From Instinct to Algorithms: Why the Grocery Industry Needs AI

The grocery industry is at an inflection point. Store shelves may look full, but behind the scenes, many operations are running on fumes, especially in fresh departments like produce. The root of the problem? We’re still relying on human ordering and decision-making practices built for a different generation, while the labor market, customer expectations, and technological landscape have moved on.

THE HIDDEN COST OF HUMAN-DRIVEN ORDERING

When I was a produce retail director, I witnessed firsthand how inefficient traditional ordering could be. Well-meaning department managers, armed with clipboards and muscle memory, would guess at quantities. My father, who is still in the grocery industry as chief executive for Kirby Foods, ordered with pen and paper back in the ’70s the same way I did much later, and the same way most still do! Nationally, produce shrink averages around 5% to 9%. That’s billions in lost revenue and tons of food waste each year, much of it due to over-ordering or poor forecasting.

Then came the generational shift. For every five experienced Boomers exiting the workforce, only two Gen Z workers are entering. Boomers often stayed at a company for a decade. Gen Z? Eighteen months is the average. The institutional knowledge that has stabilized store operations for years is evaporating — and the new workforce expects technology to fill that gap.

MY FIRST GLIMPSE OF THE FUTURE

Pre-COVID, I had the opportunity to help pilot one of the first AI tools for fresh produce ordering. We trained it with real sales data and guided it with guardrails based on merchandising goals. The result? Out-of-stocks dropped. Shrink decreased. Inventory turns improved because the system didn’t “hedge” with extra cases.

The biggest surprise? Employee satisfaction rose because the pressure to “guess right” in an antiquated process was removed. Managers felt supported, not replaced. Ancient, cumbersome processes now graduated to the digital age.

Retailers who embrace AI now will reduce shrink, boost employee retention, and create a more resilient
supply chain.

That experience sparked a passion. Today, at EmpowerFresh, we’re developing AI tools for wholesalers and retailers that can analyze thousands of SKUs across locations, weather patterns, seasonality, and promotions. Our system runs thousands of computations per second and has achieved 90%+ accuracy on average. We’re not just suggesting orders, we’re forecasting with precision. Saving time and money for retailers.

THIS ISN’T ABOUT THE ROBOTS

Let’s be clear: This isn’t science-fiction. It’s not about robots replacing people. It’s about tools that extend what we can do faster, more accurately, and with less burnout.

Narrow generative AI, purpose-built for retail use cases, is already proving masterful at spotting trends, recommending order quantities, and forecasting demand. In three to five years, we’ll see AI managing most key retail processes: buying, forecasting, promotional planning, schedule writing, production planning, theft prevention and even inventory counts. The tedious, error-prone tasks that drain human capacity are the ones AI is best suited to handle.

Meanwhile, humans will shift to interpreting the data, guiding the strategy, and managing exceptions. In many ways, it’s a return to grocery retail craft, but with better tools.

WHY THIS TREND MATTERS NOW

COVID accelerated change, but it was just the beginning. The volatile supply chain, rising wages, high turnover, inflation, and customer demand for freshness collided to expose our industry’s weakest link: outdated systems. The status quo isn’t just inefficient, it’s unsustainable.

Retailers who embrace AI now will gain a serious edge. They’ll reduce shrink, boost employee retention, and create a more resilient supply chain. Those who delay may find themselves unable to attract talent or meet shopper expectations.

AI won’t stop at ordering. Already, we’re seeing tech like inventory-tracking cameras, shelf-scanning drones and robotic produce sorters. Imagine a world where every link in the chain, from farm yield predictions to last-mile delivery will be optimized by smart systems. It’s coming. The only question is: Will we lead, or will we lag?

MY ADVICE TO INDUSTRY LEADERS

1. Start small, but start now. Pilot in one department. Let your team experience the relief of data-driven support. The ROI will speak for itself.

2. Invest in training, not just tech. AI is a tool, not a magic wand. Empower your people to understand and guide the systems. Raise the bar, set 100% use as expectation, don’t waiver in vision or goal.

3. Stay human first. The future isn’t man vs. machine. It’s man with machine. Use AI to reduce noise and let your people focus on what they do best.

4. When we piloted that first AI system years ago, our goal wasn’t to replace the order writer. It was to help them make better decisions, to reduce stress and increase consistency. We didn’t just improve margins. We improved morale. And, in today’s grocery retail landscape, that might be the most important metric of all.

Jesse Himango is chief operating officer and chief product officer at EmpowerFresh Company, an AI-centric company purpose built for independent retailers’ produce departments.