Groceryshop 2024: Wrap-Up—Exciting Tech Abounds, but the Physical Store Remains the Center of Commerce

Introduction

Coresight Research is a research partner of Groceryshop 2024, which took place October 7–9, 2024, in Las Vegas, Nevada, US. Groceryshop is an annual conference that helps businesses navigate the evolving grocery landscape, exploring the latest business models, advanced technologies and shifting consumer behaviors. The event format includes keynote addresses, conference sessions, an exhibit floor, one-on-one meetings and evening entertainment.

This report presents our top takeaways from the conference across the five major themes in grocery retail covered by Groceryshop 2024: 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; embracing collaboration, innovation and new partnership structures.

• On the first day of Groceryshop 2024, 12 technology innovators competed in the “Shark Reef” Startup Pitch competition. For insights from that event, please read our separate recap report.

Groceryshop 2024 Wrap-Up: Coresight Research Analysis

1. Seizing New Opportunities in Retail Media

Despite its rampant adoption, retail media continues to face some basic challenges around a lack of standardization, sales attribution and timely analytics. Retail media’s success online logically suggests an expansion into other forms of media, such as social media platforms or physical media within stores, where measurement will likely be even more of a challenge. As such, Michele Roney, Executive Vice President of Retailer CX at Mars United Commerce, commented that, while in-store media is growing, there is still a lot of work to do.

Now Hiring: Unicorns

The unique function of retail media networks (RMNs)—in which the retailer is both a retailer and a seller of advertising—creates an inherent conflict within the retailer due to the different nature of these roles; dealing with this conflict often requires unusual individuals who can wear both hats. Udyan Khanna, Vice President of Marketing, Digital Commerce and Channel Marketing at McCormick & Company, characterized individuals who understand both the marketing and sales sides of this process as “unicorns;” however, she also stated that the availability of these individuals is improving.

Offline Retail Media Could Present New Pitfalls

Roney also took time to remind retailers that retail media is not mandatory, and the value of a RMN depends on the intended audience and the network’s measurement capability. Discussing offsite retail media specifically, Roney stated that offsite retail media needs to build on an already established retail media foundation. According to Roney, offsite RMNs have little value without targeting processes, as Mars’ top two criteria are audience scale and year-over-year growth, something retailers should consider as they venture into offsite retail media.

AI Could Blur the Line Between Content and Advertising

Panelists discussing retail media offered interesting views on AI. For instance, Michal Geller, President of E-Commerce and Digital at Newell Brands, outlined two coming changes to retail media due to AI:

• A shift from SEO (search engine optimization) to “AI-O”: AI-driven search
• Given the massive computing power now available and the ability to personalize content, Geller anticipates companies will be able to “send an unlimited number of campaigns to the individual,” which he cautioned could be unnerving for consumers

In a similar vein, Sean Ransenberg, Managing Director at H-E-B, expects that GenAI (generative AI) will be able to enable great leaps in targeting and personalized content and deliver customers relevant experiences, blurring the line between content and advertising.

Geller discusses the intersection of AI and retail media
Source: Groceryshop

 

2. Building Profitable, Efficient and Resilient Businesses

Demand forecasting represents the first line of defense against food waste; as such, accurate, next-generation forecasting could eliminate surplus food further down the retail chain. The technology can also help retailers adapt to emerging trends in food consumption, while other advanced technologies, such as AI and computer vision, can allow associates to spend more time with customers, while simultaneously saving consumers time during their shopping trips.

Grocery Changes Coming Due to Growing GLP-1 Medication Use

Prashant Agrawal, Founder and CEO of Impact Analytics, gave a fascinating presentation on the changes in the grocery retail space that are being and will be caused by GLP-1 medications, such as Ozempic and Wegovy. He stated that US residents consume 25% more calories per person (3,000–3,100 calories) than the OECD (Organisation for Economic Co-operation and Development) recommended average; however, due to GLP-1 medications, Agrawal expects that US calorie intake will go down by 2030.

On the consumer side, these changes will create a shift toward fresher, healthier foods and away from packaged, unhealthier foods; however, retailers will need to contend with the fact that demand forecasting for fresh foods is more complicated and challenging than it is for packaged foods, as fresh foods spoil and expire. Agrawal concluded with, “What does this mean for grocers? Demand will shift but not decline and product shift adjustments will be needed.”

