Will AI do grocery shopping and manage grocery stores? You bet

December 19, 2023

Yes, AI will do grocery shopping for many humans and will manage many grocery store operation, online sales, and deliveries for supermarkets in the future. Let's take a look at the supermarket industry and the grocery delivery market in the United States. We also feature brief company profiles on two well established and still promising companies in the segment: Instacart and Kroger. Finally, we do a quick rundown of AI's present and future involvement in the grocery lanes. Let's take a look,

Grocery Delivery

In recent years. the grocery delivery market in the U.S. has experienced significant growth, particularly influenced by changes in consumer behavior and the rise of e-commerce. Revenue for grocery delivery in the United States is anticipated to be $201 billion this year 2023. The growth rate for grocery delivery next year is expected to be almost 30%. The market is expected to continue growing rapidly, with a projected compound annual growth rate (CAGR) of 16% from 2023 to 2028​​. 

E-commerce and grocery delivery are not new. The concept of selling groceries online emerged almost 30 years ago, in the mid-1990s, with the advent of the internet, and several companies were pioneers in this space. Here are a few notable early players:

• Peapod: Founded in 1989, Peapod is often credited as one of the first online grocery delivery services. Initially, it started as a phone-based ordering service and then transitioned to online ordering as the internet became more accessible.
• Webvan: Founded in 1996, Webvan was among the first to offer a full-service online grocery store. It was known for its ambitious business model, which included building its own infrastructure for storage, packing, and delivery. However, Webvan is also known for its spectacular dot-com bust failure in 2001.
• NetGrocer: Launched in 1999, NetGrocer was another early online grocery service that offered nationwide delivery in the United States. It focused on non-perishable food items and was one of the first to utilize FedEx for shipping groceries to customers.
• HomeGrocer: Founded in 1997, HomeGrocer was another early entrant in the online grocery market, known for its peach logo on delivery trucks. It focused on a regional approach, initially serving the Seattle area before expanding.
• Tesco: In the UK, Tesco was a pioneer in the online grocery sector. In 1996, it began a small-scale trial, which led to the launch of its full online grocery service in 2000.

These early ventures into online grocery sales were groundbreaking at the time, laying the groundwork for the e-commerce and online grocery shopping models that are common today. Many of these early ventures failed due to the challenges of logistics and the cost structures involved. Webvan failed early.  Peapod, the pioneer in the space, kept on going for about two decades, ultimately receding in 2020 due to the increased competition from Amazon, Walmart, Kroger, and other newcomers into the arena.  

The COVID-19 pandemic accelerated the shift to e-commerce. In May 2023, e-commerce accounted for 7.2% of all grocery spending in the United States, which is more than 35% above pre-pandemic levels​​.

These figures and trends highlight the rapid expansion and increasing importance of grocery delivery services in the U.S., driven by technological advancements, changing consumer preferences, and the impact of the COVID-19 pandemic on shopping habits.

Supermarket Chains in the U.S.

Amazon, which runs Whole Foods and Amazon food stores, and the largest supermarket chains in the United States are expected to dominate the online grocery shopping and delivery scene in the upcoming years. Here's a current ranking of supermarket chains in the United States by revenue: 

1. Walmart: Walmart is not only the largest supermarket chain but also the largest overall retailer in the United States. It has numerous locations nationwide, offering a wide range of groceries along with a variety of other consumer goods.
2. Kroger: Kroger is one of the largest supermarket chains in terms of both revenue and number of stores. It operates under various banners, including Ralphs, Fry's, Smith's, King Soopers, and more.
3. Albertsons Companies: Albertsons is a major player with numerous stores operating under different names, including Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, and Randalls, among others.
4. Publix: A dominant supermarket chain in the southeastern United States, Publix is known for its customer service and quality products.
5. Costco: As a leading membership warehouse club, Costco offers bulk groceries and other products at discounted prices.
6. Ahold Delhaize USA: Operating under various brands like Food Lion, Giant Food, Hannaford, and Stop & Shop, Ahold Delhaize has a significant presence, particularly in the northeastern U.S.
7. H-E-B: A popular supermarket chain based in Texas, H-E-B is known for its wide selection of groceries, including many Texas-made products.
8. Whole Foods Market: Owned by Amazon, Whole Foods is known for its focus on natural and organic products.
9. Aldi: A rapidly expanding discount supermarket chain, Aldi is known for its low prices and efficient store layout.
10. Target: While primarily a general merchandise retailer, Target has a significant grocery section in its stores, offering a wide range of food and beverage products.

