Chatting with The Drum at Groceryshop, the marketing boss and the head of competitive strategy say grocery’s future depends on one thing: delivering value that feels personal, with AI quietly doing the heavy lifting behind the scenes.
John Froman & Erich Kahner of Dunnhumby
At GroceryShop, Dunnhumby’s John Froman and Erich Kahner say the message from shoppers is simple: they want value, simplicity and personalization that feels human. “Customers are telling us they still want low prices and convenience, but they also want to feel recognized,” says Kahner. “It’s not enough to just have good prices. They want experiences and offers that make sense for them.”
Kahner, head of competitive strategy and insights for the Americas, and Froman, vice-president of marketing for the Americas at customer data science company Dunnhumby, describe it as a “simple equation with complex variables.” Shoppers expect one-stop convenience and personalized value and most retailers are still trying to balance both. “If you’re a mid-market supermarket without the everyday low-price perception of a Walmart or Aldi, you have to get sharper on value while protecting what makes you special,” Kahner says. “That might be your fresh foods, your service, your store experience, whatever gives you a reason to stand out.”
Froman adds that the retailers that succeed will be those that narrow the price perception gap while amplifying their own identity. “Be more competitive on perceived price without sacrificing the thing that makes you special,” he says. “That usually means optimizing the fresh mission, assortment, quality, service, while you close the value gap.”
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Kahner cautions against thinking of price only as what’s on the shelf tag. “Price perception is so much more than base price,” he says. “It’s the promotions you run, the assortment you carry, how you message value in-store and online and even what you highlight in your ads or loyalty program.”
Froman adds that the most successful retailers treat value as an organizational mission, not just a marketing message. “It’s not just about being cheaper,” he says. “It’s about showing customers you’re on their side.”
Consistency across channels is key. “Keep the value proposition consistent in every channel, then use what you know about the customer to make recommendations, promotions and rewards feel personal,” Kahner says.
HEB is one of the few regional grocers that has stayed strong while competitors lost share to Walmart and club formats. “HEB has done an amazing job of localizing for every community and investing in its own brands,” Kahner says. “About half of its sales come from private labels, compared with about 20% for the industry, and that helps it improve price perception without hurting quality.”
Even as official inflation numbers fall, shoppers still feel squeezed. “People think inflation is still at 20% when it’s really closer to three,” Kahner says. “They’re not thinking year over year, they’re thinking pre-Covid versus today.” That emotional math keeps sticker shock alive and pushes savings higher up the hierarchy. “If you’re not a base price leader, you have to pull every other lever, including assortment, messaging, loyalty and experience, to prove value in a way people can feel.”
Kahner says Dunnhumby has used machine learning since the 1990s for offers, pricing and assortment. What’s new now, he explains, is connecting richer behavioral data with transactions and market signals, then pushing models that are both predictive and prescriptive. “The question is not only which products matter, but what the retailer should actually do next,” he says. “The goal is to automate more of that decision-making and shrink the distance from insight to action.”
Rather than building a separate AI division, Dunnhumby embeds more than 500 data scientists across its client accounts and product teams. “That keeps models tied to real customer value and close to the end user,” Kahner says. “You can’t just drop in a group of AI experts and tell them to innovate. The technology has to live inside the business problem.”
Froman notes that trust and adoption don’t always move in tandem. “In our study, overall trust in AI has barely changed in two years, even as adoption has doubled,” he says. “The gap is widest among Gen Z, they use it far more than they trust it. And that’s actually healthy. We should approach AI with skepticism and keep human judgment in the loop.”
Kahner believes grocery is one of the best use cases for AI because of how often people shop and how much data those interactions create. “Between online orders, loyalty programs and weekly trips, grocery creates a feedback loop that can actually make AI useful,” he says. “You can use it to personalize savings, speed up checkout, manage inventory and help store teams serve customers faster.”
The key, Froman adds, is to make AI invisible. “Shoppers are less interested in AI as a thing and more interested in what it does for them,” he says. “Help them save money, eat better and get out of the store faster. That’s what builds trust.”
Froman also points to operational benefits that make a difference for employees and customers alike. “AI can help store associates get real-time inventory or pricing updates on a headset,” he says. “It can turn normal routines like shelf stocking into real-time data collection. When it’s built into the flow of work, it saves time for everyone and makes the experience smoother.”
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Kahner says the future of grocery marketing comes down to personalization that feels helpful, not invasive. “Use what you already know about the customer, their loyalty data, their purchase history, their missions, and give them messages that make their lives easier,” he says. “Make media additive to the shopping trip, not more clutter.”
Froman believes the same logic applies to commerce and retail media. “We’ve got to move beyond who can pay more for an impression,” he says. “If you can target people based on actual shopping behavior, the message feels relevant instead of interruptive.”
Consumers are also balancing what they call a split mission. “They’re trying to save money and eat healthier at the same time,” Kahner says. “They want both value and wellness and they’re mixing banners to get it.” Dunnhumby’s data shows even high-income shoppers crossing over to Walmart for staples while shopping Whole Foods for produce. “If you’re a CPG brand, you have to serve both of those missions, sometimes with the same product,” he says. “The companies that make health affordable will grow faster.”
The rise of GLP-1 medications will deepen that trend. “These shoppers are being pushed toward nutrient-dense, functional foods,” Kahner says. “But they can only stay on that path if they can afford to. That’s where brands have to step up and make healthier choices attainable.”
Froman is watching the competitive landscape shift quickly. “Publix is expanding north, Grocery Outlet is moving east and the hard discounters have ambitious growth plans,” he says. “We’re also seeing the lines blur between convenience, grocery and quick service restaurants. The C-stores that lean into real food service are outperforming because they’ve become legitimate meal destinations.”
Dunnhumby’s upcoming Retailer Preference Index studies for convenience and QSR will explore those changes further, but both Froman and Kahner say the underlying message will remain the same. “Value is everyone’s job,” says Kahner. “If you’re not a base price leader, you earn price perception through hundreds of small moments, your assortment, your promotions, your messaging, your loyalty experience. It takes time and coordination across the entire organization.”
Froman agrees: “The brands and retailers that get it right are the ones that stay consistent in both price and purpose. When customers feel seen, when they stop having to hunt for deals every week, that’s when you win more of their shop.”
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Tesco Media and Insight Platform is a partnership between Tesco, the UK’s largest grocery retailer, and dunnhumby, a global leader in Customer Data Science.