Have Some Berries
I’m not even going to apologize this time, because I am once more returning to the topic du jour. Whenever you see me beating something into the ground, it is because it is so important that we just cannot ignore it. It is what it is, and besides, I keep hearing that employers expect our students to be fluent in it.
Hot on the heels of our discussion on promiscuous shoppers comes a related subject, and that is spoilage. As it turns out, promiscuous shopping is accelerating a problem grocers have had for as long as there have been grocers. With all this shopping around, perishables have become a big challenge for many grocers, and now…wait for it…some are using AI to help resolve the problem.
About 30% of food in a grocery store is thrown away, primarily because of spoilage and short shelf lives, a phenomenon known in the industry as shrink. This includes fruits, vegetables, meats, dairy, and eggs, all main players on the supermarket scene. These items are usually among the ones with much higher margins than the industry average of 20-30%, because of the risk inherent with carrying them. My source material says that this spoilage amounts to about $18.2 billion in lost value.
This is where AI enters the conversation. By carefully tracking inventory data, such as when an item was delivered to the store and when it was put on display, stores can be in a better position to adjust prices to help push inventory out the door.
Wait. Did I just hint at another way that dynamic pricing could be used, and not in an evil way?
As it stands, employees have to manually check “best by” dates on many hundreds of products, which is a daunting, tedious task. While some items can be visually checked quite easily, such as simply noticing whether the lettuce is wilting, the broccoli is turning yellow, the bananas are as brown as a West Texas dust storm, other items must be inspected closely. The meat may still look fresh, but may be nearing the end of its shelf life. Eggs, yogurt, and milk could be close to turning bad, which cannot be discerned without looking for the tiny print on the packaging.
Or trying to consume it. No thanks.
Interestingly, the average American household also tosses about one-third of the food it buys, but for different reasons, of course. We often buy more than we need, something easy to do for single-person households as well as anyone shopping at Sam’s Club or Costco. But it is also the effect of “aspirational shopping,” meaning we buy things we know are good for us, and since we have been pondering eating healthier and all that, we load up on a bunch of kale, spinach, and other things that just don’t sound all that appetizing when it comes time to prepare dinner. So it rots in our fridge or in the bread box.
Inflation-weary shoppers are indeed shopping around, looking for the best value. Even with high gas prices and the implicit extra driving involved with shopping at multiple stores, there is the consumer perception that it is better to spend extra time in order to still have net savings. Furthermore, the nature of the competitive mix finds traditional grocers fighting to hang on against the likes of Dollar General and the big box membership stores, not to mention all the other grocers in town.
AI helps grocers make real-time decisions, which can be reflected instantly with DSLs, or digital shelf labels, another topic we have explored. Those high-dollar blueberries and strawberries—especially the winter varieties that fetch bloated prices because they are out of season and imported from Peru and Mexico—can have a price reduction at the precise correct moment, not tomorrow after someone finally noticed the berries looking a little worse for the wear. Timing is everything when it comes to perishables, especially fruits and vegetables that technically start to die as soon as they are picked.
But wait, there’s more! An app called Flashfood helps match shoppers with partner supermarkets who post their on-sale perishables nearing the best-by date. Shoppers can order online, and then swing by the store to pick up their purchase, which has been refrigerated as needed.
Flashfood is a mutually beneficial app. It helps shoppers find bargains, something each of us would like to experience. But it also benefits grocers who now have a better way of connecting with shoppers with time-sensitive items that are put on sale…or awaiting a trip to the landfill. It is better to be recovering cost and maybe making a sliver of a profit, than losing the whole thing. There are more than 2000 Flashfood locations across North America.
Naturally, the retailers hope that shoppers might also come inside to shop for other things, simply out of convenience. You never know. Actually, retailers report that Flashfood users spend $28 more per visit on regularly-priced items, and shoppers make four extra shopping trips per month. Better yet, Flashfood has helped reduce shrink by 27% among its affiliates.
And it is all because of allowing AI to take over. Now you know why I had to write yet another blog about it. Never mind the naysayers, it is delivering the goods. And the perishables.
Dr “Berry, Berry Happy” Gerlich
Audio Blog
