How Dynamic AI Pricing Could Eliminate Food Waste in Stores

Changing prices at the right time helps everyone

Key Takeaways

  • More than 30% of food never even gets sold in the US, thanks to waste.
  • A Polish supermarket is testing AI pricing to automatically reduce prices before food spoils.
  • Fears that customers will game the system to get cheap food are unfounded.
Strawberries in a while cardboard box.

Liz Caldwell / Unsplash

Food tech startup Wasteless plans to eliminate supermarket food waste by automatically reducing the price of items before they go off. 

Dropping the price on perishable food before it goes bad is a staple of supermarket strategy. You can exploit the system—shopping late on a Saturday can net some bargains if the store closes on Sundays, for example. Wasteless uses AI to dynamically vary pricing automatically to ensure that as many goods are sold before they spoil as possible. It’s kind of like airline seat pricing, only in reverse.

We’ve all seen special offers on short-dated items in the supermarket. The problem is, often these reductions come too late. Nobody will buy an avocado even for $0.10 when it’s more like a tepid black and green avocado smoothie inside. Likewise, if you drop prices too early, you risk making less money than you could and also leaving yourself without stock. 

The time, then, is ripe for a better way.

"With almost half of all food going to waste in the USA, the use of AI is a timely solution," Dr. Philip J Miller, AI medical communications expert, told Lifewire via email. "It can predict both supply and demand trends, so the ordering is more efficient. It can also strategically reduce prices to move soon to be perished items."

Wasteless

Supermarket stock control is already heavily reliant on AI. The computer brain can track trends and anticipate seasonal demand much better than humans. It makes sense, then, for the computer to apply its artificial intelligence to the pricing of goods, to optimize sales, and avoid waste. 

Someone using a smartphone while shopping in a grocery store.

FG Trade / Getty Images

That’s the goal of Wasteless, which is currently in trials in a grocery store in Poland. The idea is that the computer learns the habits of shoppers in that particular store and combines this with its knowledge of how long all those fruits and veggies, meats, cheeses, and other perishable products should last.

It can then automatically vary prices. Ideally, no food would be wasted due to spoilage, and the store owner can, as the Wasteless website promises, "recapture the full value" of their wilting produce. 

The other part of this equation is electronic price labels. You may have seen these in some stores already. E-ink shelf labels can be updated wirelessly from the central computer, which makes the whole procedure seamless.

"The AI algorithms required are not complex," says Verma. "What's more challenging is the initial research of customer behavior, frequent change[s] in pricing, which requires investment in electronic pricing displays and price execution, and, finally, increasing the accuracy of aging data on packaging."

The barriers are only in the cost of implementation, then. The technology is both available and mature. It just needs to be deployed. That’s an easier sell for big supermarkets, who can more easily amortize their investments. In fact, for these big chains, food waste is not a problem of sustainability or the environment. It’s just a big waste of money. Happily, solving one handily solves the other.

Food Waste

In 2019, food waste in the US cost more than $400 billion. That’s a third of all food produced, not sold. And that’s before you even get to the food that we waste at home and so on.

"With almost half of all food going to waste in the USA, the use of AI is a timely solution."

"Supermarkets waste above 25% of the food they sell," Sushil Verma, president and CTO of Austin Data Labs, told Lifewire via email.

"In spite of this, supermarkets have shied away from heavily discounting about-to-expire products for two reasons: fear of customers intentionally delaying purchase to wait for a discount and the food safety concerns that might cause."

In reality, this hasn’t happened. While some people might organize their shopping trips around discounts, most of us shop when we need to, or when it is convenient for us.

"There has been recent research that suggests that these fears are overblown," says Verma. "It looks more and more like age-based pricing is a big opportunity for retailers, a way to segment the market, charge more for fresher products, increase average margin, and reduce waste all at the same time."

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