Caitríona Redmond: Could supermarket shopping be about to change radically?

AI has come along in leaps and bounds, and now one of Ireland's biggest retailers has started to adopt AI technology in the UK to identify customers who may benefit from a form of personalised pricing. Will Ireland follow suit? 

As the slow erosion of our disposable income continues, many hard-pressed consumers will happily trade away their personal data in exchange for cheaper supermarket shopping.

Last year, I wrote that dynamic grocery prices could be on the way. Now, I believe that possibility has significantly increased.

Most people are familiar with electronic shelf labels. These digital displays can be changed with the switch of a button.

Staff don’t walk through the supermarket changing prices by hand anymore; each price is a small digital display that is connected to a server.

That server may be within the shop itself, or it may be at a head office or parent location.

This system can benefit both the retailer and the consumer. There is a much lower chance of a pricing error and the consumer being charged too much or too little at the checkout.

It can also save on manpower and increase transparency, or allow the retailer to offer a flash sale on a particular product.

The seasonal sale can be described as a form of reactive pricing, but dynamic pricing occurs when a supermarket very swiftly changes a price depending on product demand.

For example, your summer holiday might be impacted by dynamic pricing; your aeroplane ticket may cost more depending on how in-demand your flight is.

Last month, the Bank of England noted that some sectors were experimenting with technology — such as these electronic shelf labels — that could enable dynamic pricing in the future.

Separate to this, users of the Tesco Clubcard app in Ireland have witnessed some changes in recent months.

These include being able to set the app to always open in the store, and being able to upload a shopping list and be directed to the individual aisles for your products, and individualised vouchers. This is all before the advent of AI-enhanced supermarket shopping.

AI has come along in leaps and bounds, and now one of Ireland’s biggest retailers has started to adopt AI technology in the UK to identify customers who may benefit from a form of dynamic or personalised pricing. We will surely follow suit.

Last month, Tesco announced it was partnering with Adobe to use the data it had collected via the Clubcard loyalty scheme and combine it with AI to benefit its members.

It also launched a large-scale trial of an AI assistant, initially being offered to 280,000 staff in the UK, followed by customers in the UK, where they have about 28.4% of market share.

Customer data is big business for Tesco, which acquired Dunnhumby Ltd in 2004. Its website describes the business as helping retailers and brands perfect the science of shopping by using customer data science.

Dunnhumby counts many consumer brands as its clients, including McDonald’s, Coca-Cola, GlaxoSmithKline, and Walmart Data Ventures.

Internationally, Clubcard users number more than 24 million households and 12.7 million app users. In Ireland, 87% of households have a card.

But what does the new AI system involve?

Tesco believes working with Adobe, it can be more responsive to the needs of shoppers. From its customers visit the supermarket, so as to anticipate their needs and improve content offers and shopper experience across its shops and channels.

Right now, Tesco staff members are using an AI assistant to help them with their meal planning. It is hoped this will reduce food waste and that building their shopping basket using AI will save them time, stress, and money. 

Reportedly, it’s a two-way conversation with the AI system: The assistant will help customers plan their meals and offer inspiration with personalised recipe ideas. Once a recipe is chosen, the assistant will then help customers fill their shopping basket in the app by listing the products they need and identifying where they might find them.

There’s also a function to help use up leftover ingredients in the fridge, and it’s built directly into the existing Tesco app.

In the future, those electronic shelf labels may remain static, but customers who use the Clubcard app, or a hand-held scanning device in-store, could, instead, be targeted with individualised offers and discounts that may expire when they leave the supermarket.

Such a discounting method may prove problematic. In theory, shoppers would benefit from prices tailored to their shopping preferences.

However, could the same pound of mince or pint of milk cost different prices for different families in the same supermarket at the same time of the day? This could give rise to people who are willing to pay more for their groceries, subsidising those who chase more discounted prices.

That potential lack of pricing transparency may be one to keep an eye on. As each customer would benefit from individualised discounts or deals, the price will always remain static on the shelf. Could the margin paid to the producer or farmer fluctuate based on discount demand? Would the real value of the product on the shelf no longer be clear?

As the slow erosion of our disposable income continues, many hard-pressed consumers will happily trade away their personal data in exchange for cheaper supermarket shopping. I believe it’s only a matter of time before Irish shoppers start to adopt AI supermarket shopping.

REDMOND RECOMMENDS

I’m sure we’re all familiar with Amazon and its marketplace, where some retailers sell their goods, and Amazon fulfils the order.

Now, it appears the business model has become more widespread. Last week, while researching items for camping online, one of the top search results was for a well-known Irish shop.

When I clicked through to the retailer’s website, I was able to verify it was authentic. The items were only available online and not in-store.

This was, in fact, a marketplace shopfront for an entirely different retailer. I could tell this because when I got to the checkout, it said, "delivery from our trusted supplier directly to you".

Always check the small print.