re Grocers Taking On More Than They Can Chew?

How grocers are managing change, technology & AI

By Craig Rosenblum, Principal Columbus Consulting

GROCERY TRENDS

THE INDUSTRY TODAY

E.GROCERY

Five Key Considerations For Grocers To Stay Competitive And Relevant:

The grocery industry, like many retail categories, has transformed and evolved over the last three decades. From supermarkets to discount clubs, curbside pick-up to same-day delivery, grocers have faced the convergence of new consumer demands with innovative technological capabilities. The golden era of supermarkets from the 60’s and 70’s fostered the birth of the 1988 Walmart Supercenter, blending grocery shopping with general merchandise in a way that redefined convenience. Soon after came Amazon’s entry into online grocery in 2007, pushing the boundaries of digital retail. And then the pandemic in 2020 ushered in accelerated eCommerce growth, turning omnichannel shopping—into the standard consumer expectation.

Grocery e-commerce sales are predicted to increase at a compound annual growth rate of 4.5% over the next five years — more than three times faster than the 1.3% rate forecasted for in-store grocery sales, [Brick Meets Click reported in its U.S. eGrocery Sales Forecast: 2024-28 report.]

Total grocery e-commerce sales are projected to reach nearly $120 billion annually by the end of 2028, accounting for 12.7% of total grocery sales in the U.S., the report found. Pickup is expected to lead the pack as the most popular e-commerce method.

This astounding rate of growth is causing grocers to shift their priorities from an instore-first mentality to a digitally-inclusive framework. Like all unified-commerce retailers, grocers are looking to new processes and systems that adapt to e.commerce needs. Shop online, pick-up in store, or delivery via third party partners have complicated traditional technology.

At the same time, retailers are becoming media companies. Retail media revenue is expected to double over the next four years, reaching $100B by 2028, with 77% of this commandeered by Amazon (69%) and Walmart (8%), as they capitalize on their data foundation and fully integrating commerce and media assets in store and on line. For grocers to garner their fair share of brand dollars and compete for a greater share of the shoppers wallet, it will require monetizing your first-party data, identifying shoppers and segments, providing reporting on ROI/ROAS and iterating retail media across shopping channels to enhance their shopping experiences

Today, grocery retail has become an intricate blend of physical and digital experiences. With increasing competition, price sensitivities and heightened shopper demands, grocers are facing change on every front.But adapting is a daunting task. The industry needs a technological make-over as legacy systems can no longer keep pace with the changes in the marketplace. Grocers are looking to address nearly every aspect of their businesses, but this can be a lot to take in at once.

Some of the key areas the industry is addressing to satisfy Shopper needs include:

• Consistency Across Channels – Whether browsing online, using a mobile app, or shopping in-store, customers want a unified experience with synchronized inventory, pricing, and promotions.
  
  
• Personalized Recommendations – Shoppers expect brands to use their purchase history and preferences to offer tailored product suggestions and promotions.
  
  
• Convenience & Flexibility – The ability to start shopping on one platform and complete the purchase on another—such as researching online and buying in-store—is a major expectation.
  
  
• Real-Time Engagement – Customers appreciate brands that provide instant support via chatbots, AI-driven assistance, or personalized messaging.

Loyalty & Rewards Integration – Shoppers want loyalty programs that work across all channels, offering personalized discounts and exclusive perks.

The following are some of the latest features being integrated:

• Online Marketplace - This feature enables multiple third-party sellers to list and sell their goods or services on your website. Marketplace sales are projected to be 46% of eCommerce revenue in North America. While historically led and dominated by Amazon, Walmart, ebay, Target, and Best Buy, rising players like Temu and AliExpress continue to climb the ranks.
  
  
• AI Agents - Amazon's "Buy for Me" exemplifies the emergence of Agentic Commerce. This AI-powered feature acts as a personal shopping agent, operating across Amazon and third-party platforms. Its significance lies in how it restructures the traditional shopper journey. Instead of starting with a consumer search, the process now begins with Amazon's AI agent. This agent autonomously handles product discovery, comparison, and the final transaction, all on behalf of the shopper, effectively collapsing the conventional buying cycle.
  
  
• LiveStream Commerce - The ability to buy products in real time while streaming on applications like Instagram Live, TikTok Live, and YouTube. Livestream shopping is gaining traction in the US, with over 20% of digital buyers expected to purchase livestream by 2025, and expected to reach 60M+ buyers by 2028. The trend enables strong engagement, real-time interaction, and seamless checkout experiences will lead the next wave of digital commerce.
  
