How a supermarket can use AI

The development of AI across economies in the world is happening so quickly and in​​​​​​​ so many areas it is difficult to keep up and fully comprehend. As a case example, the supermarket industry is interesting because it is a market that most people have direct experience with and the operation of a supermarket, on the surface at least, is relatively easy to understand. A supermarket puts everyday goods on its shelves and people come in and buy them.

How can AI help the people who run supermarkets?

The first area is stock or inventory management. It is crucial for supermarkets to have enough stock every day to meet the needs of their customers. A key part of stock management is effective forecasting of consumer demand for the different goods supermarkets sell. AI is good at helping to forecast consumer demand because it can handle all the information that determines how much people might buy. AI can use things like historical data, current consumer trends, weather information, promotional activity of suppliers and the activities of competitors. For example, AI can be used to predict the demand for goods ranging from pasta to toothpaste to washing up liquid so a supermarket knows the stock levels of these goods needed on any one day.

By forecasting consumer demand accurately supermarkets are less likely to run out of stock and less likely to carry too much stock which leads to waste. Because supermarkets work on small profit margins any efficiency gains they make will increase their profitability.

AI can also help to boost the sales of supermarkets. One chain of shops uses video and AI in its stores to monitor what people are buying. It discovered that only 30 per cent of people who shopped in the aisle for shampoo were women. By putting shampoo in the aisle alongside products bought by women the store's shampoo sales increased by 25 per cent. 

Another leading supermarket found that by using AI to find out the consumers who bought certain goods such as fresh vegetables, bread, milk and chicken they could then send these customers offers on other goods they might buy such as household cleaning products to increase sales of these goods. 

Supermarkets use AI-powered scanning systems that make the supermarket checkout process more efficient. The use of sensor technologies makes the automation process when customers scan items as efficient as possible. The reduced queuing time in supermarkets because of the use of AI improves the customer experience. 

The application of AI in these examples illustrates the benefits for consumers and producers in the industry.

Some possible questions to discuss with a class

1. How can AI be used to increase efficiency in a supermarket?

2. How would the efficiency gains in the supermarket would affect the supply curve in the supermarket industry?

3. How can the increased use of AI increase demand in the supermarket industry?

4. What might be some of the disadvantages of using IA in supermarkets?