Reducing Supermarket Food Waste with Dynamic Pricing

dynamic pricing

The ability to react and cater to consumer demand is nearly always a competitive advantage, but it also comes at a price. Naturally, when a shopper heads to the store to buy their groceries, they expect everything on their list to be available, and their products fresh.

But as supermarkets manage a growing number of products with varying expiration dates, they’re faced with the increasing challenges of selling these items before they expire while making sure they generate as much profit as possible. Failing to accomplish this not only hurts the retailer’s bottom line but also leads to unnecessary food waste. In fact, one-third of the food produced for consumption is lost or wasted globally, and grocers are significant contributors.

In order to save sales and limit losses, grocers often incentivize shoppers to make purchases by discounting products nearing their sell-by date. However, the challenge is that they often struggle to find the perfect pricing and timing balance that will maximize sales and also minimize the discount they need to offer. They walk a thin line of discounting too early or offering discounts that are too high.

With hundreds of thousands of SKUs, internal teams simply can’t manage the complexity of this process. Fortunately, the emergence of AI-enabled solutions makes a responsive price strategy on perishable food far more simpler and more profitable.

Let’s explore how artificial intelligence allows grocery retailers to bypass old roadblocks by enabling dynamic pricing strategies that pad margins and reduce food waste.

Traditional limitations to pricing

Historically, responsive price adjustments were a hassle, or even impossible, especially in physical stores. The process relied on rules-based algorithms that required significant manual oversight.

Picture the pricing gun – employees have to manually walk through the store and change the price on each individual product if there is a sale or special offer on these items. For supermarket and food retailers, the selling period for marked down products is very short, creating a major pain point when attempting to optimize prices in real-time.

These obstacles have led to the development of new tools that automate efforts around identifying optimal prices and enable retailers to make the resulting adjustments quickly.

Optimizing price around sell-by dates

Today, the use of artificial intelligence has led to breakthroughs in markdown pricing. Aggregating demand behavior (historical and current) with inventory information, competitor pricing and sell-by dates allows for pricing strategies that can be optimized in real-time, across all areas of business, and at scale.

For example, bananas that begin to ripen need to be sold while consumers are still willing to pay for them, but not before a new shipment comes in. Providing discounts to shoppers on products that are still fresh gives shoppers an incentive to buy now. This can even be done on a granular, individual store level, as inventory and consumer buying patterns vary based on store geographies. What this means for customers is that products are available at any time at the best possible price, ultimately leading to less wasted food.

Increasing profitability through product affinity

Retailers can also increase profitability by optimizing pricing on products with strong affinity. Analyzing data on products that are sold together, retailers can detect cross-sell opportunities and markdown one product while driving sales of other related products at full price.

As shoppers head to the grocery store for the fourth of July, retailers can find areas to increase sales with perishable and non-perishable items typically paired together. For example, offering a markdown on cherries nearing their sell-by date, if bought with a pie crust, or similarly, full-priced hotdogs and discounted buns.

By linking multiple items, retailers can lower prices of certain products that may have otherwise expired while still increasing the bottom line by ensuring sales of higher-margin items.

Empowering retailers to reduce food waste and better serve shoppers.

When a business deploys dynamic pricing, they become more sustainable – both environmentally and financially. But it also has the benefit of generating loyalty among shoppers who receive the best deals and competitive prices. In addition to time-sensitive food, retailers can also see the advantages of markdown pricing for seasonal items or products with short selling cycles.

With dynamic pricing driven by AI, retailers can gain a holistic view of their entire inventory in real-time, as well as the connections between products, and can optimize their strategies on the fly in order to reduce food waste and better serve shoppers.

allonline365 specializes in retail solutions to help manage your business. We offer solutions that address your current business needs as well as your future ones. Choose a solution that digitizes your business and grows along with you. Contact us on or  +27 (21) 205 3650.

