This Thanksgiving, Combat the Rising Cost of Goods with AI

According to an article from The Wall Street Journal, American families can expect to spend about 14% more on this year’s Thanksgiving dinner due to the rising cost of staples like turkey, flour, and eggs.

With food prices soaring across the board, merchandising technologies are offering retailers an opportunity to protect already razor-thin margins while minimizing the impact on customers’ Thanksgiving table. In particular, artificial intelligence (AI) is offsetting the impact of the rising cost of goods by supporting pricing and promotion decisions - delivering optimized regular and promotional prices and deciding the right products to promote or not promote.

With these capabilities, retailers can select better price points and execute impactful promotions - making a product like turkey a winner that drives increased customer traffic and sales this holiday season.

Make Turkey a Winning Product with AI-Powered Pricing and Promotions

By leveraging AI to promote the right mix of items, retailers will win more shoppers by not passing price increases on to consumers. In the case of turkey, the investment in the promotion will be made up for through the Halo items (e.g., potatoes, gravy, etc.) purchased alongside the turkey at full price.

Customers’ product needs are a priority when it comes to buying, with pricing providing additional incentive to buy. To win customers this holiday season, retailers must decide the right mix of items to promote or not promote and at the right price points – a task AI is well suited for.

AI helps retailers decide where they can invest in products - passing less inflation driven cost increases to consumers by optimizing the pricing mix and driving Halo purchases at full price. With AI, turkey could become a winning product this Thanksgiving - attracting more customers to retailers already leveraging the technology.

Ultimately, retailers have the power to maintain reasonable price points and deliver the right items to consumers with AI, driving customer traffic and growing margins this holiday season and beyond. There is no doubt that AI technology is delivering meaningful results – providing retailers with much-needed support as the industry is increasingly challenged by this period of high inflation.

Understanding and Leveraging the Halo Effect with AI

Customers buy solutions, not items. This fact forms relationships between products, which we call the Halo Effect. For example, a Thanksgiving promotion for Turkey will lead to the sales of its related products – e.g., potatoes, gravy, cranberry sauce, etc. – to complete the meal solution. Afterall, a Thanksgiving meal doesn’t end with turkey alone.

In addition to product affinities, the Halo Effect is informed by several other factors – such as cannibalization and pantry loading, among others. It is critical that retailers understand and leverage the Halo Effect to drive successful pricing and impactful promotions.

However, it is beyond human ability to consider all the Halo relationships between all the products in a retail store each week. This is where AI becomes a must. AI computes the Halo and simulates pricing and promotion scenarios – determining which combination of regular and promotional prices and products will lead to maximum profit, sales, traffic, or other business outcomes.

Ultimately, AI delivers actionable recommendations to retailers – ensuring they are executing pricing and promotion decisions with the greatest impact.