For more on the Albertsons-Kroger merger, read our reports, Kroger and Albertsons Announce Merger: Details, Data and Implications and Kroger and Albertsons To Divest 413 Stores to C&S Wholesale Grocers in a $1.9 Billion Deal.

McMullen (left) and Melissa Repko, Retail and Consumer Reporter at CNBC (right)
Source: Coresight Research

New Growth Opportunities: New Audiences and Product Types

Diversification beyond traditional offerings will unlock new revenue streams. The increased focus among stakeholders on sustainability, as well as trends in health-conscious consumption, meal kits and gourmet selections, presents significant opportunities for brands and retailers.

Pursuing New Audiences

Seth Goldman, Co-Founder and CEO of Eat the Change, first founded Honest Tea, which Coca-Cola later acquired. However, when Coca-Cola announced Honest Tea would be discontinued, Goldman needed to pursue new opportunities—so, he started identifying a new market and consumer base, eventually leading him to launch Eat the Change, a snack company. The company’s mission is centered around the mantra of “be the change you want to see in the world,” which includes lowering the environmental impact of its products, reducing food waste and supporting biodiversity. Goldman stated that there is a growing need for companies to use sustainable alternatives that benefit both consumers, especially those for whom sustainability is a priority, and the planet. “What we eat is our single biggest environmental impact,” Goldman explained. “If you want to change your impact, you have to change what you eat.”

In regard to scaling, specifically, Goldman stated that being a mission-driven brand involves embedding the mission into the product itself; this alignment ensures that as the brand scales, or even changes categories, its mission remains intact.

When attempting to reach customers who may not initially think Eat the Change is for them, Goldman highlighted the importance of offering a quality product with strong branding. According to him, the brand’s environmental aspect is not the primary selling point—products’ quality and taste take precedence.

Goldman telling the audience his journey in retail
Source: Groceryshop

Opportunities in Snacks, Private Label and New Flavors

In the “New Industry Research: Consolidation, Inflation and Other Trends Shaping Grocery” panel, participants discussed how the rise of discount grocers poses a serious threat to traditional supermarkets—a trend also revealed extensively in recent reports in the US Consumer Survey Insights series from Coresight Research. Retailers must tap new growth opportunities to remain competitive in the changing landscape. Lorelei Bergin, VP of North American Retail at NielsenIQ, stated that, while brand loyalty is weakening, there are significant opportunities for brands in healthy snacks, private-label and multi-pack offerings, and new flavor profiles, among other areas.

Bergin also stated that the online channel is critical for reaching consumers, meaning that an omnichannel approach is necessary in today’s retail world, an insight we heard reiterated repeatedly during the first day of Groceryshop 2023. Scott Moses, Partner and Head of Grocery, Pharmacy and Restaurants Investment Banking at Solomon Partners, agreed, stating, “If you want to be the number one retailer, you have to be the number one grocer,” referencing the strategies of Amazon and Walmart.

Bergin during the “Consolidation, Inflation and Other Trends Shaping Grocery” panel
Source: Groceryshop

Organizational Evolution: Impacting Every Part of a Company

A culture of adaptability and continuous learning will drive success for grocery retailers: grocers that foster an environment of innovation, empower their workforce and prioritize customer-centricity will be better positioned to navigate industry shifts effectively.

Effective Organization: The Key to Unified Retail

As previously discussed, a unified commerce experience is more important than ever—and, according to the members of the “Winning Organizational and Team Structures for Unified Commerce” panel, building a unified commerce experience starts with the processes, structure and people of the organization in question. Given the complexity and sheer number of channels, every part of a company needs to be tightly coordinated, from sales and IT teams to creative and marketing teams. Organizations need to focus on building flexible and agile cultures, systems and processes that can adapt to any situation or channel; as such, companies should view investments in change management and organizational culture as just as important as investments in data capturing and technology.

Simmons from Sam’s Club also reiterated the importance of investing in organizational culture, as it is a key to success both with customers and employees. By building flexible, adaptable teams, brands and retailers can keep up with technological changes and shifting shopper behavior.

Ultimately, hiring the right talent is the only way to build an effective team. However, once talent is hired, companies must empower their employees to make the right decisions and communicate effectively, so that they can tackle the right problems at the right time. Partnerships are another critical component of building an adaptable organization as they allow brands and retailers to leverage talent and capabilities they do not have in-house.