A lot of demand for steak but not the supply hence higher prices, says Stew Leonard's CEO

Stew Leonard Jr. on Holiday Shopping Trends & AI Implementation

Key Concepts: Beef prices, holiday shopping trends, supply & demand, AI in retail (customer feedback analysis, production planning, traffic management), viral marketing (TikTok), consumer spending habits, fresh food production.

Holiday Shopping & Consumer Behavior

Stew Leonard Jr., CEO of Stew Leonard’s grocery chain, discusses current trends in holiday shopping, noting a “weird year” for the business. While consumers aren’t necessarily cutting back on traditions, they are demonstrating shifts in spending based on price fluctuations. Specifically, beef prices, particularly tenderloin/filet mignon – a popular holiday item – are up approximately 15% due to a significant imbalance between supply and demand. He states that U.S. cattle herds are at a 50-year low, driving up prices despite no changes in tariffs or overall costs. An example cited is a viewer spending $250 on an 8-pound prime rib, costing $22-$23 per pound.

However, Leonard highlights offsetting price decreases in other staples. Eggs are down $1.50 a dozen, butter is down $1 a package, and milk is down $1 a gallon (half gallon specifically mentioned). Consumers are still willing to spend on “treat” items, illustrated by the success of a new “cookie milk” product.

Viral Marketing & TikTok’s Impact

The “cookie milk,” described as tasting similar to crème brûlée, experienced significant success after going viral on TikTok. Stew Leonard’s anticipates selling 60,000 bottles of the product, demonstrating the power of social media marketing. Leonard acknowledges the importance of platforms like TikTok and the potential for unexpected product popularity.

AI Implementation at Stew Leonard’s

Stew Leonard’s is actively integrating Artificial Intelligence (AI) into various aspects of its operations. Leonard references a previous conversation about AI tools like ChatGPT and details three key applications:

1. Traffic & Wait Time Analysis: AI is used to analyze customer order data (from order placement to pickup) to identify bottlenecks and improve efficiency. This addresses issues like long wait times experienced by customers, such as the hour-long wait described by the interviewer during a previous visit. The system can pinpoint which items were causing delays, potentially due to insufficient catering preparation.
2. Customer Feedback Analysis: The traditional suggestion box has been replaced by online customer comments. Stew Leonard’s is utilizing ChatGPT to “scour the entire Google” and aggregate daily customer feedback, enabling rapid response to concerns and suggestions.
3. Production Planning: AI analyzes years of sales history to optimize production schedules, ensuring sufficient quantities of fresh items are available, particularly during peak demand periods like the day before Christmas. The goal is to meet consumer demand for freshly made products like hot bagels.

Historical Context & Store Experience

Leonard acknowledges the intense crowds Stew Leonard’s stores experience during the holiday season, comparing it to Thanksgiving in terms of customer volume. He recalls his childhood experience with physical suggestion boxes, highlighting the evolution of customer feedback mechanisms.

Notable Quote:

“We’ve had just a really weird year at Stew Leonard’s this year.” – Stew Leonard Jr., describing the unusual fluctuations in pricing and demand.

Technical Terms:

• Supply and Demand: A fundamental economic principle describing the relationship between the availability of a product (supply) and the desire for that product (demand).
• AI (Artificial Intelligence): The simulation of human intelligence processes by computer systems.
• ChatGPT: A large language model chatbot developed by OpenAI, used for tasks like text generation, translation, and customer feedback analysis.
• Viral Marketing: A marketing phenomenon that results in exponential multiple levels of brand exposure.

Logical Connections:

The discussion flows from general observations about holiday shopping trends (beef prices, overall spending) to specific examples (prime rib cost, cookie milk success). It then transitions to how Stew Leonard’s is leveraging AI to address challenges related to these trends, such as managing crowds, responding to customer feedback, and optimizing production. The anecdote about the previous store visit serves as a bridge between consumer experience and the need for AI-driven solutions.

Data & Statistics:

• Beef prices (tenderloin/filet mignon) are up 15%.
• U.S. cattle herds are at a 50-year low.
• Prime rib costs $22-$23 per pound.
• Eggs are down $1.50 a dozen.
• Butter is down $1 a package.
• Milk is down $1 a gallon (half gallon specifically).
• Anticipated sales of cookie milk: 60,000 bottles.

Synthesis/Conclusion:

Stew Leonard Jr. paints a picture of a dynamic holiday shopping landscape where consumers are adapting to price fluctuations while still prioritizing traditions and indulging in special treats. Stew Leonard’s is proactively responding to these changes by embracing AI to enhance operational efficiency, improve customer experience, and capitalize on emerging marketing opportunities like viral trends on TikTok. The company’s focus on fresh food production and responsiveness to customer feedback positions it to navigate the challenges and opportunities of the current retail environment.