Less waste, more sales - agile pricing for fresh goods with the new InStore Check & Price App

The entire food value chain, from farm to fork, struggles with large amounts of waste. This is expensive and harmful to the environment and the climate. In food retailing alone, around 500,000 tons of waste is generated in Germany every year*. The associated loss of revenue is almost 2.5 billion euros**. Retailers are under increasing pressure – because much of this waste could be avoided. Introducing intelligent solutions to work more sustainably and economically is therefore already on the agenda of many retailers.

But in food retailing in particular, waste is a huge challenge due to two conflicting factors. On the one hand, large sections of a grocer’s assortment consist of fresh and expiring products with short to very short life cycles. On the other hand, proactively and rigorously selling off these products often requires a great deal of time from store staff – on a daily basis. Fresh and expiring products have to be checked regularly and, if necessary, sorted out or relabeled. Often, however, store employees are already working at full capacity – not to mention the lack of staff in general. Working with existing resources efficiently therefore means, above all, creating robust processes that are easy to integrate into the daily processes in the store and do not generate any additional work for the staff.

Data as a prerequisite for effective pricing

Now, onlookers may assume that these challenges should be much easier to solve thanks to the current state of digitization. However, this is not the case. In contrast to e-commerce, brick-and-mortar retailing often still lacks the necessary data to incorporate the latest technology. In order to control sales processes proactively and in a data-driven manner, highly up-to-date inventory and shelf-life data at an SKU (Stock Keeping Unit) level would be required. This data is often not available and will likely not be automatically provided in the near future. Therefore, daily visual inspection of the relevant products is still common practice in many stores. In food retailing in particular, store employees check the best-before dates (BBDs) of fresh products and the associated remaining stocks on a daily basis and manually discount the items that need to be sold off most urgently. This process is very time-consuming, labor-intensive and is also highly error prone.

As long as SKU-related BBD and inventory data cannot be recorded automatically (e.g. via RFID technology for automatic and contactless identification and localization of products), an alternative solution is needed that at least simplifies the process in the store with software support – in the best case even optimizes it. GK has developed a new app for this purpose: The InStore Check & Price App.

This app is a practical addition to the proven price optimization solution, GK AIR Dynamic Pricing, and was developed for the special challenges of stationary retail. First, the app supports store employees with software-based inventory and best-before date management. This enables the store employees to create the data basis during their daily workflow, which makes an anticipatory and agile sale of perishable goods possible. Based on this, the Dynamic Pricing solution takes the next step to calculate optimal sales prices or discounts. Most importantly, the system makes data-driven decisions (instead of e.g. a 50% discount on everything) based on current demand on the customer’s side. Depending on how much time is left until the final sell-through date, the solution provides ad-hoc reduced prices or discounts for each item.

InStore Check & Price App: Easy to integrate into existing processes

A key factor is that the InStore Check & Price App is tied to the processes that already exist in the store. Multi-level processes with different responsibilities within the store can also be implemented with the app. For example, Person One enters the information on the items using the scanning function in the app and Person Two then changes the prices. The app thereby has the great advantage that it works close to the currently existing process and does not require additional personnel or technology (e.g. electronic shelf labels).

In a nutshell, grocers and other food retailers benefit from the following added values through the accurate pricing of fresh and expiring products:

  • By proactively pricing fresh and expiring products, retailers reduce their (food) waste and thus make their business more sustainable.
  • By lowering prices, sales will increase and the retailers will achieve higher revenues (instead of losses due to unsold goods).
  • Furthermore, by digitizing the process through the InStore Check & Price App, retailers achieve transparent reporting for their store.

Beyond pricing fresh and expiring products, the artificial intelligence-based pricing software GK AIR Dynamic Pricing handles the pricing of the entire assortment as well. This enables retailers to make optimal pricing decisions on a daily basis – for each item and for each store or sales channel. This not only reduces markdowns, but also optimizes the success of revenue and profit strategies. Overall, retailers achieve more predictable and, above all, sustainable profitability. You can read more details about the use of dynamic pricing in food retailing in my blog post “5 Approaches to Successful Dynamic Pricing in Food Retailing“. Suppose you would also like to learn more about current developments in dynamic pricing in retail in general. In that case, I recommend the interview “The Potential of Prices” (in German) from Stores + Shops with Jens Scholz, CEO of prudsys | Member of the GK Software Group.

Mrs Pricing

https://www.fleischwirtschaft.de/wirtschaft/nachrichten/Lebensmittelverschwendung-Zu-viel-im-Muell-44156 

** https://www.rundschau.de/artikel/bilanz-zur-lebensmittelverschwendung-im-leh