Smart Supermarkets: How the Retail Industry Benefits from Shopping Cart Scanning, Dynamic Pricing and AI as the Boss [5 Reading Tips]

Artificial Intelligence in Retail — Source: Pexels/Gratisography

Artificial intelligence is the digital business trend par excellence. That’s what you hear. That’s what you read. That’s what they say. The »Hype Cycle for Emerging Technologies« published by the US research firm Gartner confirms this year after year. But what happens next? Either the hype fizzles out and the technologies disappear again – or they reach what Gartner calls »Plateau of Productivity«. They become normal, they become part of everyday life.

At the moment, it looks like artificial intelligence has come to stay – after all, AI can already look back on almost 70 years of development. For companies, this means one thing in particular: they have to think data – available in large amounts – intelligently, using intelligent technologies that are also available.

To put it differently: we are at a turning point where we have to decide which existing technologies we make good use of and develop profitably. In this regard, supermarkets are an exciting field of experimentation – and every single banana can potentially be an exciting data set.

Smart, Data-Driven, Secure

In Germany, AI is usually associated with start-ups – companies founded by young, smart, digitally savvy people. There is no doubt that the German start-up scene is growing quickly. This is not least shown by the results of the Deutscher Startup Monitor (German Start-Up Monitor): in terms of future technologies, start-ups have a leading role in the future as they are carriers and drivers of digitisation.

Artificial intelligence is not a vague buzzword here, but concrete everyday working life: 60 per cent of 1,550 start-ups questioned have already incorporated AI technologies in their business model.

According to a study conducted by appliedAI, there are 214 pure AI start-ups in Germany – and the trend is pointing upwards because the growth rate of the last three years amounts to 80 per cent. This clearly shows: no innovation lab in Germany is established without AI.

One thing that many German start-ups have in common is that they come from a scientific background: one example is Signatrix, whose business idea is based on master’s theses at the University of Bonn. Signatrix wants to help the retail industry with computer vision to solve a major problem: shoplifting. Due to shoplifting, the German retail industry loses about 3.4 billion euros every year. To put it differently: one in 200 shopping carts seems to be able to pass the checkout without the goods having been paid for.

The company has developed an AI-assisted service which identifies the next best actions with the help of image recognition. In concrete terms, this means that a high-resolution video camera records the content of the shopping cart at different points of the sales area without any personal characteristics before identifying, classifying and comparing the content. If products disappear between the surveillance points, trained staff is informed. From then on, a human decides how the suspicion is handled further.

Smart Prices as an Anti-Waste Measure

Measured by area and population, Israel has the highest AI business density worldwide – way ahead of China, the USA or Germany. The use of AI in supermarkets has already been tested there: Wasteless is an Israeli start-up that has analytically dedicated itself to the fight against food waste because 33 percent of all food produced worldwide ends up in the rubbish.

The company from Tel Aviv develops an AI which dynamically designs supermarket prices. This automated pricing is based on machine learning. The algorithm includes more parameters in its calculations than just the approaching expiry date: demand, shelf space, regionality, brand popularity, inventory, weather data, prices of the competition as well as current purchase prices. In real time, all this information flows into dynamic prices that are displayed on the digital price tag in the supermarket, making price development transparent.

Even outside Israel, the system was tested last year: at the Italian retail chain Iper, for example, two thirds less fresh food had to be thrown away during the test period than before. At the same time, the markets increased their turnover by up to seven per cent despite reductions.

Smart Management: Help! My Boss Is a Computer!

In the USA, AI has also arrived in people’s everyday shopping life and helps them make good decisions – not in the sense that it would stop customers from buying donuts or burger ingredients. However, the US food giant Walmart is working on the store of the future in a district of New York. This prototype store brings together innovations such as AI-controlled cameras and interactive displays.

In Walmart’s high-tech store, cameras identify the filling levels of shelves by means of image recognition. Algorithms then calculate when employees should replenish the shelves.
This means that employees only take action when the AI tells them to do so – just like their boss would normally do.

This offers enormous advantages for customers: other than with a human boss, customers can make sure that the raw meat for burgers, which was refilled in a data-driven way, is actually fresh and that the bananas are not mushy.