Brands Are Losing Shelf Space to AI Algorithms
Tesco has spent three decades learning what more than 24 million U.K. households buy through its Clubcard loyalty program. Now the grocer is testing what happens when artificial intelligence stops recommending groceries and starts building the basket itself. Tesco’s pilot is a meal-planning assistant, built with U.K. AI consultancy Tomoro, that suggests recipe ideas based […] The post Brands Are…
Tesco, a leading U.K. grocery retailer, is piloting an AI-powered meal-planning assistant that could reshape the retail landscape by reducing physical shelf space. Developed with Tomoro, an AI consultancy, the assistant generates personalized recipes based on individual preferences and dietary requirements, automatically adding suggested ingredients to customers' shopping baskets.
Tesco, which controls nearly 30% of the U.K. grocery market, is testing the tool with around 280,000 employees ahead of a wider rollout, reports Retail Gazette.
This AI initiative is part of a broader strategy encompassing meal planning, marketing, and back-end operations. Tesco also partnered with Adobe in April to incorporate agentic AI capabilities into Clubcard offers and marketing. Further, Tesco signed a three-year agreement with AI company Mistral in December to overhaul Clubcard offers.
Retailers worldwide are racing to integrate AI into meal decisions before consumers even finalize their shopping lists. Albertsons' Ask AI search tool, launched last September, increased basket size by 10% for users, according to CEO Susan Morris. Additionally, Albertsons rolled out an agentic shopping assistant for all its store banners in December.
Agentic AI, which actively influences a customer's choices, differs from traditional recommendation engines. Gabriel Corbett, co-founder and CEO of Mealia, a U.K.-based AI grocery app integrated with Tesco, Asda, Sainsbury’s, and Morrisons, explains that this technology allows retailers to steer demand toward specific products, improve margins, and reduce food waste.
Consumer interest in AI-driven grocery shopping is evident, with 69% of U.S. adults surveyed by PYMNTS Intelligence expressing interest in delegating grocery shopping and meal planning to agentic AI. This trend aligns with retailers' efforts to build AI-driven personalization strategies.
However, this shift in the retail landscape poses challenges for brands competing for shelf space. If AI assistants automatically generate shopping lists based on stored customer preferences, brands not already part of that customer's established pattern may never be considered. Therefore, retailers must shift their retail media budgets from influencing shoppers on physical pages to shaping the data and rules AI agents use to generate shopping lists.
Written by urgent.news from PYMNTS's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
