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Unsubstantiated Optimism over AI

10/30/2023

A recent report Sustainability in Grocery: Progress Through Technology was prepared by Incisiv and Wynshop both involved in digital media.  The report documented that 87 percent of grocers believe AI will contribute to sustainability.  Among the findings, 83 percent anticipate that sustainable practices will attract Gen Z shoppers and 78 percent look to sustainability as a advantage with respect to differentiation from competitors.

 

The results of any survey are strongly dependent on how the questions are framed and the selection of participants. Reducing waste is an obvious contributor to sustainability but this does not require Artificial Intelligence just the old-fashioned kind!

 

Surveys conducted by Purdue University have shown that sustainability and welfare are ranked low in motivation among consumers to purchase products.  Price and quality rank far higher and will become progressively more important with sustained high interest rates.  Quarterly reports from retailers show that the anemic growth in sales has constrained margins attained by market leaders. Large companies can exert pressure on suppliers and operate with a proportionally relatively lower unit overhead than smaller scale competitors.

 

The report cited consumer preference for companies with “clear sustainability principles” but it is difficult for consumers to confirm that retailers have effective programs contributing to this attribute.

 

The bottom line of the Sustainability in Grocery report actually confirms the results of the previous Purdue survey. Only 13 percent of consumers are willing to pay a premium for the concept of sustainability.  High-end and specialty supermarkets catering to a small affluent demographic will benefit from promoting real or perceived sustainability.  For the bulk of retailers, low prices, convenience and product quality will be the major drivers of sales.