These chains are known for their diverse offerings, ranging from discount to specialty groceries, and play a crucial role in the U.S. grocery retail landscape. Most of them can be expected to continue growing their online sales and grocery delivery services either by in-house delivery services or in partnership with third-party delivery services like Instacart. 

Instacart

Instacart is an American company that operates as an online grocery delivery and pick-up service in the U.S. and Canada. Founded in 2012 by Apoorva Mehta, Max Mullen, and Brandon Leonardo, Instacart has grown to become one of the leading players in the online grocery sector.

According to research.contrary.com, Instacart is the market leader in the US third-party grocery delivery market.  Instacart is a digital-first leader in the online grocery sector, offering both delivery and pick-up services. Instacart has a 21.8% market share as of 2023, which is up from 10.2% in 2019. 

Instacart has three end-user segments: users, shoppers, and stores. Instacart partners with over 1,400 national and regional retailers, including Albertsons, ALDI, Costco, CVS, Kroger, Loblaw, Publix, Sam's Club, Sprouts, and Wegmans.

Instacart is the Uber of grocery shopping.  Instacart primarily operates as a digital platform that connects customers with personal shoppers who pick and deliver orders from various local grocery stores. 

Instacart relies on a large workforce of independent contractors (personal shoppers) who shop for and deliver orders, as well as a smaller number of part-time employees. The company partners with a wide range of retailers, from large grocery chains to local specialty stores, allowing customers to choose from a variety of retailers in their area. Instacart generates revenue through delivery fees, membership fees (Instacart Express), and partnerships with retailers. The company also earns from in-app advertising and promotional partnerships with consumer goods companies.

Since its inception, Instacart has expanded rapidly across North America, serving thousands of cities. Customers can use the Instacart app or website to order groceries, household items, and even alcohol, which can be delivered to their homes or made available for pickup at participating stores. Instacart Express, the membership subscription service, offers benefits such as reduced delivery fees and lower minimum order amounts for a monthly or annual fee. The COVID-19 pandemic significantly boosted demand for Instacart’s services as consumers sought safe and convenient ways to shop for groceries.

Instacart has raised significant funding through various rounds of investment, contributing to its high valuation, which has made it one of the most valuable private companies in the U.S. in the technology and grocery sector. Instacart’s technology includes a user-friendly app and website, sophisticated logistics and order-matching algorithms, and a robust delivery tracking system. The company uses data analytics to optimize operations, personalize customer experiences, and provide valuable insights to retail partners.

Instacart faces competition from other delivery services, grocery store chains developing their own delivery systems, and e-commerce giants like Amazon, Walmart, and Kroger. The company has also faced labor law challenges related to the gig economy labor model, including issues around compensation and worker classification.

Instacart’s future success will depend on its ability to continue blending state-of-the-art technology with the convenience of personal shopping, adapting to evolving consumer preferences and the growing trend of e-commerce in the grocery industry. The competitive landscape, however, will become challenging as other companies imitate the model and supermarket chains continue developing their own online sales and delivery operations like Kroger. 

Kroger

The Kroger Co., commonly known as Kroger, is one of the largest supermarket chains, operating thousands of stores across the country. Kroger was founded in 1883 by Barney Kroger in Cincinnati, Ohio. The company's headquarters is located in Cincinnati, Ohio, USA.

In recent years, Kroger has invested heavily in its online grocery shopping service, including delivery and curbside pickup options. The company has also invested in technology and innovation, including partnerships for automated warehouses and experimentation with drone delivery.

Kroger operates supermarkets and multi-department stores across the U.S. It is known for its grocery, deli, and bakery departments, along with pharmacy and general merchandise offerings. Kroger offers a variety of store brands (private label brands) that contribute significantly to its revenue. These include Kroger, Private Selection, Simple Truth, and more. The company also operates fuel centers and jewelry stores (like Fred Meyer Jewelers). Kroger's growth has been partly due to its acquisition of numerous supermarket chains over the years, including Harris Teeter, Fred Meyer, Ralphs, and more. 

