Grocers Deploy AI to Turn Expiring Food into Profit

Shoppers hunting for deals are visiting more stores than ever, forcing traditional supermarkets to find smarter ways to compete. With discount chains gaining ground, broad price hikes and promotions are losing their punch. The new strategy hinges on precision, using artificial intelligence to dynamically price items, particularly perishable goods approaching their best-by dates.

This shift tackles a persistent financial drain: roughly 30% of food in U.S. grocery stores is discarded annually, representing billions in lost value. Companies like Flashfood provide a platform where shoppers can buy soon-to-expire items at a discount via an app, picking them up from a designated store fridge. The approach aims to convert potential waste into revenue.

'We see AI as a meaningful opportunity to both improve the customer experience and drive productivity,' Kroger Chairman Ronald Sargent noted on a recent earnings call. Flashfood, which is expanding in over 100 additional Kroger stores this month, reports its partner retailers reduce unsold inventory by an average of 27%. Crucially, app users tend to make extra store trips and spend more on full-priced items during their visits.

The technology offers a dual appeal. It meets the demand for value from nearly 90% of shoppers, according to a Deloitte study, without resorting to store-wide markdowns that can erode brand perception. Simultaneously, the data generated provides unprecedented insight into what sells, at what price, and when—intelligence that is vital for managing high-risk categories like fresh produce and bakery.

Analyst Bill Kirk of Roth Capital Partners points out that while grocers sit on rich customer data, few leverage it effectively. 'Kroger has been at the forefront of recognizing the importance of their data and the insights that can be derived,' he said. For an industry under pressure, bridging the gap between surplus inventory and bargain hunters is becoming a focused path to protecting margins.

Source: CNBC