Sales rates can fluctuate for any number of reasons. Something as simple as the day of the week can influence a person's shopping behavior. This creates a challenge for retailers as they strive to have the right products available when a customer wants them.
This challenge is particularly complex for grocers that sell perishable food. In fact, according to the United Nations Environment Program, approximately one-third of all food produced in the world is lost or wasted every year. As a result, grocers must find a way to limit their contributions to the annual 1.3 billion tons of food wasted.
Luckily, artificial intelligence offers a path forward. With data-driven dynamic pricing capabilities, retailers can maximize the success of the turnover and earnings strategies while giving customers a good deal and minimizing food waste.
"Retailers face a broad spectrum of challenges. They must, for example, find solutions for consumers who are calling for more sustainability, while expecting fresher and larger inventories to choose from. They also have to deal with an intensifying competition in the market space due to an increasingly challenging global economy, as well as growing complexities and rising costs. The combined force of GK CLOUD4RETAIL, GK AIR and IBM Consulting offer all-encompassing solutions that enable retailers to digitize their infrastructure, reform their business strategy through data-based decisions and apply cutting-edge technology to transform the customer experience. Particularly in food retail, these solutions make a tremendous impact in avoiding food waste by adjusting prices dynamically based on their respective due date and other external factors. Together, IBM and GK are building solutions today, that help retailers solve the challenges of tomorrow," knows Jens Spring, Senior Partner Recruitment Leader, IBM Partner Ecosystem – Germany.
What is GK AIR Dynamic Pricing?
GK AIR Dynamic Pricing enables retailers to take greater control of their inventory as well as price products in a way that optimizes customer loyalty. The as-a-service offering is available on IBM Cloud with IBM Kubernetes and Red Hat OpenShift. These key integrations bring AI-powered pricing to any environment, whether it's on premise, in the cloud or via IBM Cloud Satellite. This partnership enables retailers to manage the lifecycles of products with limited shelf-life more sustainably.
"IBM Cloud offers the kind of flexibility retail customers demand," says Jens Scholz, CEO, GK Artificial Intelligence for Retail AG. "Retailers have mixed requirements for the solutions they own and how – and where – they are hosted. IBM Cloud's ability to serve retailers needs regardless of their environment is key to our partnership."
With GK Software and IBM working in tandem, both brick-and-mortar as well as e-commerce retailers can use machine learning to account for a wide selection of pricing variables. These variables include current and historical data, inventory, transaction data, company targets, competitor prices, seasonal trends and regional factors including weather. The advanced solution then suggests the optimal price point and sell-off dates for products, drawing in customers whilst increasing sustainability.
How does GK AIR Dynamic Pricing Work?
The process for using GK AIR Dynamic Pricing is simple. When perishable inventory comes in, store associates scan the products with the help of a pricing app that has been specially developed for food retailers. In the app, the staff can enter current stock levels and best-before dates for every product. Then, advanced algorithms calculate an optimal price.
AI-supported pricing solutions rely on current and historical data to predict the sell-off date for perishable items. Depending on how the forecasted sales timeline deviates from the expiration date, GK AIR Dynamic Pricing lowers or raises the price completely automatically . For example, if a product is predicted to sell three days before it expires, due to availability of inventory or other residual factors for example, the pricing software will recommend a higher price than if it was to expire the next day. The price strikes the right balance between supply and demand to ensure the price is appropriate for the customer and the retailer.
Additionally, GK AIR Dynamic Pricing creates a database for inventory and expiration date information. This way, retailers achieve transparent reporting for their store by digitizing the process.
What are the benefits of GK AIR Dynamic Pricing and IBM's Partnership?
The benefits of GK AIR Dynamic Pricing extend beyond ad-hoc in-store price changes to the ability to perform price optimization across the entire assortment and product lifecycle. This is especially important for fashion, luxury and beauty industries that can also benefit from GK and IBM's collaboration. In these industries, dynamic pricing should begin with the introduction of a new item, be applied throughout its peak popularity and end with the markdown and inventory clearing phase.
No matter the industry, it is difficult to price a complete assortment with the level of detail and frequency required to boost profits. As a demand-based and AI-driven price optimization solution, GK AIR Dynamic Pricing helps retailers not only automate, but optimize their pricing process, allowing them to focus on strategic decisions and improving sales KPIs across the board.
What's more, GK and IBM's partnership is designed to support retailers throughout the integration process. According to Michael Scheibner, Chief Strategy Officer, GK Software, "Our collaboration with IBM brings a holistic solution to retail customers beyond the expertise needed to integrate GK technology on IBM Cloud. IBM is providing advisory services to customers based on years of deep industry expertise, helping customers to optimize their strategy and operations as well as their technology."
How can GK AIR Dynamic Pricing and IBM Help Your Business?
To learn more about how GK AIR Dynamic Pricing and IBM Cloud can improve sales and boost your sustainability efforts, visit our website or contact us today!
