"we're actually turning the current food waste problem into an opportunity."
Bargain hunters are always searching for food discount stickers, which can save hundreds of pounds a year.
But these yellow stickers could become a thing of the past and be replaced with AI-driven dynamic pricing.
It involves digital price tags that are displayed either on the shelf below the food products or on high-tech stickers attached to the product itself.
The AI automatically and wirelessly updates these prices when a particular item approaches its sell-by date.
The AI also looks at how much stock the supermarket is holding of that item as well as the demand for it.
Therefore, manually applying discount stickers to food products is unnecessary.
Dynamic pricing is already happening in various supermarkets in Europe, such as DIA in Spain, Iper in Italy, Metro in Germany and Hoogvliet in the Netherlands.
These supermarkets use a system provided by Israeli firm Wasteless.
David Kat, senior vice president of business development at Wasteless, said:
“Our model gauges the risk of a certain item expiring on the shelf rather than being sold and makes the decision as to whether a markdown is required or not.
“The data we help generate can also help retailers better understand how to manage stock replenishment and avoid over-ordering.
“So we’re actually turning the current food waste problem into an opportunity.”
According to the firm, it is now in “advanced negotiations with three household name British retailers”.
The system aims to be rolled out in the UK during the first half of 2024. Wasteless claims it can cut supermarkets’ food waste by more than a third.
Asda has already trialled digital price tags from SES-Imagotag, which is now supplying its technology to approximately 350 large retailers across Europe, Asia and the US.
Displaydata is a UK firm and its system is being used by German retailer Kaufland.
A study has said that dynamic pricing could be worth an additional 10% to a retailer’s fresh food revenues as it will help to sell products that would otherwise have to be thrown away.
Currently, supermarkets and other food retailers in the UK are responsible for around 300,000 tonnes of food waste per year.
Acumen is a firm that advises retail companies on how much they should sell their products for.
Co-founder Matt Wills has pointed out the potential disadvantages of dynamic pricing, saying:
“With a lack of clarity on what the reference price is, consumers might not realise they are getting a deal at all.”
“This could also lead to unpredictability of prices, causing added complications for people on a budget squeeze, if items are seen to be continually changing in price.”
Mr Wills also fears that it could cause some prices to go up.
He continued: “There’s also a risk of price discrimination, with products that are more popular in certain stores ending up having prices pushed up because of higher demand in that area.
“So, rather than helping consumers, AI-driven pricing could have adverse effects, for example seeing pensioners pay more for certain products because they live in a predominantly retired town with a similar consumer demographic.”
According to Mr Wills, retailers having strict guidelines will be key to ensuring they can offer the benefits that dynamic pricing can bring, whilst ensuring AI and algorithms do not inadvertently create negative consequences for shoppers.
On the other hand, Sabrina Benjamin believes the benefits of AI-driven digital pricing in supermarkets will outweigh the negatives.
Ms Benjamin, founder of business technology consultancy Authentic Branches, said:
“Digital price tags are definitely more sophisticated than the yellow sticker approach.
“The flexibility it creates and the ease to change prices, means the retailer can provide greater benefits and discounts to the consumer… and influence traffic to their store.”
Whether shoppers will welcome the change and the disappearance of food discount stickers is another thing but Ms Benjamin believes they will be won over by the price reductions.