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British supermarket Sainsbury’s plans to cut costs by harnessing AI

The company logo for the Sainsbury's food store chain at their Holborn building in London, Monday Nov. 20, 2006. (AP Photo/Alastair Grant)
The company logo for the Sainsbury's food store chain at their Holborn building in London, Monday Nov. 20, 2006. (AP Photo/Alastair Grant) Copyright ALASTAIR GRANT/AP
Copyright ALASTAIR GRANT/AP
By Indrabati Lahiri
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A five year tie-up with Microsoft could potentially help the supermarket chain to make use of AI to cut costs and improve staff efficiency.

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British supermarket giant, Sainsbury’s could be the latest retailer to harness AI to gain better insights into customer shopping behaviours and find new ways to streamline services.

The supermarket has revealed that it has entered a five-year partnership with Microsoft although the exact details and value of the deal have not been revealed.

Sainsbury’s is expected to utilise its data and consumer behaviour insights, whilst Microsoft will bring technological expertise which could help the retailer come up with a game plan for how best to implement and leverage AI for its business.

The tie-up is aimed at improving the online shopping experience for consumers, making it more interactive and easier to use, whilst also enhancing the search functions.

On the employee side, AI could potentially help workers gain insights into important processes, as well as access real-time data, which could support logistics functions such as refilling shelves, by letting staff know when stocks are running low and for how long they are expected to last. AI is also expected to enhance inefficiencies within employee working practices.

New product and service developments could also potentially happen much faster.

However, one of the main reasons for this partnership is likely due to Sainsbury’s embarking on a very ambitious cost-cutting initiative, which will see as much as £1 billion (€1.17 billion) slashed over the next three years. AI has been known to significantly help businesses slash costs and streamline their processes.

This is also expected to go a long way in attracting and retaining customers and investors, with the retailer hopeful of profit growth reaching approximately 10% this financial year.

Which other grocery chains are using AI?

Recently, a number of grocery chains have jumped on the AI bandwagon, mainly for cost-saving and efficiency benefits.

These include US membership-only warehouse club retail chain, Sam’s Club, which has revealed that it would be using AI to check customer receipts before they leave the shop. Another supermarket chain Kroger intends to use it for self-checkouts, whereas Geissler’s supermarkets could start using AI-powered carts instead of traditional carts.

Melissa Minkow, director of retail strategy at CI&T, a digital consultancy firm, said, as reported by Modern Retail, “We’re in a challenging labour environment given the economic landscape. It’s really important that retailers are optimising the time of their employees so that their employees are fulfilled and able to interact with customers in the most effective ways.

“There’s definitely potential for larger baskets from shoppers. There’s also a strengthened brand reputation because the customers are leaving feeling more satisfied by the interactions that they’re able to have with store employees.”

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