Event Coverage 11 minutesFree ReportGroceryshop 2024 Day Two: A FRESH Perspective on Winning in Grocery with AI-Powered Demand Forecasting John Harmon, CFA, Associate Director of Technology ResearchStephan Deemer, AssociateSteven Winnick, Vice President—Innovator Services October 9, 2024 Table of ContentsIntroduction Groceryshop 2024 Day Two: Coresight Research Insights Building Profitable, Efficient and Resilient Businesses Implementing and Scaling AI Applications Seizing New Opportunities in Retail Media Delivering Convenient, Seamless and Unified Shopping Experiences Embracing Collaboration, Innovation and New Partnership Structures What's InsideDon’t miss our insights from Groceryshop 2024! Taking place during October 7–9 in Las Vegas, Nevada, the annual retail conference helps businesses navigate the evolving grocery landscape. In this report, we present key takeaways from the second day of Groceryshop 2024, with highlights covering food waste reduction, AI (artificial intelligence), seamless shopping experiences and more. Coresight Research is a research partner of Groceryshop 2024. Companies mentioned in this report include: Colgate-Palmolive, DoorDash, Instacart, Mars Wrigley, Uber Eats, Walmart Other relevant research: Next-Generation Pricing, Demand Forecasting and Inventory Planning: Insights Presented at Groceryshop 2024 Your Guide to Groceryshop 2024: Five Key Themes Driving Growth and Innovation in Grocery and CPG Retail Access all of our coverage of Groceryshop 2024 All Coresight Research coverage retail media, loyalty programs and GenAI in retail Visit the Coresight Research Food, Grocery and CPG Retail Hub to explore sector data, reports and company profiles. Executive SummaryCoresight Research is a research partner of Groceryshop 2024, which is taking place during October 7–9, 2024 in Las Vegas, Nevada. Groceryshop is an annual conference that helps businesses navigate the evolving grocery landscape. We present key insights from day two of Groceryshop 2024. Coresight Research Insights 1. Building Profitable, Efficient and Resilient Businesses Deborah Weinswig, CEO and Founder of Coresight Research, took to the stage on day two to discuss next-generation pricing, demand forecasting and inventory planning, powered by AI (artificial intelligence). She launched the new FRESH framework from Coresight Research, which encapsulates how grocery retailers can win with fresh and prepared food while minimizing the impact of food waste. According to an executive from Mars Wrigley, the company’s proposed acquisition of Kellanova would bring increased value for customers across all geographies. They highlighted the importance of preserving the unique aspects of acquired brands in order to maintain consumer loyalty. Mars Wrigley plans to double its snacking business over the next decade. Only then can technology innovation be implemented as brand strength is a prerequisite for innovation, according to the company. For grocery retailing overall in the next 12 months, speakers from Mars Wrigley and Instacart pointed to the importance of ensuring affordability for consumers. Walmart is focused on accessibility and expanding its customer base. The company plans to continue enhancing its Walmart+ membership program by optimizing delivery processes, offering in-home and faster delivery options and partnering with companies such as Burger King. DoorDash has expanded beyond meal delivery to offer greater convenience to its 37 million monthly users. The company is working to make its services accessible to more US consumers; for example, DoorDash now accepts SNAP (Supplemental Nutrition Assistance Program) payments. 2. Implementing and Scaling AI Applications In one panel, executives from Calgary Co-op and Good Food Holdings agreed that AI’s potential to unlock data and enable personalized in-store experiences will be a key driver for future success. However, they warned that it can be easy to select the wrong solution from among the many available on the market. When looking at ways to implement AI, the solution must both solve a problem for consumers as well as deliver ROI (return on investment) for the company. 3. Seizing New Opportunities in Retail Media Instacart believes that retail media is an “absolutely critical” channel. Instacart’s “Carrot Ads” retail media offering allows grocery retailers to launch a retail media network quickly and Caper Carts enable brands and retailers to advertise to customers from the cart while they shop in-store. 