Grocers are among the retailers that could find the biggest business bump from using artificial intelligence (AI) solutions to analyze and segment data.
This is in part because they carry so many distinct products and product sizes, or what is known in the industry as stock-keeping units (SKUs). They also have a diverse customer base because everyone needs food.
BIV asked OpenAI's free ChatGPT tool how grocers could use AI and it answered with five bullet points:
• inventory management, by analyzing sales data;
• personalized marketing, using customers' purchase histories;
• customer service, via chatbots;
• pricing optimization through analyzing market trends, competitor prices and consumer behaviour; and
• shelf management, by using sensors and cameras to tell staff where to restock products.
"It is possible to use AI in all the topics that ChatGPT mentioned," Save-On-Foods president Darrell Jones told BIV.
"Most companies will have to decide on policies for AI in certain areas of their businesses to be sure it meets with their companies' policies and protects their customers' rights as well. This is in my view an important context to have before you jump in to use AI."
He said that his company is using AI in some information-technology solutions parts of the business, and it is also developing policies for best practices on when to use the technology.
"I thought it was a decent list that ChatGPT provided," retail analyst and DIG360 owner David Gray told BIV.
"I think generative AI is game changing. I see it as being on a continuum, though, as there have been things like dynamic pricing, and a lot of stuff in retail that is data driven."
He said algorithms that companies, such as Netflix Inc. (Nasdaq:NFLX), use to determine what content users might want to view next has already sprouted to the retail sector, as it is similar to what Amazon.com Inc. (Nasdaq:AMZN) uses on its platforms.
Large Chinese retailer JD.com has announced plans to launch a tool similar to ChatGPT. Canada's Shopify Inc. (TSX:SHOP; NYSE:SHOP) has AI tools to help vendors and merchants write product descriptions.
Gray said AI has the potential to dramatically increase the efficiency of retailers because it provides data analysis that is not viable, or possible, to have humans perform
"There's the idea of being able to factor in weather patterns, competitor moves and local economics – things like that, which would be beyond what someone at their desk could do," he said.
Weather-related analysis would not only tell retailers what items to feature in the short term, either at the front of the store or on its e-commerce website. The analysis would also provide insight about weather forecasts that are further into the future, such as for a hotter and drier spring than usual. That could prompt retailers to buy more sunscreen earlier than they would otherwise, Gray said.