By Danny Edsall, Justin Cook and Jagadish Upadhyaya
Some grocery companies are moving fast toward the first “killer application.”
In our recent survey of 100 US grocery retail executives, 84 percent said they are at least somewhat familiar with Gen AI.
And already, there is a camp within the industry that is optimistic Gen AI can make a “significant financial contribution” in terms of major revenue creation or cost savings for their companies (four in 10). That is impressive for a technology many likely first learned about within the last year. A somewhat larger group believes it is still too early to say (49 percent), but very few are pessimistic (11 percent “somewhat pessimistic,” 0 percent “very pessimistic”).
During June and July of 2023, Deloitte surveyed 100 senior executives from US grocery retailers with over 10,000 employees about the future of their industry.
Those who are moving forward with the technology appear to be moving fast. Before the calendar hits 2024, over 40 percent of executives in our survey think their company will be using Gen AI for a business application. What will those applications be, and which will be most successful? We asked grocers to place their bets on the first “killer application” for the industry (Figure).
“Acting as a customer assistant” emerged as the top candidate. This could include not only answering customer service questions, but also going far beyond to cover things like meal planning, suggested shopping lists, product search, and sales alerts.
The next two leading applications are related to the back office, where some grocers may see potential for Gen AI to replace and consolidate disparate, sometimes still paper-driven, processes and complicated tools. Managing supply chain logistics ranked second on the list, reflecting an ongoing pain point that grocers are hoping to partially manage with Gen AI. Its use in inventory management came in a close third. As a labor-intensive process, the desire for real-time inventory with high accuracy was something many grocers separately in our survey said they wanted to have in their stores in the next five to ten years. Inventory management could be better if there were a Gen AI-powered interface to explore the data and suggest recommended actions.
“Act as an expert and tell me how this could work”
As grocers work toward realizing the first Gen AI “killer application” of a customer assistant, they could look for inspiration in their childhoods—specifically, that parent or caregiver who was at the center of everything food, from meal inspiration to preparation. A person who knew what we liked and what was healthy. Someone who managed the food budget, planned the shopping list, had the special recipes, and tried to prevent waste. It was likely a person we fully trusted. Replicating this kind of relationship is a high bar, but a worthy goal grocers may strive to achieve as they deploy technology to help the lives of their customers and build loyalty.
However, for such a system to work, consumers would likely need to be willing to share their personal data beyond what they put in the shopping cart last week. Think about health history, allergies, dietary preferences, religious restrictions, etc., covering everyone for whom they may be preparing food. We know from past research that about half of consumers are willing to share their data (including some medical data) and use technology in exchange for personalized recommendations for healthy food.1 That’s promising, but consumers may have more specific hesitation about Gen AI.
Will consumers respond to the “golden prompt?”
For a forthcoming report, we surveyed 2,000 US consumers about their grocery shopping habits, attitudes, and preferences.2 When asked in the context of their primary grocery store, 53 percent of consumers said they did not want communications from their grocer that are generated by AI. Regarding trust, only 22 percent agreed or strongly agreed that their primary grocer would use Gen AI responsibly in interactions with them, now or in the future. Two in 10 is a low figure for what some might consider one of the most trusted companies in consumers’ lives.
To help overcome some of these obstacles, grocers might consider an approach that puts AI technology in the background. Make the experience easy using interfaces like apps and smart speakers without specifically touting the Gen AI technology. Use Gen AI first to help facilitate a better experience from things they already do on your digital properties, then expand from there.
Whether it turns out to be customer-facing or something helping the business from behind the scenes, many executives think a killer grocery app is coming soon. Note only 1 percent think effective deployment is still years away. If nothing else, it seems Gen AI is helping make many of us believers in the pace of change.
Danny Edsall, United States; Justin Cook, United States; Jagadish Upadhyaya, India
Note: For all its flaws, only human intelligence was used in the writing of this report