Kroger is consistently ranked among the largest retailers in the United States in terms of revenue. The company's financial performance has been characterized by steady revenue growth, influenced by its diverse offerings and expansion strategies. Kroger also has corporate goodwill initiatives focusing on sustainable practices, including waste reduction, energy efficiency, and responsible sourcing. The company is also involved in various community engagement and philanthropic efforts, including hunger relief and health and wellness programs.

Kroger operates in a highly competitive grocery market, facing competition from other large supermarket chains, discount retailers, and e-commerce giants. To continue succeeding, Kroger must continuously adapt to changing consumer preferences, including the growing demand for online shopping and home delivery. 

AI Grocery Shopping and Delivery

Within the next two decades, AI will continue growing its influence in the supermarket industry, online grocery shopping, and delivery. AI is increasingly becoming a crucial component in the grocery supermarket industry, reshaping various aspects from supply chain management to customer service. Below are some examples of AI's current and anticipated involvement in the industry:

Supply Chain Optimization

• Demand Forecasting: AI algorithms analyze large datasets (big data) to predict future grocery demand by region, helping supermarkets manage inventory more efficiently.
• AI Stock Management: AI systems can monitor stock levels and sales to automatically detecht deficiencies and reorder products. AI can optimize product placement within stores based on data analysis of sales. AI can also provide real time guidance on stock management of food items and products subject to safety recalls.

Food Safety and Quality Control

• Quality Assurance: AI can be used to monitor and ensure the quality of products, identifying items that don't meet quality standards.
• Food Safety Monitoring: AI systems can monitor storage conditions and track food products through the supply chain to ensure food safety compliance.

In-store Enhancements

• Smart Shopping Carts: AI-powered shopping carts can guide customers through stores, provide product information, and even handle checkout processes.
• Inventory Tracking: AI-enabled cameras and sensors can track inventory on shelves in real-time, alerting staff when restocking is needed.

Customer Service

• Chatbots and Virtual Assistants: AI-driven chatbots and virtual assistants can handle customer inquiries, provide information, and assist with online orders.
• Self-checkout Systems: AI technologies are used in self-checkout systems to streamline the checkout process and reduce wait times.

Predictive Analytics

• Market Trends Analysis: AI can analyze market trends and customer feedback to help grocery stores adjust their strategies and product offerings.
• Price Optimization: AI tools can dynamically adjust prices based on demand, competition, inventory levels, and other factors.

Personalized Customer Experience

• Personalized Recommendations: AI can learn consumer shopping patterns and preferences to offer personalized product recommendations to customers, either in-store or online. AI can also optimize shopping cart selections to help customer meet specific nutrition or health goals. AI can be optimized to find savings and to recommend product alternatives and companions. This is the typical "customer who bought this also bought the following" feature in Amazon, Walmart, Kroger, and so on. By analyzing customer data, AI can help in creating targeted marketing campaigns, improving customer engagement, loyalty, and satisfaction. 

Online Shopping and Delivery

• E-commerce Platforms: AI enhances online grocery platforms by providing personalized shopping experiences, efficient search functionality, and recommendation systems.
• Optimized Delivery Routes: For grocery delivery, AI algorithms can optimize routes, reducing delivery times and costs.

In summary, AI is already influencing the grocery supermarket industry by enhancing efficiency, personalizing customer experiences, optimizing operations, and contributing to better decision-making. As technology evolves, AI's role in this sector will continue growing, offering almost unlimited opportunities for improvement and future innovation.

The Future of AI and human groceries 

Count on this. Within the next three decades, AI technology will continue developing as the quintessential assistant of humanity. Regarding grocery shopping, AI will be able to shop better and more efficiently than any human owner, "master", or client. 

AI will learn the "master's" preferences, nutritional, and consumer objectives. AI will monitor stock levels within the household to know when to order groceries to restock on time. resupplies.  AI will provide personalized recommendations for foods, supplements, and household products that can help humans meet predetermined objectives. 

AI will single handedly select products and create optimal shopping lists and online carts. If authorized by the owner or client, AI will place orders right on time to keep all stocks replenished on time. Humans will provide feedback to AI so that the grocery shopping continue being optimized. 

The best is yet to come. Stay tuned. 

Creatix.one , AI for everyone.