Resource Credit | Progressive Grocer 

Coupons and Ecommerce: Delivering on Grocery Shopper’s Expectations of Value

grocery shoppers

Start a conversation about what’s essential to the success of online grocery retail, and the first mention is always – always – ‘convenience’. And, yes, it would be foolish to downplay the significance of this element of the e-commerce shopping experience, but it would be even more foolish to ignore the growing but still nascent grocery vertical, in particular, shoppers’ expressed psychological need for ‘value’.

This need, according to findings from Inmar’s 2018 e-commerce study, translates to a widespread and deeply held expectation among consumers that sellers should provide them the means to save money on their online grocery purchases.

The rapidly growing numbers of shoppers buying groceries online are bringing with them a host of expectations from their brick-and-mortar shopping – including ready access to promotions – and retailers must be strategic in meeting this demand if they’re to grow and sustain their online business.

Needed for a growing market

Ensuring that customers enjoy a seamless promotion-use experience when moving between the physical grocery store and the website will help retailers further generate genuine incrementality as the volume of consumers shopping the ‘virtual shelf’ continues to grow. And this market segment is most definitely growing.

Not only are there more people shopping online for groceries, but they’re also doing so with increasing frequency; 33 percent of survey participants said they plan to increase how frequently they buy groceries online over the next year. 

As might be expected, that proportion is even greater among more digitally adept millennials, with 43 percent of this group reporting that they expect to shop online for groceries more frequently.

Expected by saving-savvy shoppers

Online grocery shoppers are active coupon users and regularly employ available promotions across all of the channels they shop.

Asked to identify the promotions they use when grocery shopping, 71 percent of surveyed shoppers cited digital coupons with the same proportion referencing sales price. At the same time, 61 percent said they use paper coupons, and 35 percent acknowledged using rebates.

When asked specifically about their efforts to save money while shopping online for groceries, 61 percent of survey participants confirmed using consumer promotions to do so. This is surprisingly good news for retailers using promotions to drive purchases. However, these retailers need to do more to increase the availability of promotions for online orders.

Inmar’s survey results indicate that a very healthy proportion of online grocery shoppers don’t have confidence in finding the same savings opportunities online as they do in-store.

The e-commerce study found that 44 percent of shoppers believe there are more promotions in-store than online. 

In addition, there is an obvious delta around shoppers’ perceptions as to promotion usability for, and relevance to, online orders.

46 percent of shoppers hold the view that promotions are easier to use in-store, while 41 percent consider in-store promotions to be more relevant to their shopping and saving needs.

The issue demands immediate attention from retailers, as shoppers are looking at multiple (including traditional) savings vehicles as they prepare for an online shopping trip. More than a third of surveyed shoppers (36 percent) reported looking at digital coupons before making an online purchase – their high rate of review indicative of their desire to use these promotions with their purchases. The same proportion said they look at the store circular, and more than a quarter (26 percent) said they look at paper coupons.

Given the popularity of paper coupons as both a saving method and a research tool, brick-and-mortar retailers should give full focus to enabling paper coupon redemption with online purchases to take full advantage of their motivational power.

Critical to success

The bottom line is when it comes to executing grocery e-commerce that consistently engages and activates shoppers, providing convenience isn’t everything. Online grocery shoppers, just like shoppers in-store, expect great value. Pricing and savings are tremendously important factors influencing their online buying decisions.

Shopper behavior research has illuminated again and again the significant impact that coupons have on consumers’ decision-making and purchase activity, with promotions driving shoppers to buy more, by sooner, try new products within the brand, and make new purchases outside the brand.

While this is the proven case with in-store shopping, there’s no reason to doubt that promotions wouldn’t have the same influences online – provided that the offers are present for shoppers to use.

Grocery retailers that fully appreciate all of the elements that affect purchase behavior and that ensure online shoppers have immediate access to relevant, easy-to-use promotions will gain a decided competitive advantage in e-commerce. And with online grocery poised for tremendous growth, it would be wise for brands and retailers to invest in seamless omnichannel promotions.

