The exponential impact comes when Generative AI is added onto the hard work companies have done to clean, tag and manage their customer, inventory and product data for traditional AI/ML applications.”
— Greg Buzek – President IHL Group
Nashville – Artificial Intelligence/Machine Learning and Generative are already transforming the grocery industry according to new research from analyst firm IHL Group. In total, the fiscal impact could reach as high as $1.9T for grocers in terms of increased sales, improved margins and lower operating costs.
“The metamorphosis of the grocery industry is not a distant future concept—it is unfolding before our eyes. Many retailers have been hard at work leveraging AI/ML solutions that have been hidden from consumers but improving efficiencies for several years,” said Greg Buzek, President of IHL Group. “Key components for success include the company’s data and structural readiness to take advantage of the advancements as well scale and free cash flow to invest in the technologies. The real exponential impact comes when Generative AI is added onto the hard work companies have done to clean, tag and manage their customer, inventory and product data for traditional AI/ML applications.”
The study titled “Charting the AI-Driven Transformation in Grocery” studies the potential financial impact for retailers in operational areas ranging from Sales Growth, Gross Margin improvement and Sales/General Administrative cost improvement.
Some key highlights include the following:
- Sales Growth Opportunities could generate up to $1.1t in benefits through the end of the decade through personalized promotions, fewer stockouts, improved store efficiencies and better assortments.
- Gross Margin Improvements could add another $412b through more efficient supplier negotiations, better demand forecasting, improved load management and route management for trucks and reduction of waste through less spoilage.
- Lower Operating Costs could add up to $397b in improved fiscal impact with better customer service, more efficient labor utilization, automation of routine tasks, improved infrastructure management and streamlining administration of payroll, benefits and more efficient marketing.
Image by rawpixel.com on Freepik.