How regional grocers can compete on digital without Walmart's budget
This is the second post in our series on how specific industries can modernize the way they build digital products. The first looked at industrial manufacturing. This one looks at grocery retail, where regional chains now compete on app experience with companies that outspend them many times over.
In August, Albertsons told the Wall Street Journal that shoppers who use its conversational search spend 10% more, and that shoppers who use the fuller version of its AI shopping assistant spend up to 26% more. Jill Pavlovich, who leads digital shopping experiences there, explained that the extra spending came from shoppers adding more to their basket because "they're not forgetting items." In other words, the system is paying attention to what shoppers were placing in their baskets, making assumptions about what they’re having for dinner (e.g., spaghetti and meatballs) and then suggesting ingredients that go with that meal that were not already in the basket. This way, shoppers are less likely to forget key ingredients and items.
Our co-founder Jeff Gothelf wrote about that recently and why that seemingly unimportant sentence is the game changer for Albertson’s and for other retail groceries. A shopper who stops forgetting the tomato sauce is a change in behavior, specific enough that a team can design for it, measure it and argue about how to improve it. This isn’t an idea that only Walmart-sized budgets can come up with. It’s standard customer experience design and every grocer and retailer can copy it.
You already know how to do this in the store
Grocers are very good at a specific kind of work. A category manager decides what goes on the shelf, a planogram fixes where each item sits, the weekly ad sets the price, and within days the sell-through numbers say whether the sum total of these decisions was right. Margins are thin so this becomes a deliberate, disciplined practice. Regional chains that have lasted for decades have usually done it by knowing their own shoppers and their own stores better than a national competitor can.
That same discipline is now being applied in software. The app, the loyalty program, online ordering, curbside pickup and the shopping assistant all form a part of the overall shopping user experience. And it’s this user experience that determines whether your customer comes back to you or gives the competition a try. The digital product teams at the regional grocers are asked to plan these experiences much the same way they plan the rest of the business, as a list of items to stock and then tick off a list. Whatever Walmart or Kroger have on their app, we’ll need that on ours as well. The team makes a plan, commits to a budget and deadline and gets to work. Success is measured in terms of whether the digital user experience was delivered on time and on budget.
Where it breaks (or how a store is different than an app)
In the grocery store, the shelf tells you within days whether it made sense to stock a product on it. The measure of success is well-understood and determined in advance. Customers will come in, shop for their items and buy the items on the shelf. Digital features don’t work this way. Simply putting them online doesn’t mean anyone will look for them, much less use them. Your digital product team needs to determine in advance what they expect your customers to do with each feature they put in the app or service. Without that decision the feature ships and no one can credibly say whether it was worth building it in the first place.
Getting into a feature parity competition with a national retailer is a recipe for losing. A national chain can fund many attempts at a shopping assistant and keep the few that work, while a regional chain with a fraction of that technology budget gets a handful of attempts a year at best. AI has made each attempt faster to build but the cost of delivery still ends up limited by the retailer’s budget. In Atlassian's State of Product 2027 survey of 1,000 product professionals, 80% said AI is helping them ship faster while customers aren't seeing value any sooner, and 86% agreed that as shipping gets easier, deciding what to build matters more. For a team that only gets a handful of attempts to ship features to market, choosing them well is the most important part of the job.
This is why the Albertsons approach matters more than the Albertsons budget. "Launch a shopping assistant" and "help shoppers stop forgetting items" describe the same project. But it’s the second one that tells a team whether it worked, what to try next and when to move on to the next feature.
Three shifts for a team with a smaller budget
Name the shopper behavior before the feature. Before anything goes on your next roadmap, ask the team to write down what a shopper will do differently once it exists. Make sure it’s phrased as a human behavior. For example you’ll want to see behaviours such as forgetting fewer items, reordering the weekly staples in under a minute, or refilling a prescription in the app with no phone call. These are outcomes — measurable changes in human behavior that deliver business results. "Use the new recipe section" is a description of the feature without the human in it. Instead, challenge your teams to ask, “What will people do differently once the new recipe section is live?” This approach is already used in the brick and mortar store locations. The digital experience works the same way.
Test in one store before you build for all of them. As a brick and mortar retailer, digital product teams at regional grocers have the huge benefit of being able to put digital product teams in the store on any given day of the week. These teams can walk around, observer how people shop and then put a rough version of the idea in front of shoppers in one location. It doesn’t even have to be fully functional. It’s just has to do enough to answer some questions about how make the experience more valuable for these shoppers. A few weeks of that will show which guesses were wrong while they are still cheap to change.
Read the result the way you read a shelf. Once the feature is live, check whether shoppers did the thing you wrote down. If they did, invest in it, and if they didn't, change it or take it out, the same way a slow-moving product loses its placement on a shelf. A small team can't afford to maintain features nobody uses, and removing one is a sign the process is working allowing the team to focus on features that do have value for your shoppers.
A grocer can do all of this without becoming a technology company, because the skillset involved is one its staff already have. They already look at what shoppers do, and they act on it.
What you can do tomorrow
Pick one team and one shopper problem, and give them a quarter. Choose something small enough to test in a single store or a single group of loyalty members. Write down the behavior you expect to change, and review what happened at the end. One feature that measurably changes what shoppers do is worth more to a regional chain than five that match a competitor's list, and it gives the rest of the organization a concrete example to follow.
At Sense & Respond Learning, we help product, design and engineering teams make this shift from output to outcomes, with practical training in product discovery, Lean product management and OKRs. If your organization is competing on digital with a fraction of your largest competitor's budget, we'd love to talk.