Nearly three quarters of US consumers are stressed about their grocery bills – and they’re changing where and how they shop because of it. As prices remain volatile and loyalty becomes harder to earn, retailers and brands are scrambling for new tools and strategies to attract, convert and retain today’s grocery shopper.
That’s where a new AI-powered solution from Algolia comes in.
Algolia’s Intelligent Grocery Solution, which showcased at GroceryShop in Las Vegas in the fall, draws on Algolia’s experience in search, merchandising and personalization to balance the modern-day budget constraints of consumers and grocers while supporting conversion and appealing to diverse shopping styles.
“If folks are concerned about affordability of groceries, especially within the US right now, you need to make sure – as a grocer – that you’re creating experiences that makes a shopper feel comfortable that they are getting a deal, but also still protecting your margins, which are already razor thin,” said Michelle Cucchi, product marketing director at Algolia.
She explained that the company can help retailers, and by extension the packaged food manufacturers with which they partner, “find that sweet spot of merchandizing” that protects margins but assures consumers they are getting the best price and experience.
“It doesn’t feel like a trick. It feels like a true and genuine experience,” she added.
A 5-prong approach to boost sales and loyalty
At the same time, Algolia’s tool can help retailers meet a new generation of consumers who are approaching grocery shopping in an entirely new way.
For example, 46% older Gen Z consumers are more likely to discover grocery products by browsing or searching on a grocer’s app than store shelves, Cucchi said.
“That is almost the complete opposite of the baby boomer generation,” she added.
To balance the different needs of cross-generational shoppers and retailers, AI-based Algolio’s Intelligent Grocery Solution focuses on five key pillars:
- search that converts,
- merchandising for margin,
- recommendations that remember,
- agentic that is actionable and
- inventory that talks backs.
The future of food at Future Food-Tech San Francisco
Join global food-tech leaders at Future Food-Tech San Francisco on March 19-20, 2026, where innovators, CPG brands, startups, investors and policymakers gather to explore breakthrough technologies, strategic partnerships and the future of food systems through policy, biomanufacturing, AI, ingredient innovation and sustainable solutions. Click here to view the agenda and here to register.
‘Search that converts’ goes beyond relevance
The most effective search doesn’t just populate the right options at the top of a list – it drives conversions while protecting margins by understanding what the consumer wants and what the retailer has to offer.
This means balancing inventory and understanding the different types of products that might complement search items or accurately replace them if they are unavailable. It also means interpreting natural language – whether typed, spoken or handwritten and uploaded.
Merchandising for margin boosts search profitability
In stores, retailers historically have relied on static signs or end cap displays to promote items, but according to Cucchi, Algolia’s solution can “turn every search box, category page, homepage, carousel and more into a data-driven end cap.”
She explains this supports the relationship between retailers and brands by providing more visibility and transparency, and builds on their media revenue strategy.
Actionable agentic and recommendations that remember foster loyalty and boost sales
Algolia is able to recreate “winning experiences” that happen in stores between associates and shoppers by offering an AI powered shopping assistant that can answer consumer questions – such as how to create a party menu for a consumer whose guests have dietary restrictions, Cucchi said.
“By creating an experience that gives the shoppers the information they need to feel confident in their purchase is only going to help the grocers and give the shoppers and experience they love,” she said.
She added personalized recommendations also create cross- and up-sell opportunities.
Personalized recommendations also can sooth frustrations about out-of-stocks by suggesting alternatives that are authentic to the consumers’ desire.
“One of our current customers out of the UK has seen a 39% boost in conversion rates by offering a personalized recommendation when an item is out of stock,” Cucchi said. “That is a win-win for both the shopper and for the grocer.”
Accurate inventory
The last pillar of the solution focuses on accurate inventory so that consumers feel confident the exact brand and products they are order will show up on their doorstep. When this consistently happens, it boosts loyalty.
“At the same time, real time stock visibility helps stores reduce waste and restock smarter, which cuts some of their operational costs and can further support their bottom line,” Cucchi said.
Ultimately, Algolia’s approach is not one-size-fits-all, but is a flexible solution that can be tailored to meet today’s needs and tomorrow’s challenges.
