In a bid to increase sales and reduce food waste, more and more of Japan's convenience stores and supermarkets are letting artificial intelligence analyze data such as past sales figures to decide what discounts to apply to perishable products.
At about 3 p.m., in a branch of the Lawson convenience store chain in Tokyo's Shinjuku Ward, an in-store computer decides which food products should be discounted and by how much. A display read "assorted sandwiches, one, 20 yen ($0.13) discount," another, "crispy ham and lettuce sandwiches, three, 30 yen discount."
A manager then printed out price tags and made the rounds, affixing them to products. Eight assorted sandwiches lined the shelf, but only one, approaching its use-by time, was discounted.
In 2015, Lawson Inc., one of Japan's largest convenience store chains, introduced a system in which the AI at its head office advises store managers and experienced staff on product management at all stores.
To calculate how far to cut prices, the software considers a store's sales, delivery times and the local weather conditions to propose a price that gives the product the best chance at being sold.
Until now, store managers have been making reductions based on experience, but leaving it to human judgment was leading to instances of undiscounted stock going to waste or items selling out. To curb this, the AI reviews some 270 product types four times a day.
The system has led to improved business performance for the group. In 2021, in the six prefectures comprising northeast Japan's Tohoku region, the gross profit per store rose by 0.6 percent, while the cost incurred from wasted products was down 2.5 percent.
It has since expanded further, with 162 Lawson outlets in the capital adopting the system between June and September this year. The company intends to begin a full national rollout in fiscal 2023.
Major supermarket chain Aeon Retail Co. has also developed an AI discounting system which was implemented at about 350 stores by the end of September. The system analyzes the sales performance of each store and works to price in-store-prepared products at a level that ensures they are sold by closing time.
At Aeon's Funabashi branch in Chiba Prefecture, staff use a portable device to scan barcodes of the remaining items on the deli produce shelves at 5 p.m. each day. When a university student who works part-time there checked the 200-yen rolled Japanese-style omelet, the device displayed "18" -- meaning, at 5 p.m., if there are 18 omelets left, they presumably will sell out by the 11 p.m. closing time.
There were 24 omelets on the shelf at that moment so the employee entered "24 omelets" and sent the data to the centralized system. It instantly calculated a blanket 10 percent discount for the omelets and spooled out the 180 yen price tags.
The system's introduction seems to have been a welcome addition, with one official at Aeon Retail praising it for having "ended the practice of needing to make huge discounts right before closing time."