Dynamic Pricing for Perishables – Grocery Retailer
The Challenge:
A 40-store grocery chain used static markdown schedules for perishable items (produce, bakery, dairy, meat) resulting in 8.5% shrink from expiration and $2.8M annual waste. Markdown timing was inconsistent across stores, and pricing decisions didn’t account for local demand patterns or competitive pricing.
The Solution:
Implemented Azure AI dynamic pricing models on Fabric analyzing inventory age, sales velocity, weather forecasts, local events, and competitive pricing scraped via APIs. Power Automate triggered recommended markdowns sent to department managers via Power Apps. Electronic shelf labels enabled real-time price changes. Power BI tracked shrink reduction, markdown effectiveness, and gross margin impact.
Result:
Perishable shrink (loss due to wastage) reduced from 8.5% to 3.2% saving $1.45M annually, markdown effectiveness improved with 67% of marked-down inventory sold before expiration versus 42% previously, and despite increased markdowns, gross margin improved by 1.2 points due to reduced waste. Customer perception improved with fresher products on shelves.