• For more on the ways that GLP-1 medications will impact the grocery and CPG sectors, read our report, Decoding the GLP-1 Trend: How Is the Ozempic Economy Impacting CPG Retail?

FRESH—The Center of Grocery Retail

With more challenging forecasting on the horizon, Deborah Weinswig, CEO and Founder of Coresight Research, delivered a presentation on next-generation demand forecasting, pricing and inventory planning. During the presentation, she also launched the FRESH Framework from Coresight Research, which encapsulates the ways in which grocery retailers can win with fresh and prepared food while minimizing the impact of food waste across five pillars: Food waste reduction, Refining inventory planning, Estimating demand, Setting dynamic pricing, and Hunger curtailment.

As Weinswig explained: food remains an enormous problem globally—Coresight Research estimates that there will be $750 billion in total retail food waste in 2024 in the US alone. Additionally, while fresh food accounts for only 42% of grocery sales, it represents 82% of waste in food retail, Coresight Research calculates, based on data from FMI and Pacific Coast Food Waste Commitment.

Figure 1. The Coresight Research FRESH Framework for Winning in Grocery Retail

Source: Coresight Research

 

Sam’s Club Uses Leading-Edge Technology To Increase Convenience

Chris Nicholas, President and CEO of Sam’s Club, outlined the technologies that the company is using to enhance the customer experience in its stores. These technologies include Scan and Go, where customers scan items with their smartphones, which is now being used by more than 30% of Sam’s Club members. This came after the retailer’s parent company, Walmart, announced at CES in January 2024 that it would introduce arches that use computer vision to check purchases (rather than relying on humans to check receipts), speeding up customers’ exit of the store.

On the consumer side, Nicholas stated that the combination of Sam’s Club’s value and the convenience and benefits provided by advanced technologies is attracting younger consumers who shop differently than previous customers and use Sam’s Club to “just stock up.” For associates, Nicholas mentioned that the company is also implementing tech that simplifies associates’ lives, such as a platform for inventory control that takes 23.5 million images a day and assists associates in selecting the next best task to complete. This technology has taken 100 million tasks out of the clubs, according to Nicholas, enabling associates to spend more time with customers.

Sam’s Club also announced its new, futuristic store in Grapevine, Texas, which has since opened (on October 17, 2024). The store fully leverages the company’s Scan and Go technology and, therefore, contains no checkout registers.

3. Implementing and Scaling AI Applications

GenAI has come far since the announcement of ChatGPT 3.5 nearly two years ago—since that time, many experiments involving GenAI have begun to show positive results. Retailers are now using language models to accelerate the tagging of content, generate advertising content and accelerate the writing of computer code. Meanwhile, AI embedded in robotics and computer applications is generating a wealth of useful data and insights, as well as enhancing inventory management and slashing the time required to generate employee work schedules.

Successful “Homebrew” GenAI Use Cases

In one notable session, speakers explored descriptions of retailers using language models directly to achieve results despite the launch of several user-friendly applications that handle model management, freeing the user to focus on their core business. For instance, Reckitt uses GenAI to tag its media assets—as the nuances of the baby nutrition category require a unique solution—allowing it to tag content in 55% fewer hours. Schnuck Markets first deployed GenAI with its own tech team due to their facility with technology, and soon after achieved a 30% productivity gain when writing computer code; although they may not be headline-grabbing, the productivity gains from using GenAI in coding can be dramatic, enabling the creation of many new functions that were previously uneconomical.

AI Excels in Computer Vision and Labor Scheduling

Krystyna Kostka, Senior Vice President, Operations, at BJ’s Wholesale Club, offered a testimonial for its technology supplier Simbe. Most notably, the company uses Simbe’s robots powered with AI and computer vision to collect data on inventory (including stock-outs), items in wrong locations, pricing accuracy and planogram compliance, among other issues. According to Kostka, BJ’s Wholesale customers love the robots, as do club managers; however, while the robots may bring joy to customers and associates alike, the true value lies in the data and insights they generate. In fact, Simbe considers its robotic solution superior to both AI-based inventory-management platforms and fixed, shelf-mounted cameras, as a picture is worth a thousand words, and a “moving picture” from a movable camera is even more valuable.

