Tailored to Match: How AI is Reshaping the Future of Personalization

Neha Ghai
April 11, 2023
How AI is Reshaping the Future of Personalization

At a Glance

  • 20% of all grocery sales will be digital in 2025.
  • Tech-savvy grocers can gain a competitive edge across digital channels.
  • The power of hyper-personalization is reimagined at the intersection of emotions and technology to fuel sales
  • This article highlights AI-focused startups sharpening their consumer-centric insights

The Post-Pandemic Shift to Personalized Grocery Retail

One of the remarkable shifts witnessed in grocery retail coming out of the pandemic has been the upsurge in personalization. In response to the changing consumer preferences and behavior set in during the pandemic, there was a significant departure from the traditional grocery retail model, where products were marketed to a broad audience or demography. The advancement of technology and the onset of the pandemic acted as a catalyst for the digital transformation of grocery retailers to provide data-driven insights that emphasize customer centricity.

The Rise of Digital Sales and Profitability Challenges

Historically, growth in grocery retail has been glacial, with an average of only 2.7% year-over-year sales growth. The home-bound shutdown in 2020 increased the need for groceries and essentials, tripling the annual average growth of grocery retail to 9.5%. The main driver was the rise in digital sales, which were up more than five times over 2019 levels. Grocery Doppio's report titled "Growth at the cost of profitability" states that 20% of all grocery sales will be through digital channels by 2025. The report highlights the number one problem grocers face is low profitability in their online business.

Harnessing Data and the Future of Grocery Engagement

One way grocers can increase profitability in this ultra-competitive space is by leveraging data to generate customized solutions to retain shopper loyalty. Delivering hyper-personalized experiences to customers is an arduous task that requires a deep understanding of behavior, preferences, and past interactions with the brand. Data is collected and analyzed across thousands of products, social media activity, browser history, and demographic information. Leveraging this data is a herculean task but worth the effort, as businesses can create highly targeted personalized experiences, including product recommendations, customized marketing messages, and tailored promotions. Achieving personalization at an individual level can increase customer engagement, drive sales, and foster long-term loyalty. Grocers leverage data to customize personalized solutions for their customers and have invested in cloud solutions and tech platforms to customize shopping journeys, deliver personalized messaging, and react to triggers. The element of differentiation in a global digital age is at the intersection of human emotions and technology. Growing up in a digital world, Millennials are receptive to messaging and promotions from retailers; they are often willing to trade personal information for a customized and tailored experience while striking a balance with the risk of privacy invasion. Millennials and Gen Z will account for the most significant portion of digital buyers by 2026, and hyper-personalization at a one-to-one level is at the heart of retaining these customers and fuelling grocery sales.

Gain the Competitive Edge 

Personalization can give savvy grocers a competitive advantage across channels. Timely consumer insights lie at the heart of improving shoppers' journeys and facilitating growth in digital sales. Digital sales in grocery grew five times since 2019, requiring a seamless omnichannel experience and innovations in product recommendations, promotions, and discounts. Personalization is now an expectation, and predictive analytics incorporating multiple data points like browser history, past purchases, location, weather, page views, social interactions, and clicks per page can help gauge customer preferences and interests. 

Power of Personalization: Benefits for Business 

One-to-one hyper-personalization benefits grocers and customers alike. Below we dive into the key benefits.

Grocers: Grocery retailers can significantly increase foot traffic and online sales by leveraging timely insights into customers' future needs and preferences. By delivering personalized promotional offers and engaging customers with tailored recommendations, retailers can improve their chances of fulfilling customer purchase needs and driving better churn rates for customers in transitory states. Ultimately personalization will help uplift loyalty and drive sales.

Shoppers: The shopping experience is a seamless and hassle-free way for busy shoppers to interact with the brand. When visiting online stores, shoppers can be presented with pre-built curated lists and recommended cross-selling products. Saving time is pivotal to building a positive shopper experience. In Grocery Doppio's “Annual Digital Maturity Benchmark,” 89% of shoppers are more likely to return to the same grocer if they have had positive experiences.

Integrated Technology Disruptors 

Below are some disruptive companies personalizing the shopping journey through the innovative use of technology:

Halla - A food recommendation taste intelligence platform that is revolutionizing the grocery industry by offering unique recommendations. Their patented technology combines data and human psychographics to create customized solutions based on more than 100 billion grocery shoppers and product data points. Founded in 2016 by Gabriel Nipote, Henry Michaelson, and Spencer Price to enable grocers to provide personalized and seamless digital journeys coupled with proprietary data sets and real-time capabilities. The platform has partnered with Farmstead and leverages its expertise to predict human food preferences in real time.

Birdzi - An intelligence platform focussed on customer-centric data to strengthen consumer loyalty and engagement while personalizing the shopping experience. Founded in 2012 by Shekhar Raman and Francisco Borges, the product-centric company creates customized solutions for grocery retailers by using their proprietary retail execution software VISPER to strengthen brand loyalty by increasing customer value.

Grocery Shopii - The woman-owned digital platform incorporates meal planning into a grocer's e-commerce platform. The company, founded in 2018 by Katie H.Hotze, utilizes proprietary technology to prevent cart abandonment and improve shoppers' online grocery experience. The company implements a unique approach using machine learning to incorporate recipes into its recommendation platform. The distinctive method leverages this technology to optimize personalized capabilities and deliver relevant suggestions to the shopper.

OjaExpress- A digital platform that combines technology, culture, and groceries. Chicago-based OjaExpress, founded in 2015 by immigrants Fola Dada and Boyede Sobitan, is vertically integrated and seeks to deliver ethnic culture-specific groceries. Focussing on quality food, shoppers can buy groceries from various cuisines such as African, Caribbean, Hispanic, Asian, and European. The digital grocery platform’s vertically integrated technology sources supplies from mom-and-pop shops and provides for same-day delivery. 

In conclusion, personalization falls at the intersection of technology and emotional human needs, and delivering those requirements can increase consumer engagement and loyalty in this competitive grocery landscape.