In public discourse, there seems to be no end to the possible uses of artificial intelligence, nor its influence on enterprises. Generative AI is doing innovative activities and changing customer service. Predictive AI is expediting decision-making and providing additional depth and accuracy to forecasting. In the grocery and retail industries, conversations about AI tend to center on how the technology may assist businesses evaluate demand, optimize stock positioning, and encourage impulsive sales.
We believe, however, that AI will have its most substantial influence in the areas of retail customisation and loyalty. Already being utilized or experimented with by some of the world’s largest retailers, including prominent supermarket chains, AI can create a more personal customer experience in multiple ways, including matching the right product or offer to the right customer and facilitating the one-to-one connections retailers have long sought. AI’s capacity to use previous data to anticipate future outcomes and tailor encounters is giving rise to new services, interactive shopping experiences, higher consumer involvement, and enhanced brand loyalty.
Despite its promise, grocers are just at the start of what AI and machine intelligence can provide. The possibilities are constantly evolving, with AI providing early adopters huge opportunity and strategic benefits. McKinsey estimates the retail AI business is primed for “explosive growth” and will climb by more than 30% yearly from 2023 to 2032.
Hyper-personalized shopping experiences at scale? It’s feasible with AI
This expansion will depend on the quality and amount of data merchants can use with their AI capabilities. Fortunately, the consumer data that grocers already have at their fingertips – including customer behavioral and purchasing habits collected by a loyalty program — provides ideal ground for AI applications to bloom. The greater the depth of data, the closer a match is made between the grocer’s understanding of each customer’s needs, wants, and preferences (and potential future behavior), and the quicker AI systems can recommend appropriate inventory levels, generate a custom offer, or automatically deploy tailored communications.
This degree of customisation will pay off, since all buyers want to save money and be rewarded and interacted with in a meaningful way. According to our Grocery’s Great Loyalty Opportunity research, 60% of buyers find tailored offers “very” or “extremely” significant, and 84% feel these deals save them money.
Personalized offers greatly enhance engagement and revenue as well. Australian retailer Woolworths discovered customers are five times more likely to buy a product when marketing is tailored to them, according to AI and the Current State of Retail Marketing.
However, there is a mismatch between merchants and customers over how well they are offering individualized offers. While 71% of merchants questioned for our grocery research say they succeed in this area, just 34% of buyers feel the same. Additional study by McKinsey indicated certain loyalty programs are irritating buyers by not customizing enough.
AI is helping to minimize this mismatch, enabling individually tailored, hyper-personalized offers to be developed dynamically, in the moment, and given via the appropriate channel for each consumer. AI orchestrates everything under readily specified business standards, ensuring offers fit with business KPIs and create value for the brand and grocer while helping to reduce generic rewards and interact with customers more efficiently. Importantly, all this can be done at scale, a skill that was previously unreachable but required for grocers that need to give individualized experiences to thousands or tens of thousands of unique consumers, not just a few subgroups of them.
Predictive AI’s capacity to exploit consumer data and learn from the outcome of its forecasts extends beyond detecting current spending trends to understanding the subtleties of why a shopper has behaved in a specific way. It can forecast what will cause a client alter behavior as well. It may also identify a brand or product the client hasn’t bought and is likely to want to try, as well as construct an offer that is most likely to nudge them into making a purchase.
Gamified incentives drive AI-powered loyalty engagement
This AI-powered “nudge” is clearly shown in gamification activities forward-looking supermarkets have implemented into their loyalty programs. Gamification helps grocers to improve the experience of customized loyalty further, extending engagement for consumers and increasing revenue growth by rewarding minor changes in behavior. promotions performed by European retailers Carrefour and Tesco attest to the tremendous effects of employing AI analysis, decisioning, and predictive skills to handle these challenge-based loyalty promotions.
In each example, Eagle Eye’s machine learning and AI examined historical behavior and purchase habits of particular consumers and utilized that information to develop bespoke Challenges with customized thresholds and prizes. These obstacles motivate customers to carry out specified behaviors, including consolidating expenditure to raise their share of wallet with these stores, which produces incrementality for the retailer and lavishly compensates the client.
The separate loyalty programs supply the essential data and insights into individual consumer behavior, while AI anticipates the threshold limitations to unlock prizes and the triggers in the form of genuine offers. Gamification is the lever that drives engagement — and it does it consistently and efficiently. Our grocery survey indicated that two-thirds of customers globally would, or already do, participate in games or challenges established by a loyalty program or app.
These efforts from Carrefour and Tesco are fascinating instances of how customization, loyalty and gamification can work together to produce value for consumers, retailers and their suppliers, who are also reaping the perks of participating in these campaigns. They emphasize AI’s potential to generate individualized objectives for individual consumers throughout the hundreds of thousands or even millions of loyalty program members that engage in a grocery reward project.
They are also wonderful instances of how AI is helping grocers realize their aim of true, one-to-one engagement, enhancing consumer happiness and providing value for the business. Is your retail brand researching AI applications, and if so, are you similarly bullish about its potential implications as we are?