4. Delivering Convenient, Seamless and Unified Shopping Experiences We heard about the need for retailers to embrace both internal and customer-facing strategies to successfully implement an overarching unified commerce strategy that is based on connected data, automation and upskilled staff, among other capabilities. Brands and retailers are working to meet rising consumer expectations around seamless shopping experiences by blending the in-store and online shopping journeys, but they are doing this in different ways, such as tapping into fandoms, focusing on in-store engagements and implementing personalization. However, putting the customer first is pivotal to winning in grocery retailing, and technology integration must enhance the human connection, not replace it. 5. Embracing Collaboration, Innovation and New Partnership Structures Instacart has added Uber Eats and restaurants to its offerings. The company believes that partnering with a competitor is okay if it helps serve the customer at the end of the day. Introduction Coresight Research is a research partner of Groceryshop 2024, which is taking place during October 7–9, 2024, in Las Vegas, Nevada. Groceryshop is an annual conference that helps businesses navigate the evolving grocery landscape, exploring the latest business models, advanced technologies and shifting consumer behaviors. This year, the conference covers five major themes in retail: seizing new opportunities in retail media; building profitable, efficient and resilient businesses; implementing and scaling AI (artificial intelligence) applications; delivering convenient, seamless and unified shopping experiences; and embracing collaboration, innovation and new partnership structures. (Not all coverage reports cover all five themes.) We present key insights from the second day of Groceryshop 2024. The show floor at Groceryshop 2024 Source: Groceryshop Groceryshop 2024 Day Two: Coresight Research Insights 1. Building Profitable, Efficient and Resilient Businesses Deborah Weinswig, CEO and Founder of Coresight Research, took to the stage on day two to present new research on next-generation pricing, demand forecasting and inventory planning. She also launched the new FRESH framework from Coresight Research, which encapsulates how grocery retailers can win with fresh and prepared food while minimizing the impact of food waste. Food waste represents one of the biggest problems in the world today, Weinswig emphasized. Coresight Research estimates that there will be $750 billion in total food waste (in terms of retail selling price) in the US in 2024. Looking at fresh food specifically, it accounts for some 42% of sales but contributes 82% of waste in food retail, we calculate, based on data from FMI and Pacific Coast Food Waste Commitment. Fresh food therefore presents a critical focus area for retailers looking to reduce food waste. Weinswig dived into the applications and benefits of AI—supported by robotics and computer vision—across the five pillars of the FRESH framework: Food waste reduction, Refining inventory planning, Estimating demand, Setting dynamic pricing, and Hunger curtailment. “The FRESH framework from Coresight Research is all about giving retailers the edge they need with fresh and prepared food. It’s practical, actionable, and is designed to help retailers balance the tricky equation of reducing waste while keeping shelves stocked with in-demand products,” Weinswig explained. Figure 1. The Coresight Research FRESH Framework for Winning in Grocery Retail Source: Coresight Research While reducing food waste is beneficial to retailers’ margins, it also has a greater, far-reaching impact on the world. “If we can find a way to mitigate food waste, we can literally feed the world. It’s not just about better forecasting consumer demand; it’s about creating a smarter, more sustainable future for grocery,” said Weinswig. Access the full presentation here, and look out for our upcoming in-depth report on the FRESH framework on coresight.com. Weinswig discusses the role of AI in next-generation demand forecasting Source: Groceryshop Highlighting the scale of current difficulties in inventory planning, Weinswig revealed that 92% of US retailers surveyed by Coresight Research reported out-of-stocks (OOS) as a challenge. Nathan Mansperger, Vice President of Digital Supplier Growth at Southern Glazer’s Wine & Spirits, echoed this, claiming that OOS account for 8%–10% of missed CPG sales. He said that nearly one-third of customers will switch to a new brand if their preferred brand is not available at their local retailer, emphasizing the detrimental impact of poor inventory management on brand loyalty. Southern Glazer’s Wine & Spirits partnered with a “marketing intelligence vendor” and “digitally walked” over 1,000 grocery aisles, Mansperger said. As a result, the company changed its processes—namely, by delivering weekly reports to sales managers, regularly discussing the needs of its buyers and connecting with retailers’ e-commerce teams, These changes resulted in a 10% increase in product availability and a 90% alignment between in-store and online channels, according to Mansperger. Mansperger highlights the impact of poor inventory management on brand loyalty Source: Groceryshop In his mainstage keynote, Anton Vincent, President of North America & Global Ice Cream at Mars Wrigley, discussed the proposed