U.S. retailer Kroger is focusing on data analytics and artificial intelligence (AI) personalization to innovate the customer and employee experience, providing a more targeted and efficient approach, according to their recent earnings call. With comparable sales without fuel growth up by 3.5%, the retailer navigated a challenging retail landscape, including inflation and reduced SNAP benefits, through a focus on savings and value that has resonated with consumers.
Gary Millerchip, chief financial officer for Kroger, said the company clearly sees those on a constrained budget and dealing with the impact of a lower number of SNAP dollars. He said the company is, “…really focusing our marketing effort to ensure that we're personalizing offers to resonate with those customers and help them manage their budgets more effectively.”
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With advancements in AI, including generative AI and search algorithms, the number 4 top grocery retailer of 2023 relies on this technology to improve search results and substitution accuracy, simplifying the digital experience to provide accurate, personalized consumer recommendations and optimizing store operations.
“Within our 84.51 customer research team, we are already piloting several large language models to summarize customer database sets,” said Rodney McMullen, chairman, and CEO for Kroger. “By applying AI to customer surveys and customer service logs, our team can analyze and categorize them in minutes versus days before. This allows the business to react to customer feedback more quickly and accurately, and then reflect these learnings in the customer experience.”
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Advanced algorithms will also optimize store operations, streamlining essential operational tasks like store orders, reducing items from being out of stock, and improving inventory management while reducing operating expenses.
“Our rich history as a technology leader gives us confidence that we will continue to effectively use AI, including more recent innovations. We also believe robust, accurate, and diverse first-party data is critical to maximizing the impact of innovation and data science and AI,” said McMullen.