Kostka comments on how BJ’s Wholesale Club utilizes robotics technology
Source: Groceryshop

 

Similarly, Alimentation Couche-Tard is planning to bring new technology to its Circle-K convenience stores in the US—technology the company stated it perfected in Europe—including a merchandising tool that reduced inventories by 10% while still achieving 98%–99% in-stock rates at all times. Earlier this year, the company launched an AI-powered labor scheduler, which reduced the time needed to create a schedule to five minutes, a process that took hours previously.

4. Delivering Convenient, Seamless and Unified Shopping Experiences

While many inventory optimization and emerging technologies, such as AI, power unified commerce, the physical store remains the dominant hub for the consumer experience and commerce overall. Still, many speakers were quick to remind attendees that both online and offline businesses offer unique data and experiences that enhance the other channel.

Unified Commerce Is Global and Tech-Powered

Ram Krishnan, CEO, North America Beverages, at PepsiCo, stressed that unified commerce enables companies to meet the needs of consumers worldwide, ensuring that products are in the right location at the right time, feats that can be achieved by advanced demand forecasting and inventory optimization software, as well as advanced logistics algorithms.

Similarly, Peter Strong, Partner at The Partnering Group, defined six key capabilities that enable unified commerce, including both technology and human factors: 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; and an organization of upskilled team members to elevate roles and responsibilities.

The Store Remains the Center of Commerce

Many sessions reiterated the central role the physical store plays in both online and offline commerce. For example, Cristina Marinucci, Global Head, Shopper Excellence Insights and Analytics, at Mondelēz International, highlighted the company’s shift toward “media-to-shelf” activations and its focus on insights-led strategies rather than upper-funnel projects that are not connected to what the consumer actually experiences in their preferred channel. In the same session, Justin Coaldrake, Head of Omnichannel Guest Experience and Media, at Casey’s, a convenience store chain (and the fifth-largest pizza vendor in the US), discussed how the company uses its pizza business to drive cross-channel sales, turning pizza buyers into convenience-store customers (and vice versa). Later, Lindsay Rowles, General Manager, Retail and Property, at Foodstuffs North Island Limited, noted that the skills learned in the online business enhance the brick-and-mortar stores.

Marinucci (left) in conversation with Ethan Sinick, Managing Director at Shirland Ventures (right)
Source: Groceryshop

 

5. Embracing Collaboration, Innovation and New Partnership Structures

At Groceryshop 2024, a variety of sessions dove into how companies from across the grocery sector—including companies that consider each other competitors—can transform their internal structures and fast-track growth by exploring external partnerships and collaborations. For instance, Fidji Simo, CEO and Chair at Instacart, offered some controversial views on the notion of partnerships, stating that Instacart will do what it takes to enhance the customer experience, including partnering with companies that might be considered competitors, rather than maintaining the traditional view that competitors should be shunned. Specifically, Instacart recently added competitor Uber Eats as a partner. For Instacart, the partnership provides its shoppers with a broader base of options, increasing the value of Instacart and leading to greater order frequency; for Uber Eats, the partnership provides the company with access to Instacart’s base of large families and new geographic areas into which Uber Eats can expand.

Simo (left) discussing Instacart’s partnership with Uber Eats with Ben Miller, Vice President, Original Content and Strategy, at Groceryshop
Source: Groceryshop

 

What We Think

The Coresight Research View on Grocery

Food retailers, including supermarkets, are the dominant channel for purchasing groceries. However, non-traditional grocery retailers have steadily siphoned sales from traditional food retailers over the last few years, a trend we expect to continue moving forward. Long term, we expect that the polarization between the “frugal” and “fit” characteristics of shoppers will support the growth of both value-focused retailers and specialty retailers that focus on niche and healthier offerings.

Industry concentration in the US grocery market will steadily increase—predominantly in the supermarket space—as major players in grocery such as Kroger and larger, well-capitalized alternative grocers such as Walmart and Costco reap the benefits of greater scale, invest in online grocery offerings, compete aggressively on price and gain share at the expense of their smaller rivals. At the same time, grocery discounters such as Aldi will drive sector-wide margin pressure while rapidly expanding their brick-and-mortar fleets. This will drive M&As in the long term, as many small and mid-sized players merge to scale their online operations and compete on price or get acquired by more prominent players.

