The future of grocery is about much more than products

November 8, 2024

The future of grocery is about much more than products

An omnichannel presence and a broad array of events will attract the customers of today-and tomorrow.

This content was originally featured in a Q&A with Progressive Grocer featuring Cognizant.

Modern grocery shoppers no longer visit stores simply to purchase products-they are seeking experiences.

What was once a purely transactional relationship between grocers and customers has evolved. Today's shoppers want personalized interactions, seamless service, and memorable moments that go beyond just filling a shopping cart or digital basket.

Modern grocers are transforming to meet these shifting customer expectations. From leveraging new technologies to enhance experiences, to leveling up the omnichannel strategy, to becoming an experiential hub, let's look at the future of grocery-and how forward-thinking retailers can lead the way.

Enhancing CX with generative AI

Our research shows that that generative AI will deliver more than $1 trillion in annual growth by 2032. For grocers, the key to tapping this technology's potential is to drive innovations that will enhance the customer experience.

One of the biggest opportunities in this sector comes in the form of personalized product recommendations that meet shoppers' unique lifestyle and wellness goals. Grocers can use gen AI to analyze consumer data and provide tailored suggestions for products, recipes, and meal plans.

For example, AI-powered systems can suggest gluten-free bread options for people with allergies or intolerances; these tools can also provide sugar-free snack ideas and recipes for diabetic shoppers.

Generative AI can also be used to optimize operations in a way that will enhance the customer experience. For example, gen AI-enabled demand management tools can analyze historical sales data, current trends and other factors to predict demand and optimize inventory. This reduces stockouts, minimizes waste, and streamlines supply chain operations, ensuring the right products are available when customers need them.

And when they're not? Gen AI also has a role to play in creating smarter shopping experiences that can suggest alternative products, nearby stores or at-home delivery options to meet the needs of the customer in the moment.

Doubling down on omnichannel

Another seismic shift within the grocery industry has to do with customer behaviors, specifically how and where customers are choosing to shop. Companies like Kroger and Albertsons have seen delivery sales increase over the past year, while Walmart reported a 21% surge in Q1 digital sales.

While it is important to offer strong physical and digital experiences, the true north star for grocers is to deliver a seamless and consistent omnichannel experience. In the coming year, unifying digital and physical store experiences to eliminate friction and enable consumers to shop effortlessly across channels will be the core objective for most retailers.

So, what goes into an effective omnichannel strategy? Every organization is unique, but most roadmaps should include the principles shown in the following figure.

Figure 1

Reinventing stores as experiential hubs

Despite a 56% increase in grocery delivery services in 2024 compared to 2022, a whopping 74% of all grocery shopping still happens inside physical stores.

To make the most of this reality, grocers are revamping their business models to boost engagement and loyalty.

Many grocery stores now feature in-store dining or café options, encouraging guests to linger longer and spend more. Some are going even farther by hosting community events like cooking classes, food tastings, and showcases for local vendors. These events give customers a chance to discover new products and connect with their community. Additionally, some stores are incorporating wellness programs, such as yoga classes and nutrition workshops, to promote a holistic approach to health.

Whether through partnerships with entertainment vendors or hosting such events as live music and sports viewings, grocers have a chance to become a central hub for social interaction and customer engagement. To that end, they must consider how they will reinvent stores as destinations in which the broader community can connect, explore, and enjoy.

Embracing the future of grocery

As the grocery industry continues to evolve, one thing is clear: the future of grocery lies in creating experiences that go beyond transactions. Forward-thinking grocers are already embracing this shift, using innovative technologies and omnichannel strategies to meet the rising expectations of modern consumers. By becoming experiential hubs that blend convenience, personalization, and memorable interactions, grocers are setting the stage for a future where shopping is no longer just about products, but about engaging experiences that keep customers coming back.

For more information about how grocers can use next-generation technology to help them overcome challenges and step into the future of retail, read our Grocery Trends Report.

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