Grocery’s new “business as usual”: The 3 steps to self-funded transformation

Mar 20, 2025 • 5 min

Grocery retail is an industry that can always cry wolf and still tell the truth. Supply chain upheaval is inevitable. Despite the advent of cutting-edge AI tools that help companies grow amid choppy markets, however, many grocery retailers still linger on the fringes of tech transformation projects.

This position is becoming increasingly untenable. The speed of tech development is rapidly raising performance benchmarks and making AI adoption a competitive necessity. For retailers who haven’t made the leap to AI-driven planning, catching up to new market standards might seem a daunting task.

But with small and steady AI implementations and a unified approach to planning, they can fund continued transformation and start raking in the benefits of retail AI capabilities sooner, improving sales, increasing customer loyalty, and reducing waste.

Surveying the gathering clouds

A thunderstorm is looming on the horizon. It’s FSMA 204.

Section 204 of the FDA Food Safety Modernization Act (FSMA) signals a huge shift in regulations. The law – slated to go into effect January 20, 2026 – stipulates new traceability recordkeeping requirements for the entire food supply chain. The ambiguity of the regulatory wording and the implications of possible interpretations are cause for concern. In addition to the inherent difficulty of data management in the grocery sector, many retailers are in a tech deficit that makes comprehensive, clean data sets an impossibility.

FSMA 204 is just one of all too many fast-approaching warning signs on the industry’s horizon, some of which have already made landfall. Labor shortages, tariffs, rising wages, and inflation are all taking their toll on businesses and consumers, along with the effects of geopolitical tensions and global disruptions.

This is usually the point where the voice of the industry would say, “Look! AI is the answer!” And it is – but there’s a catch.

Taking action: Small steps are better than none

Many grocery retailers have stuck close to their on-premise solutions. Over time, they’ve built up their network of POS, WMS, and ERP systems. In many cases, though, later investments in innovations have been hampered by restricted resources and narrow margins.

But now, AI development is galloping ahead of the industry. Cloud-native systems are delivering data storage, management, and analysis at an unprecedented rate. AI can take this wealth of information, clean it up, and make the most of it, improving planning calculations and outcomes – at retail scale and speed. The resulting accuracy and responsiveness of these solutions allow companies to optimize decision-making across planning functions, deliver competitive customer experiences, and significantly shorten the time-to-value of investments.

The impact of these technologies and the speed of ROI are widening the gap between early adopters and the “wait and see” crowd. Retailers need to start evaluating where best to implement AI as soon as possible, especially if they’ve been holding off on investing in their tech stacks. Inaction will harm their businesses, keeping them at the starting line while the competition races ahead.

The good news is that AI has advanced to the point that it’s possible to jump the stepping stones retailers might have missed over the years. These AI planning capabilities complement and integrate with existing tech stacks, and the ease of implementation means you don’t have to be weighed down by massive transformation projects. The barrier to entry is lower than it’s ever been.

So where to start?

The 3-step journey to self-funded transformation

Grocery retailers don’t have to integrate AI all at once to start seeing returns. An incremental approach to implementing AI delivers the results and value needed to take each following step toward deeper integration. It’s a self-propelling process:

Determine your biggest business challenge and identify the KPIs you want to improve.
Invest in and implement AI for your top-priority business area.
Use the cost savings and profit generated by your initial project to fund the next AI implementation.

Let’s look at this a little more closely.

First, review the problems your business is facing. Where are your major efficiency and profit losses? Are you plagued by imbalanced inventory? Are your promotions costing more money than they generate? Identify which issue you want to prioritize and consider the KPIs you’ll use to measure your success. Determining the outcome you want will help you decide which business area gets the AI investment first.

Now we get to the good part – implementing your solution and reinforcing that first pillar of your planning process. Implementations no longer involve the endless cycles of go-lives, customizations, and delays. So, you’re up and running faster and seeing returns sooner. Once you’ve realized that first ROI, you can start reinvesting.

For example, in the hypothetical value journey below, a retailer decides to invest in pricing and promotions first, improving margins and increasing promotional revenue.

A flowchart showing six business phases progressing upward from pricing and promotions to forecasting and replenishment to store ops and assortment to space planning, mapped against time and ROI. — ***Fig. 1:*** *Incremental investments allow grocery retailers to use one implementation’s ROI to fund the next implementation.*

The quick time-to-value funds the investment in forecasting and replenishment, which results in massive wins for inventory management, helping the company recapture working capital and reduce overall inventory levels. This pattern continues through store operations, assortment, and space optimization.

Throughout the journey, the cost savings and increased cash flow achieved by the previous stage allow you to restart the three-step process and reinvest that ROI, fueling the next implementation.

And remember, these are not just profit wins; you’re not sacrificing the customer experience by cutting costs and corners. With AI, you’re delivering better value to the customer, while achieving efficiency gains. Profit is the natural by-product.

A unified platform for scaling AI

Right now, we’re treating these implementations as sequential one-offs, but if your AI-driven planning functions aren’t integrated with each other, your investment has an expiration date. If your promotional tool can’t easily talk to your demand planning software, you’re missing out on the true value of AI-driven planning. Siloed planning systems prevent teams from understanding the impact of their decisions on the rest of the business, which can be costly. They also make it much more difficult to scale your AI because each system uses its own data set.

With a unified platform, you can achieve scalable AI across your entire business, expanding your current use of AI across planning functions, incorporating more data as your business grows, and easily integrating future innovations to enhance performance.

As RELEX CEO Mikko Kärkkäinen puts it:

“Unified platforms allow businesses to make the jump from experimenting with AI to using it at every planning stage — unifying, automating, and optimizing processes to drive competitive, customer-centric growth. These platforms break down silos so companies can efficiently ensure consumers get the products they want, when they want them, via whatever channel they shop.”

The RELEX unified platform integrates all your planning functions so they can easily exchange data, plans, and updates instantly. They share a data core and a layer of AI capabilities that synchronize and improve planning decisions and help teams balance competing objectives. Plus, it provides a diagnostic and collaborative layer that helps them analyze and interpret data from across the company, identify and address systemic planning issues, and improve overall supply chain performance.

This unified planning approach helps grocery retailers make the most of their AI investments, ensuring solution longevity, sound data, collaborative planning, and business growth – all while putting the customer first.

And the more AI advances, the more this can be business as usual for the grocery industry, giving retailers the tools and insights they need to respond effectively to external challenges, tackle internal inefficiencies, and lead the market instead of catching up to it.

Learn more about how unified planning makes scalable AI achievable