Across three days in Las Vegas, Groceryshop speakers touched on a slew of top-of-mind topics for the grocery industry, from retail media networks to the evolving state of convenience, but many executives continually returned to a few central themes. Here’s what they were saying.
Evolving retailer-brand relationships
As more grocers and retailers debut new private label brands and products, they’re working to strike a balance with the other national CPGs on their shelves. While Frans Muller, president and CEO of Ahold Delhaize, owner of chains like Hannaford and Stop & Shop, said the company is working to grow its private label offerings, it’s also looking for “collaboration” within grocery categories. Muller said it works with its partners to share data and help them compete on shelf, believing that competition “fosters more ambition for more innovation.”
“We have only one interest—to do a better job for that consumer,” he said. “And that’s, I think, what drives us both.”
Ram Krishnan, CEO of PepsiCo Beverages North America, noted that this brand-retailer relationship is “much more strategic than it’s ever been,” as they’re “collaborating across the entire value chain.” He said the two have a “symbiotic relationship,” as national brands focus on bringing new consumers into a category, boosting household penetration, and producing innovation, while private brands ensure that consumers aren’t turning away from the category altogether.
While Gen Z and millennial shoppers have been gravitating towards Sam’s Club’s Members Mark private label, the club retailer will always be a “house of brands,” Sam’s Club president and CEO Chris Nicholas. The tension between national and private label brands “is just really healthy for everyone,” he said, but Sam’s Club is setting a high bar for its national brand partners to bring innovation and value to consumers.
Loyalty and personalization
Consumers seeking more affordable options have become less loyal to brands and retailers, so brands and retailers have had to double down on efforts to maintain customer loyalty.
Kroger CMO Stuart Aitken announced during the show the grocer is growing its loyalty program, Boost by Kroger Plus, with the addition of Disney+ Basic, Hulu, or an ESPN+ subscription as part of the membership. White Castle President and CEO Lisa Ingram, meanwhile, said the company is working to integrate fun into its loyalty program platform, with “quests,” like going to the chain at specific times of day, that gamify the process of earnings rewards.
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Krishnan touched on the importance PepsiCo places on “precision loyalty,” centered around using data for better personalization for shoppers and tailored product recommendations, i.e. suggesting a different product in the morning before work than late on a Friday night.
“You need to be aware of consumer behavior—consumer context matters, and then the consumer location matters,” he said. “It’s a very interesting phenomenon.”
Bobbie, an infant formula company, shared efforts to be loyal to its customers, too, as Sara Ahmed Holman, its chief commercial officer, said that during the 2022 infant formula shortage, the company chose to close its storefront from new customers to ensure it had enough product to serve its current subscribers.
AI applications and challenges
At last year’s show, retailers and brands were just getting their feet wet when it came to AI, identifying potential applications for generative AI but still wary of the new tech. This year, they went deeper on what has—and hasn’t—been working for them.
White Castle’s Ingram said the burger chain is testing an AI menu board at several locations that takes customers’ orders and is learning over time the many ways in which a customer will phrase the same order (there were about 80 ways to order a No. 1 on its menu, Ingram said).
Others are using AI for in-store efficiencies. Helene Drolet, VP of operations excellence, North America at Circle K-owner Alimentation Couche-Tard, said it uses AI for task management, ranking tasks like cleaning up a bottle of oil a customer dropped or fixing the coffee machine, based on priority. Sam’s Club has been using AI for inventory management across stores and distribution centers, ultimately taking 100 million tasks “out of the clubs” so its workers can use time to connect with shoppers. Sam’s Club’s new checkout-free location in Grapevine, Texas, will further free up workers, Nicholas noted, and also use AI to deliver shoppers real-time advertisements in store.
But challenges still remain. Instacart CEO Fidji Simo noted that as it develops product recommendations based on natural language, consumer behavior will need to adapt, as most are accustomed to using keywords when searching. Muller said Ahold Delhaize has been “careful” about use of AI for hyper-personalized offers based on large language models, noting that it stalled a pilot in order to better understand the model to protect consumer privacy and avoid producing incorrect results.