Business Case

The U.S. grocery industry generates more than $600 billion in yearly sales [1]. The average annual grocery operating profit in the U.S. is about 3.25% of total sales, with approximately 55% of sales derived from perishables. Losses arising from perishables is 6% of total perishable sales due to deep one-time manual markdowns to achieve sale before sell-by date, total margin losses for wasted items and waste disposal costs. This means that losses from perishables equates to 3.3% of total sales [2][3].

  • Therefore, the recovery of 25% of perishable loss is equivalent to 25.38% increase in the total operating profit

Razor-thin profit margins, short shelf life and high labor costs demand an automatic lot-based promotion solution for perishables. Furthermore, the communication of promotions to consumers at the point of purchasing decision must be short and simple.

A previously printed Cycled Discount Label on a product associated with a lot-based Digital Coupon enables simple personalized promotion communication (See Social Impact). This clear promotion communication triggers the instant decision to purchase perishables from the promoted lots.

This approach eliminates labor-intensive manual relocation and promotional labeling of fresh perishables approaching their expiration dates.

The lot-based offers are automatically redeemed at the retailer’s Point Of Sale (POS) after standard GS1 DataBar scanning.

  • GS1 DataBarTM standards, including attribute information (using Application Identifiers), can be used by all trading partners in an open environment. GS1 DataBarTM standards are widely supported by large equipment and software providers such as IDAutomation [4]

[1] FMI – Food Marketing Institute

[2] Tools to Captivate the Connected Customer by: Andy Park, IBM 2011

[3] The Challenge of Food Waste by: Björn Weber, Sarah Herrlein, Greg Hodge, PlanetRetail, sponsored by IBM 2011

[4] IDAutomation is well-known for its GS1 DataBar Barcode Generation products

 

DataBarTM is a GS1 trademark