Contact allonline365 on or  +27 (21) 205 3650

Resource Credit | Progressive Grocer

Using AI to Determine Price and Boost Revenue in Grocery


Grocers need to surf the waves of ever-changing customer expectations and do whatever it takes to not to join the ranks of the fallen retail empires. Everyone is citing customer experience as priority No.1 for retailers. However, another major lever for retailers to pull to stay alive and even thrive is the price of an item.

Big names highly recognize the importance of price, along with frictionless customer experience, a wide range of offered products and well-planned marketing activities.

Retail giants invest in price optimization heavily, which allows for creating the right price perception and persuade customers.

Advanced retailers recognize that traditional pricing approaches are broken. They are determined to embrace AI for pricing. But how exactly can technology make it easier for smaller operators to stand up and fight, and win?

AI to help retailers compete

Retail giants have been harnessing advanced analytical software like AI to set the right prices for years. Such technology used to be extremely expensive and available to the select few.

Today, more companies, including smaller operators, are getting the chance to grow as such software is becoming simultaneously more sophisticated and accessible to a wider number of players.

According to a series of market tests held by retail price optimization company Competera, elasticity-based machine learning algorithms can help retailers set competitive prices and raise revenue by 5 percent and beyond.

Vladimir Kuchkanov, pricing solutions architect at the company, comments on how artificial intelligence can be advantageous for smaller supermarkets competing with the likes of Walmart.

“The retail king has better chances from the beginning. Thanks to the huge amount of products it buys from suppliers, the company can negotiate better purchase prices,” he says. ‘To compete with it, smaller food chains need to identify a pool of products which have to be priced lower than at Walmart – even if they are selling at a loss. This would keep attracting customers. ”

However, it is just the start. “On the other hand, businesses need to indicate a group of items that can be priced higher without risking to scare off shoppers. This way retailers can compensate for low or negative profit margins they inevitably have in their fight with Walmart. But this begs two major questions: How to identify such items and how to price them. Managers can not do that as there are too many parameters to take into account. That’s why retailers bring AI into play,” adds Vladimir.

Another challenge the technology helps retailers to tackle is the management of private label products, which are essential for creating a unique and recognizable brand and winning the hearts of customers.

Retailers can choose one of two options when it comes to adopting AI in pricing. They can either invest heavily in developing an internal system or find a technological partner offering a turn-key solution evolving along with the needs of the retailer. 

Technology’s efficiency in recommending optimal prices

AI-powered algorithms enhance people with enormous computational power, making them very rapid and precise in their decisions. Such algorithms process massive and unyielding – for humans – amounts of data regarding hundreds of pricing and non-pricing parameters to suggest the optimal prices for the whole product portfolio.

The data AI needs to analyze include competitive prices, customer behavior, the retailer’s past performance, and current business goals, as well as weather and cross-price elasticity. Algorithms browse through the infinite number of pricing scenarios which equals the number of atoms in the universe to come up with the most beneficial one in real-time.

When it comes to calculating optimal prices for private label items, the technology identifies latent clusters of similar products and assigns such items to the most affinitive clusters.

What are the benefits for people? AI-enhanced managers switch to data-driven pricing, get ahold of unmanageable promotional campaigns, set the right prices for private label products that differentiate them from competitors, and finally have time to turn to high-level decision-making and improve customer experience.

As Microsoft’s chief technology officer, enterprise, Norm Judah explains: “AI is about augmenting human ingenuity. Whether you’re a seller, marketer, a lawyer or something else, AI will change the way you make decisions. It can help you navigate vast amounts of data and give you advice and recommendations about how to proceed. What you do with that advice is up to you. ”

The technology available to the big retailers is slowly becoming more accessible to companies. So, why not try out its proven potential to raise revenue and grow? If you are interested in transforming your business with AI technologies and business intelligence solutions contact allonline365 to get some advice on the best software systems that are affordable and the right fit for your business. Contact us on or  +27 (21) 205 3650.

Resource Credit | Progressive Grocer

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