I shop at Safeway, and every time I shop, I must enter our old landline phone number into its system to identify myself as a member and get my special member discounts. At a Meta event last month, I heard the story of Chedraui, a Mexican grocery store chain that is using artificial intelligence to take the concept of membership and tracking of shopping patterns to a new and much more valuable level.
Theoretically, I need to enter my long-gone phone number for Safeway so it can track my shopping to better serve me, part of that is coupons that are supposed to be targeted specifically to my family. I never look at coupons, offers, or promos, but my sister-in-law who lives with us does, and the things she finds are about as targeted to me as the spam calls I get offering to help me with tax refunds for my small business that does not exist.
At Chedraui things are different. It combs through shopping history and other data to find patterns. Based on what it learns, it comes up with just the right coupon for me right now. For example, if I buy coffee every five weeks, I might see a 30-percent-off coupon for that coffee about four and a half weeks after my last purchase. A well-timed, very targeted coupon like that helps keep me tied to that store.
These coupons are offered through WhatsApp, and Chedraui extends beyond the single coupon offer. The coffee coupon is the first thing I see, maximizing the probability that I will click to take advantage of the offer. The offer is in a carousel of coupons, all of them targeted at me, and most involve cross-sells or up-sells that are profitable to Chedraui.
So, I get to feed my caffeine addiction, Chedraui takes a loss on my coffee, but it knows I'm coming this week again. And who knows, maybe I'll try some of that new almond milk that is profitable for Chedraui since the provider is running a promotion with the chain to get some new customers. The chain decides how many targeted loss leaders to offer me vs. offers that are profitable for them.
I love this story. It's a simple, powerful, and relatable use of personalization that feels like a win for everyone. I get a discount on something I use every day; the store gets interactions with me that build loyalty, and with luck it sells something profitable as well.
This is a brilliant example of how AI can unlock data to enable a level of personalization that makes a difference for me as a consumer. Safeway has tracked every purchase I've made there since I had a landline in my house, but I've never really gotten any value from it other than the discounts it offers to people who are willing to identify themselves to the store. I've never felt like that was anything more than a shell game of raising prices to drop them so I'd feel like I was getting a bargain. I do get offers from Safeway, but as far as I can tell they are driven by what Safeway wants to sell me and has no connection to my actual desires. Chedraui, on the other hand, focuses on using my shopping data to identify an offer that would make a difference to me and puts that offer in front of me.
Hopefully, this sort of targeted intelligent interaction is something that AI can bring to the table for us and move us away from random, unhelpful interactions into things that support our caffeine addictions and other things we hold dear.
Max Ball is a principal analyst at Forrester Research.