This is the eighth installment of FMI's Technology Blog Series, which explores digital innovations for the food industry and shares compelling insights from our research.
By: Doug Baker, Vice President, Industry Relations, FMI
For the food industry, it has been a year of embracing emerging technology, especially data analytics and artificial intelligence (AI). Looking back at 2023 in The Food Retailing Industry Speaks report, we see that food retailers devoted an average of 0.9% of their total sales—more than $10 billion—to their technology budgets. Food suppliers spent almost twice the share of sales (1.9%) on technology investment. Let’s look at how the food industry is advancing in technology—specifically data analytics and AI—to improve the food industry and, ultimately, the grocery shopping experience.
Mainstream Use of Data Analytics
When it comes to data analytics, most food retailers (85%) and suppliers (94%) are utilizing this technology. Food companies use data analytics the most to optimize decision-making around pricing and promotion and to assist with assortment planning and replenishment. In 2023, the industry reported a much lower out-of-stock rate of 6.5%, below the historical rate of 8% and down from 10.7% the previous year. Data analytics is also being used by food retailers and suppliers to leverage customer data, for loss prevention, supply chain logistics/scheduling and for hiring purposes.
How The Food Industry Is Using AI
According to survey respondents, 41% of food retailers and 69% of suppliers are using AI. Many food companies are using AI to assist with assortment planning and replenishment and to leverage customer data. Some food companies are branching out and using AI to optimize decision-making around pricing and promotion, for loss prevention, supply chain logistics/scheduling and even for hiring purposes. Compared to data analytics, the use of AI among food industry companies is still in the beginning stages, but we expect this trend to continue.
Technology Takeaways
I often hear people say the food industry does not lead the pace of innovation, and that may be true—we are a cautious bunch. However, when I look at these survey results, I see an industry that is investing and innovating with technology, especially data analytics and AI. It’s clear the food industry is truly transforming into a tech-first industry.
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