• For more on the grocery market, see our report, Market Navigator: US Grocery Retailing—Igniting Unit Growth in a Low-Inflation Environment.

The Coresight Research View on GenAI

While AI was envisioned more than 70 years ago, the technology has experienced two major leaps forward in the past decade that have dramatically increased its power and accessibility.

• First, the steady decrease in the cost of computing power, outlined by Moore’s Law and unlocked by cloud computing, has boosted the capabilities of AI/ML. These two factors have combined to boost computing power to the point of enabling its use in finding relationships among large amounts of data and making highly accurate predictions; these uses are now part of our everyday lives when we use navigation apps, view optimized video clips or receive personalized product recommendations.
• Second, the advent of GenAI enables software to further analyze enormous amounts of data, responding in human language and with a human-language interface. We believe that the true power of GenAI will be in enabling enterprises to find new insights in their own data with a conversational interface, in addition to the now well-publicized applications, such as summarizing and drafting text and language translation. GenAI is also able to create content in the form of text, images, videos and computer code, which could revolutionize the technology sector.

GenAI represents the next major revolution in the history of technology, standing on the shoulders of the microprocessor, the Internet, cloud computing and the smartphone.

The Coresight Research View on Retail Media

Retail media offers retailers margin-accretive opportunities—potentially doubling or even tripling their base margins based on the scale of the retail media business, according to Coresight Research estimates—across a variety of sectors, allowing retailers to adapt to shifting market trends. This is perhaps most obvious in the low-margin grocery sector, where demand for full-funnel, cross-channel activations is evident among CPG companies. However, we continue to hear that brands are looking for standardization in areas such as attribution and data.

Coresight Research believes that two areas suggest even greater retail media potential:

• Retailers can more fully tap store-based media opportunities, given that the large majority of retail sales happen in stores. Retail media’s unique selling proposition is granular shopper data, and digital channels are where data exist in abundance—in contrast, physical stores have traditionally been a “black hole” of data, meaning there are significant obstacles to bringing the kind of targeting seen online to the offline channel. Tailored messaging, such as on screens in smart carts or within checkout areas, is a potential solution, though retailers will need to develop measurement capabilities to fully capture in-store opportunities.
• Retail can ultimately move away from shopper data being a monetizable “exhaust” from the core business and toward becoming a principal driver of profits and—perhaps ultimately—focus. Over the long term, major retailers could potentially migrate to become media and tech companies in which their traditional retail focus is primarily a provider of data “fuel.” However, such a pivot in focus is far from certain, and that model comes with its own set of risks, most notably around shifting focus away from serving and competing for the shopper and instead treating shoppers as the “product” to be sold to more valuable clients (namely advertisers).

Implications from This Report

Groceryshop 2024 distilled several key topics—retail media, operations, technology, unified commerce and partnerships—for attendees, focusing on the challenges that retailers are confronting today and are waiting around the corner. While not a new concept, retail media continues to be an area of considerable focus due to its high profitability and expansive opportunities both on online platforms and in physical stores; yet, sessions also covered the growing pains the retail media market currently faces due to its relative newness. Meanwhile, it was clear that AI-powered demand forecasting is quickly becoming essential for retailers, with special attention being paid to the good advanced, grocery-focused forecasting platforms can do by increasing efficiency and reducing food waste.

Overall, unified commerce remains a main goal for many grocers, with many speakers offering diverse views of its meaning—still, despite the excitement and importance of digital channels, the importance of the physical store as the center of all commerce was a prevalent theme throughout Groceryshop 2024.

Notes

Data in this report are as of October 15, 2024.

Companies mentioned in this report are: Alimentation Couche-Tard (TSX: ATD), BJ’s Wholesale Club Holdings, Foodstuffs North Island Limited, HEB Grocery Company, LP, Maplebear (NasdaqGS: CART; parent of Instacart), Mars United Commerce (a unit of Publicis Groupe S.A; ENXTPA: PUB), McCormick & Company (NYSE: MKC), Mondelēz International (NasdaqGS: MDLZ), The Partnering Group, PepsiCo (NasdaqGS: PEP), Reckitt Benckiser Group (LSE: RKT), Schnuck Markets, Walmart (NYSE: WMT)