AI continues to be at the forefront, including in the retail grocery industry.
Amazon is the leading retailer in the AI space, launching a $38 billion partnership with OpenAI. Amazon continues to seek to “deliver infrastructure and tools that allow customers to build and run real-time inference on multi-trillion parameter large language models (LLMs) faster, at massive scale, and at a lower cost.” Walmart is also paving the way, and companies like Dollar General, which recently hired an SVP of AI Optimization, are looking to compete.
Sources:
- https://progressivegrocer.com/amazon-enters-38b-partnership-openai
- https://www.supermarketnews.com/executive-moves/dollar-general-creates-new-role-for-ai-optimization
- https://progressivegrocer.com/these-2-retailers-are-projected-see-biggest-financial-impact-generative-ai
Kroger and Instacart Expand Relationship Around AI
Kroger and Instacart announced that they are expanding their long-running partnership to “strengthen the grocery chain’s online shopping and delivery operations, while adding new AI-driven features designed to make digital grocery trips faster and more personalized.” One of the most visible additions for customers will be Cart Assistant. This is an AI shopping tool from Instacart appearing in Kroger’s iOS app. This feature uses conversational prompts to help users find recipes, build carts based on past purchases, and plan meals more efficiently.
Sources:
- https://www.supermarketnews.com/grocery-technology/kroger-instacart-come-out-with-ai-shopping-tool-express-delivery
- https://progressivegrocer.com/kroger-instacart-expand-relationship-around-ai
Value and Private Label Growth Amid Price-Sensitive Shoppers
According to Mintel’s recent Grocery Retailing US 2025 report, price sensitivity rose in 2025. Tariffs “cast a cloud over grocery.” Mintel data shows consumers are increasingly hunting for better deals (49%), switching to cheaper brands/products (35%), and cutting back on nonessentials (36%). This means consumers are prioritizing prices and focusing on overall value, especially when grocery shopping.
Q4 is often the biggest spend season in grocery (holiday meals, entertaining, etc.). For brands, emphasizing value in messaging becomes critical as brands might have to shift from “premium feature” to “value + premium” mix. From a media perspective, consider how to target “down-trading” shoppers (those shifting to lower price tiers) with tailored media and messaging.
Source:
Thanksgiving Meal Deals!
Bundled “meal deals” that package turkey, key sides, and dessert ingredients are increasingly common. Grocers are emphasizing “cost per person” language (e.g., under $5/person) rather than just “free turkey” or “buy one, get one.” Free or significantly discounted turkeys remains a tactic, especially via loyalty programs or spend thresholds.
While inflation remains a concern for consumers, many retailers are emphasizing price relief — “helping families celebrate affordably” — messaging. For example, the average cost of Thanksgiving dinner for 10 fell about 5% in 2024 (to ~$58).
Retailers are also using these deals to drive broader behaviors — pickup/delivery orders, online ordering, loyalty-app engagement (e.g., free express delivery code at Walmart).
Walmart announced a Thanksgiving meal-bundle for 10 people for under $40 for 2025. ALDI is marketing a full Thanksgiving meal for 10 for around $40 as well (ingredients & turkey). Target is offering a “meal for four,” under $20. Amazon’s Thanksgiving meal feeds a family of 5 for $25 and includes an entire turkey and classic sides.
Source:
The Loss of SNAP is significantly impacting the industry
USDA confirmed that SNAP benefits would not go out on November 1 — disrupting food access nationwide as the government shutdown dragged on. Any interruption in food assistance only made matters worse for low-income families trying to put food on the table, as grocery costs continue to rise.
The inflation index for food at home rose 2.7% over the 12 months ending in September. A breakdown by category shows some products increasing significantly.
- Meat, poultry, fish, & eggs: 5.2%
- Non-alcoholic beverages: 5.3%
- Cereal & bakery: 1.6%
- Fruits & vegetables: 1.3%
- Dairy & related products: 0.7%
Sources:
- https://progressivegrocer.com/loss-snap-has-more-consequences-realized
- https://progressivegrocer.com/doordash-launches-emergency-food-response-amid-snap-disruption
FAQ
A: AI is being used to optimize a customer’s experience, assisting their experience with features like a “Cart Assistant” that can plan their purchases and make suggestions tailored to the shopper.
A: The current economy is pushing consumers to become more price sensitive. Recent economic changes, such as increased tariffs, are forcing consumers to buy products that offer value prices rather than name-brand products.
A: Low-income families are struggling more than ever in the face of the government shutdown and the current economy. Without receiving SNAP on November 1, these families struggle to put food on the table, especially when faced with an increase in grocery prices, which is widespread across all food products.
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