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Grocers must get ready to compete for two fundamentally different types of online shoppers: humans and AI agents. That’ll mean rethinking some of the basics of pricing and promotion, which were founded on human psychology alone.
AI shopping agents have made a strong start. Bain & Company research shows that almost half of US shoppers use them to compare grocery prices or find deals. Penetration should only increase as AI agents become more powerful, including the next wave of agentic AI that will source items from multiple vendors and place them in a single cart, ready for the human shopper to confirm the purchase.
However, humans aren’t about to vanish from the picture, even when full automation of grocery shopping becomes possible. Some shoppers are likely to delegate everything to a bot to save time. Others will remain fully hands-on. Many shoppers will probably be somewhere in between: happy for AI to build a multi-vendor basket for them to approve, but reluctant to let agents check out autonomously.
To win in what’s almost certain to be a hybrid future of people and bots, grocers will need to ensure that their pricing and promotional strategy continues to appeal to human shoppers while accommodating the relentless, outcome-focused logic of AI agents, all without worsening the fragile economics of online grocery. Bain & Company is confident that grocery pricing and promotions can be successfully rebooted for the agentic AI era through a combination of tactical and strategic moves.
The threat to online basket building
Many business models in grocery rely on basket building. Grocers sell some products at ultra-low prices or a loss to generate traffic, knowing that shoppers will pick up other items or perhaps trade up to premium products. The mix of items that ends up in the basket makes the order viable.
This model works because it helps shoppers navigate complexity. Faced with thousands of prices, humans tend to anchor their value perception on a manageable subset of known-value items, promotional deals, and total basket cost. The rise of non-human shoppers is poised to challenge this basket-building approach.
Unlike humans, bots are built to evaluate infinite stock-keeping units. They will grab loss-leading deals in the same way that we do, but they won’t “feel” value from a few familiar prices. Instead, they will optimize the overall outcome based on the goal given to them, often cherry-picking the edgiest deals from different grocers rather than building the mixed basket that the high-low model relies on.
Grocers that rely on low-priced KVIs and compelling promotions will need to keep offering them, unless they want to lose their human shoppers. The risk is that AI agents only choose low-margin or loss-generating items from their assortment. Everyday low price players, while less exposed, won’t be immune to AI-related order fragmentation, either.
Tackling AI-related order fragmentation
Basket building was already under pressure in online grocery, even before any mainstream adoption of AI shopping agents. AI agents are likely to add to this strain, threatening the broader profitability of many grocers.
To defend themselves, grocers need to find new ways to incentivize basket building. That could mean offering additional discounts that only kick in above a certain basket size, faster delivery slots for fuller baskets, or in-store pick-up offers that make order splitting impractical. Costco-style membership fees could also encourage single-grocer loyalty.
The most effective tactic might be to offer a unique assortment containing items that AI agents can’t find elsewhere. Private-label products are a particularly powerful way to deliver that uniqueness while directly supporting profitability.
Grocers should also consider making some deals store-only. Given the extra costs involved in servicing online orders, some promotions just don’t make sense online. AI agents are likely to cause even more to fail the “Is it worth it?” test once picking, packing, and shipping are factored in.
Creating differentiated value beyond price
The agentic AI era is likely to be hard going for grocers that don’t stand out on at least one individual purchase criteria. Agents will optimize their choices based on the agenda of the human shopper instructing them. That won’t always be price. In some cases, it’ll mean prioritizing the highest quality or the fastest delivery.
Fresh produce offers fertile territory for differentiated value beyond price, given variations in quality, ripeness, size, and more. Prepared foods are similarly promising, if grocers can find a way to stand out.
Online grocers will each have their own path to differentiated value, including private label and loyalty programs. Bain & Company notes that simple reliability and excellent service will also matter: making sensible substitutions, delivering orders on time, and making time slots work for the individual needs of each customer.
Don’t wait for full agentic automation before acting
Grocers need to prepare for a world in which their online customers order more frequently and across a wider range of banners due to the introduction of agentic AI. That shift is likely to put further pressure on basket size and the industry’s already slim profit margins. Executive teams should not delay action in the hope that the threat will only solidify if shoppers give AI agents the power to check out autonomously. The impact on basket building is likely to be significant even if agents are only working on a partially delegated basis. And that semi-autonomous moment is very much upon us.