By IMS Evolve chief commercial officer Jason Kay
The convergence of AI and IoT presents the opportunity to significantly impact the dynamics of operational costs. For food retailers, energy is not a peripheral expense. It is foundational to how stores operate and serve communities. Lighting, HVAC systems, and refrigeration units are essential to trading safely and profitably. So, when energy prices increase, the impact is both immediate and impossible to ignore.
The energy price rises add growing pressure on already razor-thin margins for retailers, and The British Retail Consortium (BRC) has identified rising energy costs as a leading cause behind increasing food prices. Fresh food products – those reliant on refrigeration, such as meat, fish, and produce – have experienced the highest inflation, with prices rising 3.4% year-on-year. This highlights how vulnerable fresh food supply chains are to energy volatility.
Passing costs directly to consumers is not a sustainable solution, particularly amid continued cost-of-living pressures. Retailers have both a commercial imperative and a social responsibility to protect value for customers while safeguarding their own profitability. Therefore, the real opportunity lies not in incremental cost control, but in fundamentally rethinking how energy and operational performance are managed.
This is where AI and IoT move from optional innovation to strategic necessity.
By harnessing connected assets and intelligent analytics, retailers can move beyond static energy management and reactive maintenance towards continuous, real-time optimisation. IoT-enabled systems generate vast streams of operational insight. When combined with advanced AI, that data becomes a powerful decision-making engine, enabling retailers to anticipate risk, eliminate inefficiency and actively optimise performance.
The strategic question is no longer whether retailers collect data, but how effectively they use it. Unlocking the full computational power of technology is what turns operational data into measurable commercial impact.
Harnessing the power of AI
The computational potential of AI to process vastamounts of data and consistently diagnose performance creates significant opportunities for retailers to transform operational effectiveness, particularly in energy-intensive environments such as food retail.
By gaining an overarching view of IoT-connected equipment performance, potential degradation and exposure to changing environmental pressures, AI-driven models can be applied to predict and prevent equipment problems and failures. Crucially, performance degradation does not only increase the risk of failure. It also leads to excess energy consumption as struggling machines work harder to maintain required outputs. Identifying these inefficiencies early ensures that equipment operates at optimal performance, preventing unnecessary energy waste before it compounds into higher operating costs.
Predictive insight therefore reduces not only the likelihood of breakdowns, but also the hidden energy drain caused by underperforming assets. Engineers can be deployed with a complete picture of a machines condition and history, improving first-time fix rates and minimising the period during which equipment operates inefficiently.
AI’s power also enables more dynamic energy management across IoT assets. Rather than operating on static schedules or manual oversight, AI can evaluate equipment performance within the broader operational context in real-time. By continuously monitoring energy usage patterns and operational requirements, systems can, for example, intelligently optimise refrigeration performance – aligning energy consumption with actual demand while maintaining food safety and compliance.
Managing operational costs for profitability and resilience
As energy pressures are likely to persist, the ability to optimise operations through technology will differentiate those retailers who thrive from those who struggle this year. Leveraging AI and IoT will enable food retailers to mitigate the impact of rising energy costs, unlock operational efficiencies and protect margin profits.
Adopting AI-enabled, data-driven approaches isn’t just a competitive advantage, it’s essential for long-term profitability and resilience.
The message for retailers is clear. The partnership between AI and IoT holds the key to safeguarding, and even improving, profit margins and increasing operational performance this year. Smart, data-driven solutions are now a foundational part of a modern food retail strategy.
Energy volatility is not going away. Retailers who act now will be best positioned to protect profitability and build resilience.
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