Evolution of AI Sharpens Focus of Convenience Channel Operations

Retailers are exploring its use in inventory optimization, fuel pricing and more.
Retail technology in warehouse with backstock

AUSTIN, Texas — The Convenience Leaders Vision Group (CLVG) tackled the issue of artificial intelligence (AI) in convenience retail in its latest Vision Report. AI's evolution and impact were key focuses during the group's April quarterly meeting.

As retailers learn more about generative AI and some of its usage applications, they should understand that quantity of data and the ability to process it via algorithms with cheap computing power are what make discussions of AI so relevant today, according to Tom Svrcek, analytics partner with McKinsey & Co.

"A new level of performance is being unlocked because of AI," Svrcek said. AI fits well within the scope of perfecting the task of inventory optimization and is capable of predicting demand at a "very, very granular level."

[Read more: Convenience Technology Group Sees Channel Retailers as 'Tech Trailblazers']

Consultant Hal Adams noted that the way things change with AI today is the predictive element of understanding what is happening fast enough to be able to change the result. The use of AI elevates a traditional forecasting model.

"There are things you can do and react to much more quickly that you probably couldn't do before AI," he said.

The opportunity for c-stores lies in using predictive application to generate orders and keep a store fully stocked, according to Drayton McLane Jr., chairman of McLane Group. Traditionally, most store orders are completed by the store manager, frequently based on visual cues at the shelf and while performing many other tasks at the same time. The constant turnover of managers exacerbates the problem.

Texas Born (TXB) CEO Kevin Smartt shared that the chain primarily uses AI through SparkCognition via its security camera feed. This predictive modeling approach maintains an accurate headcount of people who enter the store and alerts staff to how many employees are needed at the counter. This allows stores to immediately move people around "so there is not so much dwell time," he said.

TXB also uses AI to change its approach to bathroom cleaning schedules and safety.

[Read more: TXB Tackles the Phygital Space]

Several CLVG members expressed interest in AI-driven fuel pricing scenarios. Greg Parker, CEO of Parker's Kitchen, noted that the ability to set gasoline pump prices based on individual customer behavior offers a whole new opportunity.

The Convenience Technology Vision Group operates under the Vision Group Network (VGN), which was formed in 2020 and gathers the collective knowledge and ideas of its members for the purpose of sharing within the retail community. Other groups that fall under the VGN include the Convenience Leaders Vision Group, which was formed in 2022.

VGN reports are accessible here.