  
• Universal AI Assistants - One great example is Project Astra, by Google. It is designed to be a universal AI assistant capable of real-time interaction and multimodal understanding. It provides screen sharing integration and visual understanding through camera, Cross-platform tool access (e.g. calendar, gmail, maps, etc.), works cross devices - phone, computer, starts conversations and anticipates needs, and is multilingual
  
  
• Mobile Wallet - Integrate loyalty programs directly into mobile wallets, eliminating the need for separate apps. Solutions like Badge enable seamless integration, similar to adding a boarding pass or Apple Pay. This allows for push notifications regarding offers and promotions while addressing PII concerns through automatic opt-in upon loading the loyalty card. Embedding loyalty cards in digital wallets streamlines the delivery of deal and promotion notifications.

Despite all this, a recent Criteo study revealed that over 75% of consumers find eCommerce “functional” but lacking in enjoyment. While online shopping offers convenience, many shoppers miss the excitement of in-store experiences, where 80% of the purchases are still made. Hence, a connected in-store experience is essential.

• Align Strategic Objectives and Priorities - Despite the desire to be all things to all people it is imperative you have a clear strategy outlining your:
  • Shopper Value Equation - What are they primary one or two areas you are going to differentiate versus the competition
    
    
  • Competitors - Who are the primary one or two In-store and On-line
    
    
  • eCommerce - Website (one or multiple parties), Fulfillment (DC or Store), Picking (self or 3rd party) and Delivery (self or 3rd party)
    
    
  • Media Strategy - On-Site and Off-site strategy
    
    
  • Loyalty Program – Type? Discount, Points, etc.
    
    
  • Joint Business Planning - How are you engaging your vendors? What are the key performance indicators? Monetization? Marketing
    
    
  • Merchandising Strategy - Category Strategies and Roles
    
    
  • Organization Design - Merchandising, Marketing, Data, Analytics, Operations - What is the right approach and ownership of sales, shopper, monetization and fulfillment.

• Evaluate Existing Technology Platforms to ensure they are flexible and not rigid to integrating new technologies, applications, data and capabilities. Some things to consider:
  • API based
    
    
  • Open to accepting ALL content coupons, rewards, media, etc.
    
    
  • Creation of unique content and media, not just National
    
    
  • Contracts enable flexibility, not exclusivity
    
    
  • Cybersecurity
    
    
  • Training

• Data, Data, Data - First-party data is a critical asset that must be carefully managed. Implementing Master Data Management is essential, including a Product Item Master for a single source of truth and Customer Relationship Management for personalized experiences. Establishing and maintaining these systems will necessitate:
  • Product Attribution
  • Process
  • Governance
  • Development of Shopper Segments
  • Enabling Technology

• Hire Outside Resources - This can all be daunting, since many organizations do not have the personnel, intellectual capital or financial resources to keep up with the ongoing evolution of omnichannel solutions and technology. A Consultant can:
  • Prioritize and quantify Overall and Technology Strategy and Roadmap
  • Provide Expertise
  • Inform and Incorporate of Best Practices
  • Lead Project, Process and Change Management
  • Ensure Deployment and Training

1. Embrace AI to drive speed, intelligence and efficiency. Some areas to consider include:
   • Inventory Management & Demand Forecasting – AI can analyze sales patterns, seasonal trends, and external factors like weather to predict demand more accurately, reducing waste and stockouts.
     
     
   • Personalized Shopping Experiences – AI-driven recommendation engines can suggest products based on customer preferences, past purchases, and dietary needs.
     
     
   • Automated Checkout & Smart Shopping Carts – Computer vision and AI-powered payment systems allow customers to check out seamlessly without waiting in line.
     
     
   • Dynamic Pricing & Promotions – AI can optimize pricing strategies by analyzing competitor prices, demand fluctuations, and customer behavior.
     
     
   • Supply Chain Optimization – AI helps retailers streamline logistics, ensuring products are stocked efficiently from distribution centers to stores.
     
     
   • Fraud Prevention & Loss Reduction – AI-powered security systems can detect suspicious transactions and prevent theft at self-checkout stations.
     
     
   • AI-Powered Customer Service – Chatbots and virtual assistants can handle inquiries, assist with online orders, and provide real-time support.