Japanese C-Stores Use AI to Combat Food Waste, Boost Sales

Software systems use criteria to discount expiring products to ensure the items sell.

November 08, 2022

TOKYO—More Japanese convenience stores are utilizing artificial intelligence (AI) to monitor food expiration dates and sales data to notify them on when to discount products in an effort to increase sales and minimize food waste, reports The Japan Times.

Lawson’s, which is one of Japan’s largest c-store retailers, began using AI to help with product management in 2015. The software lets the retailer know how far to discount products based on a specific store’s sales, delivery times and local weather. It gives the retailer a product price that the AI calculates as the best chance at being sold.

The Japan Times reported from a Lawson’s in Tokyo’s Shinjuku Ward that around 3 p.m., an in-store computer notifies employees which food products need to be discounted and by how much. A display reads “assorted sandwiches, one, 20 yen (US$0.13) discount,” and another says, “crispy ham and lettuce sandwiches, three, 30 yen discount.” An employee then printed the new prices tags and added them to the products. The Times reported that although there were eight assorted sandwiches on the shelf, only one was discounted, as it was approaching its expiration time.

The AI system reviews 270 product types four times a day, and the software is paying off. In 2021, gross profit for stores in the six prefectures comprising the Tohoku region increased 0.6% per store, and food waste cost decreased by 2.5%.

Lawson’s utilizes the AI software in 162 locations, and the company plans to roll out the system company-wide in fiscal 2023.

Aeon Retail, a major Asian supermarket headquartered in Japan, also uses an AI-powered discounting system in about 350 stores. The technology looks at each store’s sales and prices prepared foods at an amount that ensures they are sold by the time the store closes.

At the retailer, staff walk around with a portable scanner and zap the barcodes of remaining prepared food items at 5 p.m. every day.

The Japan Times followed an employee one evening during these price checks, and the worker scanned a barcode for a 200 yen rolled Japanese-style omelet. The machine displayed “18,” which meant that at 5 p.m., if there were 18 omelets left, they would sell out by 11 p.m. when the store closed. However, there were 24 omelets left, so the employee entered “24 omelets,” and sent the data to the centralized system, which instantly calculated a 10% discount for all the omelets and printed the 180 yen price tags.

An Aeon Retail official told the Japan Times that the system has “ended the practice of needing to make huge discounts right before closing time.”

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SPAR Austria recently reported that it is minimizing waste through digitization. Although only 1% of the food offered in-store goes unsold, the retailer is looking to bring this down further by using data and AI for goods ordering and supply chain management.

In cooperation with SPAR ICS (the company’s IT unit), Microsoft and other partners, SPAR Austria has developed a solution that enables more targeted order suggestions and demand forecasts for all SPAR, EUROSPAR and INTERSPAR stores. Using AI, a new IT solution from SPAR ICS analyses data on sales volumes, weather conditions, marketing promotions, seasonality and other factors to produce a precise forecast of optimal product order quantities per store.

An automatic ordering system that has been in place at SPAR Austria for decades formed the basis of the new system, according to the company, and has been tested in the fruit and vegetables area. The new system offers a prediction accuracy of over 90%, meaning that the right amount is available in the right store at the right time, thus further reducing food waste.

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