Convenience retailers in Europe and the United States are leveraging new technologies, including AI, to improve their demand forecasting, optimize their assortments and space planning, transform their supply chains and delight shoppers with an improved in-store experience.

“AI is no longer a thing of science fiction: It’s here, and it’s defining marketing in 2020,” states Andrew Witkin, founder and president of StickerYou, the web-based company specializing in custom stickers. “According to Gartner, AI technologies will be pervasive in almost all new software and services by next year. For CMOs, this means embracing the world of new possibilities, not running from them,” Witkin said.

AI is dominating innovation in the retail technology industry, according to Retail Insider’s Digital Innovations Report 2019, conducted in partnership with Webloyalty. The report found AI remains the key technology implemented by 37% of retailers, outpacing augmented reality (15%), payment (22%) and delivery technology (13%).

Gartner’s 2019 CIO Agenda survey, meanwhile, found the number of organizations that have deployed AI grew from 4% to 14% between 2018 and 2019. The research firm highlights three AI technologies that must be on the CIO’s radar for high and transformational business impact in the next two to five years:

1. Augmented intelligence, a partnership model of people and AI working together to increase efficiency
2. Chatbots to engage and communicate with customers
3. Machine learning to analyze data and predict trends

Gartner references Lidl’s Winebot Margot as a chatbot in a retail scenario, which provides guidance on which wine to buy and tips on food pairings, while Volvo makes use of machine learning and data to predict when parts might fail or when vehicles need servicing, improving safety.

Today’s shoppers are web natives, who are well connected, informed and share information.

SPAR International, the supermarket chain operating 13,000 retail stores in 48 countries, is harnessing AI in India. The retailer is monitoring assets such as chillers through internet of things (IoT) sensors supplied by Bosch. The sensors track the chiller temperature and energy consumption and can analyze and identify when systems are likely to go wrong. According to Tom Rose, head of operations, SPAR International, the technology has stopped routine maintenance, therefore saving money. Additionally, the retailer loses less food through waste.

Data Driven

Despite the growth in online, stores are still a key part of the SPAR business, said Rose. New levels of connectivity enable retailers to connect with shoppers throughout the shopper journey. Similarly, the retailer’s ability to analyze data and react has greatly improved, Rose added.

In Norway, for example, SPAR International is using AI to predict waste and target appropriate actions. Stores are sent a yellow warning if they have inventory that is unlikely to sell out before the expiration date. An orange warning is sent if a store has items within 10% of their shelf life and red when items are about to expire. By alerting staff, retailers can reduce the prices or remove the product from shelves and help to reduce food waste. Rose said the customer’s perception of food freshness is also enhanced since they are seeing longer “use by dates” on products as stores are clearing stock through the business more efficiently.

Supply Chain Enhancements

Musgrave, which operates 700 franchise stores in Ireland, is transforming its supply chain with a “Perfect Order” program for its retailer partners that is designed to deliver the same sort of seamless shopping experience that consumers expect to receive from its SuperValu supermarkets and Centra convenience stores.

Alongside AI, micro space management, apps and autonomous stores are gaining traction in world markets.

Ger O’Flynn, head of commercial IT at Musgrave, reported the retailer’s supply chain transformation program had identified five areas for improvement:

1. Warehousing replenishment, including forecasting improvements and generating the right supplier order as efficiently as possible to meet store demand
2. Pull ordering, including providing the optimal range and the ability to confirm availability and reserve stock or place on back order if stock is due
3. Pre-ordering to help retailers order the right volumes they need and ensure the delivery schedule aligns with promotional planning
4. Delivery and receiving, including visibility of delivery and the ability to track delivery progress
5. Reporting and financials, including removing all paper, automating all stock to financials and a mobile solution

O’Flynn reports the program will be rolled out over the next 18 months and will utilize warehouse demand prediction to reduce the amount of stock in the business.

Autonomous Convenience

Alongside AI, micro space management, apps and autonomous stores are gaining traction in world markets.

