From cart to click: How technology is transforming the supermarket sector

No more trudging up and down the aisles, just click and get your goods delivered to your door.

The convenience of buying groceries online was of great help for many shoppers during pandemic lockdowns, and it has stuck. In Australia, nearly half of consumers (48 per cent) are now shopping online at least sometimes.

While online grocery sales are predicted to keep growing strongly, the majority of grocery shopping still happens in physical stores. Brick-and-mortar supermarkets remain hugely important, but retailers need to consider and accommodate changing consumer expectations.

New generations of digitally native shoppers are now entering the grocery market. They show greater versatility and a higher preference for online shopping than older shoppers. Interestingly, in the United States, they also enjoy shopping more than older generations. Younger shoppers are much more likely to impulse buy than older shoppers (49 per cent of 18-24 year olds vs 35 per cent of over 65s).

It’s clear that supermarkets are in an increasingly hybrid business. How should they balance investment in their new, digital channels while continuing to enhance experiences in-store and satisfy all customers?

Creating customer-focused grocery experiences

Successful customer-obsessed grocery experiences follow the four LEAD principles of design: light, ethical, accessible and dataful. These principles help grocers think about the customer experience more holistically, from all angles.  A major theme is reducing complexity and easing the customer journey/path-to-purchase, for example:

• Creating clean, easy-to-navigate e-commerce experiences: Personalisation is very important here, allowing customers to set preferences and get personalised, curated recommendations, offers and rewards. When put together, we’ve seen this level of personalisation help increase conversion six-fold, from 2 to 12 per cent. 

• Integrating mobile experiences at physical stores: Technology such as smart shelves, mobile wayfinding apps and loyalty program integration can ease friction and make the physical journey more seamless.

• Providing more transparency in the supply chain: Consumers want more information about product health and safety, as well as ethical and environmental sustainability. It’s about building visibility into the supply chain and extending that information to consumers. For example, enabling them to scan a box of eggs and see what farm and flock of chickens they came from.

Using AI to enhance bricks and clicks

Supermarkets need to think about their physical store investment as an extension of their digital investment (and vice versa), ensuring that both are driving deeper connection to the customer and better data for the retailer. This data can then be used to generate insights and continuously improve the customer experience.

Many incumbent retailers already have a vast amount of data gathered over many years, from in-store and online transactions to loyalty programs. Most startups can’t touch this breadth and depth of data. Amazon’s expansion into every facet of people’s lives is as much about gathering more data as it is about finding profit in new categories.

Grocery retailers would be wise to embrace the data advantages they have with their own customers now. What’s critical is figuring out how to synthesise that data and analyze it in a way that uncovers new opportunities for CX improvement and growth, before new rivals do. AI, including GenAI (Generative AI), is vital to achieving this. Retail marketplaces like Walmart, Amazon and Ebay have already implemented GenAI for employee efficiency, customer experience and business capability building.

In one example, a large specialty retailer that we work with saw conversion improve by 2 per cent simply due to better product descriptions using GenAI. We worked with the retailer to improve these descriptions by using GenAI to learn from customer reviews and what customers felt was unique and differentiating about the product. 

Other applications include Amazon’s product review summary feature, which uses AI to distill reviews and ratings to highlight key themes and extract valuable insights from repeated phrases. Ebay is leveraging GenAI to analyze product photos and generate comprehensive descriptions, including titles, product details and release dates. 

Tomorrow’s supermarkets: mobile, seamless, connected

Success for supermarkets lies in building a connected ecosystem of services. Walmart, for example, has a mobile app that seamlessly connects the shopping experience across channels while reducing time and friction in-store. The app resulted in a 98 per cent increase in mobile orders and a 20 per cent increase in conversions.

Another unique challenge that grocers face, compared to other retailers, is inventory. The freshness, safe storage and delivery of products must be a top priority, as well as availability. This creates many challenges in the supply chain. There are continuous disruptions from crop failure, transport issues and geopolitical conflict which all impact costs and reduce profit margins. AI also has an important role to play here with demand forecasting, inventory management and logistics.

The biggest question for most online grocery shoppers (not to mention the supply chain as a whole) is always: “Where is the package?” It’s currently an awkward process to get an answer, using limited tracking information or waiting in long call center queues. Instead, GenAI with “conversational commerce” capabilities can answer questions such as “When will my groceries arrive?” or “Can I reschedule my delivery?” very quickly and easily.

The key skill in the rapidly evolving AI landscape is the ability to learn, unlearn and relearn. Supermarkets and grocery retailers must cultivate adaptability and embrace change as the only constant. It’s also important to step back from thinking about what GenAI can do now and consider how it will fundamentally change the way we live, work and shop in the future. 

Today, there’s still a gap between GenAI hype and reality. But the use cases are growing. As AI advances, retailers will need to rapidly prepare themselves with the processes and capabilities that will enable it to be effective for their organisations, employees and customers. 

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