Image credit: Wasteless
Everyone loves to get a deal. Astute retailers are capitalizing on that, and they are helping the environment and making money in the process.
Sound too good to be true? It’s not, if the retailer deploys digital shelf tags. Digital or electronic shelf labels (ESLs) use artificial intelligence to dynamically change the price of a product based on how long it’s been sitting in the store.
Less Waste with ESLs
Typically stores wait until the last day or two of a product’s shelf life and then discount it heavily, but that’s not always an effective way to move fresh produce, meat, and dairy. Israeli-based Wasteless has created an AI-based system that tracks the amount of time a perishable item has been on the shelf and adjusts the price in real-time, based on factors such as expiration date, brand familiarity, or seasonal popularity. The closer the item is to its expiration date, the greater the discount. The tag displays both the discounted price and the original price.
When products arrive at the store, employees scan the barcode on a case of goods (or an individual item if necessary) using a smartphone app or barcode scanner. The Wasteless system registers the expiration date of the items in that case and uploads the data to its software, which is connected to an electronic price tag and the retailer’s point-of-sale platform. The data is accessible through a mobile app.
The Wasteless system uses reinforcement learning to assess how customers respond to dynamic pricing and uses that data to optimize discounts. The system might initially offer a 2 percent discount, then gradually increase the discount. If there’s no inventory movement, the discount could jump to 10 percent or more. Prices can be adjusted multiple times a day, a task that would be impossible if the system wasn’t automated.
The Wasteless system is linked to inventory and ordering software, so it can adjust discounts based on the arrival of fresh inventory or an abundance (or lack) or existing products. Other factors, such as time of day or product promotions, also impact pricing. The Wasteless solution supports both in-store and online purchases.
The Payoff of Dynamic Pricing
Dynamic pricing encourages cost-conscious consumers to purchase items before they spoil, which results in less shrink. With data-based insights about shopper patterns, stores and suppliers can predict when a product will sell out, be notified of unusual product demand, and assess the effectiveness of marketing campaigns.
That can boost a retailer’s bottom line. Wasteless claims its system can cut the market’s food waste by 40 percent and increase revenues by at least 20 percent. Suppliers see gains as well, increasing revenue by more than 75 percent and cutting by half out-of-stock scenarios.
Capgemini brought the Wasteless dynamic markdown pricing and analytics software to an Italian grocer that wanted to reduce waste by 25 percent. Capgemini’s solution included a POS system from Toshiba TEC, Hanshow ESLs, Intel® Celeron® processors, and the Wasteless software. After 12 weeks, the solution exceeded the initial goals of the project. The grocery store reduced food waste by 39 percent, increased net margins by 1.2 percent, and boosted revenues by a whopping 110 percent.
- Learn more about Wasteless.
- Find out about Capgemini.
- Find out more about the retail solutions from Toshiba TEC.
- Learn more about the ESLs from Hanshow.
- Discover more about the Intel family of processors.