Kroger’s new AI shopping assistant comes with ads

Kroger has launched its new AI shopping assistant with advertising included from day one, joining a growing trend of retail media integration across digital shopping tools.

Ads appear immediately after launch

Last week, the grocer introduced the assistant through its websites and mobile apps for most of its grocery banners, excluding Harris Teeter. The feature was developed in partnership with Cooklist, an AI platform designed specifically for the grocery sector. Shoppers use the tool to plan meals, find recipes, and build carts based on budgets or dietary restrictions.

Unlike competitors who have waited to integrate ads, Kroger included product listing advertisements within the assistant at launch. Kroger Precision Marketing, the company’s retail media business, detailed the feature on its website. For other AI shopping tools, advertising has typically been a later addition to the user experience. Walmart announced advertising features for its Sparky assistant in January, one year after the tool launched, though it had been testing ads in Sparky since the fall. OpenAI began testing ads in ChatGPT in May, several years after the initial release.

Brands will be able to measure how campaigns perform when they run within the shopping assistant, according to Brian Spencer, marketing director for Kroger Precision Marketing. Showing up in the assistant requires no additional setup on behalf of advertisers; if a company already has a product listing campaign running with Kroger Precision Marketing, it may appear in the AI recommendations.

Data drives the strategy

“For us, it’s really just about keeping up with the evolution of shopping and evolution of how people interact with retailers,” Spencer said. “Consumers are already accustomed to seeing product listing ads across e-commerce sites, and they expect those PLAs to be relevant to what they’re looking for. It’s another mechanism to just get the right brands and products in front of consumers quickly.”

Spencer added that ads will only appear when they are relevant to the user’s query. “Obviously, a lot of the queries that people have with the shopping assistant are not necessarily generating a product list, and in those cases, people are not seeing a PLA. But when it makes sense, when it’s relevant to what they’re looking for, our PLAs will appear.”

Related: Plainspeak sends free samples to attract customers

Advertising has become a significant revenue stream for Kroger, much like it has for other major retailers. Kroger Precision Marketing’s profit grew more than 20% year over year in the first quarter, while the company’s e-commerce sales were up 19% during the same period.

The company’s CEO, Greg Foran, has emphasized the value of Kroger’s data to advertisers. “What sets us apart is the depth of our data,” Foran said on the company’s first-quarter earnings call in June. “That means we can measure actual purchase behavior, not just intent, and that’s increasingly valuable to brands and advertisers.”

Foran continued, “We operate the technology layer closest to the customer, giving us a distinct advantage in how we engage and monetize those relationships.” The strategy relies on the idea that brands prefer advertising on platforms where they can track actual purchases rather than just clicks. This approach mirrors the broader shift in digital marketing, where first-party data is considered more valuable than third-party tracking cookies.

It is a shift that puts grocers in direct competition with tech giants for ad dollars. While the assistant is still in its early stages, the integration of ads reflects a broader effort by retailers to capture more of the marketing budget traditionally held by social media platforms and search engines. Apparel IPOs make a quiet comeback as retailers continue to look for new revenue streams.

This revenue strategy allows Kroger to monetize its customer base more effectively.