Today’s grocery retail world is changing like never before. Customer shifts toward online shopping, convenience and healthy lifestyle agendas create an extraordinary challenge and a golden opportunity for grocers.

In this Game-changers in Retail series, we’ve met with Justin Honaman, Head of Worldwide Consumer Products—food and beverage at Amazon Web Services (AWS)—to discuss his vision for the future of grocery retail and how it amounts to an immense opportunity to leverage AI in grocery retail.

Before we look ahead, let’s talk about modern consumers. What are the grocery trends you are seeing?

First, let’s talk briefly about what happened in the last two years. When we think about COVID-19’s impact on grocery even more broadly in consumer goods companies, I don’t know if anybody could plan for supply chain pressures and tension placed on these companies. Today, retail and consumer goods companies are in the midst of an unprecedented transformation that plays out for consumers, too. During this time, consumers have reacted in different ways. Their behaviors have changed, and their expectations from grocers have increased.

A couple of things we can expect now:

First, digital engagement.

As consumers, we want the experience to be the same online as in stores. Although this is easier with the center-store items, the more significant challenge is with fresh produce, dairy, meat and deli.

We all want our shopping experience to be delightful, frictionless and fulfilling, right? Therefore, retailers must act today, and the digital experience needs to evolve quickly. When we look at the numbers from consumer brands and retailers, the last two and a half years have accelerated many of their plans around digital customer engagement. This is exciting, and it represents significant opportunities for grocery retailers.

Secondly, know your customer.

Grocery retailers need to get to know their customers better. They must market to them and provide relevant promotions, discounts or rewards. As a consumer, when I walk into a store, I like an offer based on my purchase history. On the grocer’s side, doing this requires data and analytics. Once a grocer is armed with great customer insights, it can maintain a positive relationship with its customers.

Lastly, variety.

Consumer preferences continue to evolve around health and wellness. Today’s consumers are looking for nutritious, plant-based, fresh food for meals and snacks. We also see a rise in energy drinks, healthy beverages, teas and coffee. These consumers want their grocers to offer a variety of nutritious food options. If their grocers don’t provide the options, they lose a significant competitive advantage.

What should grocery retailers do to meet expectations and win in an increasingly competitive space?

Think about the grocery stores and why we go there. There are some things like tomato sauce that I can easily buy online and have delivered to my home. In this case, online grocery stores can offer more convenience. But if I want fresh seafood, fresh deli, fresh sushi or veggies, then it is different.

As consumers, we want to go to the store, see the avocados, touch them, feel them, pick them up and put them in our carts—an experience we can’t have if we order online.

Grocers who want to succeed in the modern grocery world must master online and in-store experiences. They must provide a good customer experience and stay ahead of the consumer.

Online platforms and apps can deliver orders in an hour or even less. What do you think this means for physical stores in the near future?

The idea of quickly getting products to your home is fantastic and very efficient. Instacart is an excellent example of this. They go to a store, shop for you and then bring the product to you.

The numbers show that online grocery shopping will increase in the near future. That’s great, but there is a reason stores exist. People still like the in-store grocery shopping experience. They like the atmosphere and experience in brick-and-mortar stores and want to inspect and pick out their own products. Freshness is the driver in that sense.

Today, both online and in-store shopping have advantages. Will consumers prefer shopping online or in-store? The answer is both. It’ll always be a balance of these two.

How important is it to make granular, data-driven forecasts in the modern grocery era?

I believe it’s essential. Forecasting, inventory planning and delivery are retailers' top priorities. Grocers need to start with good data to succeed.

Today, they can access rich customer data. They also know what is in and out of stock, the price and the margin on a product in a store. IoT data, sales data, supply chain, logistics and distribution data are also available, and the list goes on.

Grocers need the right tools and platform to combine all this data and perform analytics. This can be challenging for some retailers because, most of the time, data is not in one place. Instead, it is disbursed across the organization, making accurate forecasting even more challenging.

Luckily, advanced solutions are available today that use AI decisioning to help grocers make data-driven forecasts. Grocers just need to take advantage of that.

What do you think will be key trends shaping the grocery industry in the coming years?

The online grocery shopping trend will continue. We’ll see more buy online, pick up at the store, buy online and have it delivered to my house. Plus, there will be an absolute focus on in-store fresh food, deli, bakery, plant-based options, immunity boosting and high protein healthy food. We are in the era of at-home meals and snacks. On the beverage side, we’ll see more healthy drinks and energy drinks. It’s an interesting time to be in grocery retail. It’s time to accelerate the adaptation of new technology and keep up with evolving consumer trends. 

Together, the addition of more technology in grocers will inherently lead to more opportunities for AI in grocery retail. Connect with an expert in AI in grocery retail at invent.ai to get started.