Kroger's AI Strategy Hinges on Bridging Digital and Physical Shopping

Kroger's approach to artificial intelligence centers on dissolving the gap between digital and physical retail environments, according to remarks made by Executive Vice President and Chief Digital Officer Yael Cossett at the Groceryshop conference in Las Vegas last week.

It's on us to remove that friction, the burden of having to think differently about how [shoppers] engage with us. And that's where I think AI really is transformational.

Yael Cossett, Kroger Executive Vice President and Chief Digital Officer

The company launched an employee-focused AI assistant earlier this year, followed by an AI-powered shopping assistant for customers. Cossett discussed insights from these deployments and Kroger's plans for broader AI integration across its business.

Kroger's AI development rests on a fundamental principle: initiatives must ultimately create value for shoppers, whether through streamlined employee workflows or improved shareholder returns that fund further business investment. The grocer is anchoring its AI efforts in customer data science, leveraging two decades of data infrastructure to ensure its technology decisions rest on reliable information.

The company has invested more than 20 years in data science capabilities, initially designed to tailor digital shopping experiences, Cossett noted. Over the past decade, Kroger has simultaneously expanded its focus to modernizing the company's operational systems.

Cossett emphasized that Kroger's strategy balances two competing priorities: maintaining ownership of the data powering its AI systems while preserving the flexibility to collaborate with external partners and adapt its technology choices as the field evolves.

Things are moving so fast. We want to make sure we build proprietary models on top of our proprietary data while also partnering and leveraging frontier models and partners who have built capability that can impact the customer experience.

Yael Cossett

Kroger now has the chance to unite these capabilities, merging consumer insights derived from data science with operational domains including supply chain and merchandising. Cossett suggested that without AI, synthesizing and optimizing these diverse signals around customer needs would be impractical.

What Kroger has learned about its shoppers

Pressure on grocery retailers to invest in AI is mounting, speakers noted at Groceryshop. Yet as grocers adopt the technology, they must prioritize maintaining consumer confidence while addressing customer needs, Cossett cautioned.

Some shoppers may welcome AI-driven automatic replenishment or recurring orders based on purchase history, but Cossett suggested grocers should resist pursuing this path aggressively. He noted that customers maintain a meaningful emotional bond with meal planning and shopping for their families, a connection that will retain importance.

I think there is still a significant level of emotional connection between the customer and what they are doing for meals for their family that will continue to have an important place.

Yael Cossett

Kroger's AI shopping assistant rollout revealed unexpected patterns in how customers engage with AI technology. Cossett had anticipated that younger shoppers would be the primary adopters, but the tool attracted users across all age groups, defying his initial assumptions.

A second unexpected finding emerged: product discovery increased substantially as shoppers gained access to more targeted recommendations. Although the AI tool accelerated checkout and narrowed initial search scope, it paradoxically encouraged customers to explore beyond their original shopping intent.

[B]ecause we've simplified a point of friction… it's given time and confidence to the customer to branch out beyond that specific purpose, and I think that's a very exciting thing.

Yael Cossett