acquisition of Kellanova by Mars, stating that the deal would bring increased value for customers across all geographies. He also emphasized the importance of preserving the unique aspects of acquired brands in order to maintain consumer loyalty: “Keep what’s special, special” as Vincent put it—a lesson he learned from Mars Wrigley’s smaller acquisitions through the years. He told the Groceryshop audience that mutual respect in acquisitions is paramount to their success. Looking ahead, Vincent revealed that Mars Wrigley plans to double its snacking business over the next decade, driven by a “holistic approach” to brand growth. Only then can technology innovation be implemented as, according to Vincent, “innovation [does not] work on the back of a weak brand.” For grocery retailing overall in the next 12 months, Vincent believes that it will be important for brands and retailers to manage costs to bring prices down for consumers. Affordability was also touched on by Fidji Simo, CEO and Chair of Instacart, in her mainstage keynote. She confirmed that currently, affordability is a crucial focus for Instacart, which the company aims to drive by integrating grocers’ and brands’ promotions, offering no-fee next-day delivery, and leveraging scale to pass on savings to consumers. Vincent also pointed to unified commerce as a concept that will grow in importance in the near and medium term, with brands and retailer striving to better manage their systems so that “everyone has the same information.” (We discuss more insights on unified shopping experiences later in this report.) Vincent explains that brand strength is a prerequisite for implementing technology innovation Source: Groceryshop In the “Offering Convenience and Affordability” session, Venessa Yates, Senior Vice President and General Manager of Walmart+, emphasized Walmart’s focus on accessibility and expanding its customer base, a theme that continually came up throughout the discussion. For instance, Walmart+ now offers a 50% discount for consumers on government assistance to ensure more people can take advantage of the service. However, it is not just lower-income consumers that use Walmart+; Yates discussed the increase in high-income shoppers at Walmart, which she believes is driven, in part, by the company’s expanded online marketplace, as customers can now shop millions of products online, including premium products, from the comfort of their home. Yates made a clear case for membership programs, stating that Walmart+ members spend twice as much and shop twice as often as non-members. As such, the retailer plans to continue enhancing its Walmart+ program by optimizing delivery processes, offering in-home and faster delivery options (for an upcharge), and partnering with companies such as Burger King, which provides Walmart+ members with exclusive benefits, including 25% discounts on digital orders and a free Whopper every three months. In the same session, Fuad Hannon, Vice President of New Verticals at DoorDash, explained how his company has expanded beyond meal delivery to offer greater convenience to its 37 million monthly users. Similar to Yates, Hannon also touched on how the company is working to make its services accessible to more US consumers; for example, DoorDash now accepts SNAP (Supplemental Nutrition Assistance Program) payments—SNAP is used by more than 40 million Americans. Hannon addressed consumer concerns over delivery fees, explaining that DoorDash aims to lower these costs via a variety of methods, including its premium subscription service, DashPass. In addition, the company continues to work on optimizing delivery times for non-DashPass members. According to Hannon, DoorDash is currently working to partner with CPG companies and retailers to offer the same deals and coupons seen in stores. Left to right: Hannon; Yates; HG O’Connell, Senior Content Director, Groceryshop (Interviewer) Source: Groceryshop 2. Implementing and Scaling AI Applications While their discussion around AI and GenAI (generative AI) was brief, Penney McTaggart-Cowan, Vice President of Marketing & Member Experiences at Calgary Co-op, and Neil Stern, CEO of Good Food Holdings, agreed that AI’s potential to unlock data and enable personalized in-store experiences will be a key driver for future success. However, both McTaggart-Cowan and Stern warned that, as there are “so many [tech] solutions” for companies looking to deploy or enhance their unified commerce strategies, it can be easy to select the wrong solution. When looking at ways to implement AI, the solution must both solve a problem for consumers as well as deliver ROI (return on investment) for the company. Grocery retailers must also overcome internal resistance to change. As McTaggart-Cowan put it, “You cannot have technological overhaul without organizational overhaul.” Left to right: Stern; McTaggart-Cowan; Peter Strong, Partner, The Partnering Group (Presenter & Interviewer) Source: Groceryshop During her keynote presentation, Simo offered her perspective on the transformative potential of GenAI as a board member for OpenAI and Shopify. She predicts that GenAI will impact the grocery space in two main ways: first, by increasing internal productivity via the elimination of mundane tasks; and, secondly, by revolutionizing the customer experience through natural-language search capabilities. 