Mercator, the Slovenian multinational retail corporation, has invested in micro space management, showcased in a new convenience concept called Minute. Located in a student location, the store also appeals to the local residential area for top-up shopping after 5 p.m. The store is focused on a food-to-go assortment, private label and fresh and offers a self-service bakery, coffee to go under the Minute brand, fresh orange juice and self-checkout. Kresimir Lezaic, senior vice president of IT and telecommunications, reports that in the store’s first six months, revenue had risen by 36%, the customer count was up by 29% and the average shopping basket was up 5%. Mercator also plans an unmanned pop-up store—M-Box—which Lezaic says will be a “playground for new technology.”

Albert Heijn, an Ahold Delhaize brand, opened a pilot digital AH to-go store in September 2019, to enable a truly grab-and-go experience for customers. The tiny 14 square meter (150 square feet) store is packed with technological innovations that make it possible to buy something as if you were taking it out of your refrigerator: There is no checkout, and you no longer have to scan your products yourself.

Additionally, AiFi, the technology company that creates store automation systems, is powering and providing its Nanostore template for a new Albert Heijn digital store which literally “landed” at Amsterdam’s Schiphol Airport. Customers at the world’s fourth busiest international airport can experience the speed and convenience of checkout-free shopping. Through the end of January, visitors to the store can just walk in and walk out. They can tap a (contactless) debit card at the door to open it automatically. Then shoppers can get the products they want and simply leave. The items are automatically registered and paid for. Shoppers can also check their purchases at the exit to verify the receipt.

The small footprint, portable digital store was transported on the back of a trailer truck from its initial test location at Albert Heijn’s headquarters, where it has operated since September. “The airport is a perfect place for autonomous stores. Travelers are very aware of their time and need food and drinks at a variety of hours,” said Steve Gu, CEO and co-founder of AiFi. “This speaks to the original design thinking behind NanoStore: to make a plug-and-play modular store so it can be easily placed and moved where people need it the most.”

AI is no longer a thing of science fiction: It’s here, and it’s defining marketing in 2020.

Marit van Egmond, brand president of Albert Heijn, said: “Convenience for our customers comes first. This latest concept not only makes shopping very easy; due to its autonomous nature, this ‘plug and play’ store can be placed at locations where there is a [temporary] need for a small store, from offices or university campuses to residential areas under construction that do not yet have shopping facilities. A second advantage is that the store can always be open, which is useful for people on the road very early or very late.”

Carrefour is testing an automated store—a 56 square meter shop with 1,500 SKUs—with employees and service providers for an initial six-month period. It deploys similar technology as AH to go, which links sensors to cameras and enables payment by card, mobile or Carrefour Pay. Elsewhere, Valora Group has opened its Avec Box autonomous store at Wetzikon station in Zurich, Switzerland, while in Poland, Zabka is implementing technology to enable checkout-free shopping.

Back at SPAR International, apps are being deployed to make e-commerce more profitable—the retailer has an online presence in 12 countries worldwide. In Norway, SPAR is partnering with the courier app Zoopit for online deliveries. The customer selects a two-hour delivery slot, and the route is passed to a driver via the app. As a result, SPAR only pays for the delivery rather than the cost of a fleet waiting to be mobilized and is “making a good profit on e-commerce deliveries,” according to Rose.

In India, meanwhile, SPAR International deployed an app so customers can place orders for delivery, collection in-store or to shop for in-store. For those customers who have chosen to pick the items themselves, the app navigates them around the store in the most efficient way. The retailer is also using Philips’ Li-Fi (light fidelity) technology for indoor positioning to identify where shoppers are in the store and provide timely relevant offers along their journey. Rose said the retailer was recording a double-digit increase in sales among customers using the app.

Whether used to monitor assets and equipment, for demand forecasting, stock optimization and space management or tracking shopper movements in a store, AI and related technologies are driving retailer efficiencies and profitable growth.