3. Seizing New Opportunities in Retail Media Simo highlighted the potential of retail media, a channel that she believes “is absolutely critical.” Instacart’s “Carrot Ads” retail media offering allows grocery retailers to launch a retail media network (RMN) “overnight,” according to Simo. She also described the in-store retail media opportunity as “massive.” Caper Carts, smart carts produced by Caper AI (which was acquired by Instacart in 2021), enable brands and retailers to advertise to customers from the cart while they shop; “This is the holy grail of advertising,” Simo said. Caper Carts present an in-store retail media opportunity Source: Instacart 4. Delivering Convenient, Seamless and Unified Shopping Experiences Unified commerce was a major talking point during the second day of Groceryshop. Peter Strong, Partner at The Partnering Group, stated that retailers must embrace both internal and customer-facing strategies to successfully implement an overarching unified commerce strategy. According to Strong, this strategy should be based on six key capabilities: Composable platforms and ERPs (enterprise resource planning platforms) Connected data that is accessible and leverageable by critical functions Automation and AI/ML (machine learning) capabilities to drive efficiency and personalization Partners that can provide and drive expertise and point-solution technologies Defined processes to do work efficiently and effectively An organization of upskilled team members to elevate roles and responsibilities Many speakers throughout the day discussed when they realized their company needed to offer a unified commerce experience. For example, Ashley Becker, Vice President of Global E-Commerce Capabilities at Kraft Heinz, stated that once the company had reached 10% sales penetration, it knew that it needed to create a connected, consisted consumer experience that would allow customers to find their “perfect path to purchase” no matter where they are in the shopping journey. The “Seamless Shopping Experiences Across Channels” session showcased how brands and retailers are working to meet rising consumer expectations around seamless shopping experiences by blending the in-store and online shopping journeys. Each of the speakers discussed different ways to do this: Amy Benford, Vice President and General Manager of Integrated Marketing & Advanced Advertising at Colgate-Palmolive, discussed the benefits of tapping into fandoms, citing Colgate’s success after partnering with the Coachella music festival and the NFL (National Football League). Chad Petersen, Senior Vice President of Digital & E-Commerce at Lowes Foods, highlighted that in-store engagements can increase consumer dwell time and spending. Katie Stratton, Chief Growth & Strategy Officer at Shipt, discussed the power of personalization and cross-shopping. All of the panelists agreed that putting the customer first is pivotal to winning in grocery retailing and that technology integration must enhance the human connection, not replace it. Petersen discusses the benefits of seamless shopping experiences Source: Groceryshop 5. Embracing Collaboration, Innovation and New Partnership Structures During her keynote, Simo spoke on Instacart’s broader proposition, including its recent partnerships. Perhaps most notably, the company has added Uber Eats and restaurants to its offerings. In Simo’s view, partnering with a competitor is okay if it helps serve the customer at the end of the day. The partnership benefits Uber Eats by providing access to Instacart’s customer base of large families and suburban shoppers—areas of potential expansion for Uber Eats. Partnering with competitors and offering a greater product selection also helps the Instacart’s underlying grocery business as it makes membership to the platform more valuable (due to the availability of wider services) and increases the frequency with which users place orders on the app. Simo (left) and Ben Miller, VP, Original Content & Strategy, Groceryshop (right) discuss Instacart’s approach to partnerships Source: Groceryshop This document was generated for Other research you may be interested in: Holiday 2023: UK Retail Wrap-Up—December Downturn Unlikely To Herald Renewed RetrenchmentAmerica’s Biggest Furniture and Home-Furnishings Retailers: Assessing Performance and StrategyJanuary and February 2023 China Retail Sales: Total Sales Pick Up as Most Sectors Report Positive GrowthJune 2023 US Retail Traffic and In-Store Metrics: Recovery Stalls as In-Store Sales Dip Further