Dutch retail chain buys Israeli software linking food prices to expiration dates
By combining data, Wasteless can gradually lower the price of an item to appeal to customers, while maximizing a retailer’s margins and slashing waste
Sue Surkes is The Times of Israel's environment reporter.
An Israeli company that employs Machine Learning to cut food waste in the retail sector announced Tuesday that it is entering a large Dutch supermarket chain.
Wasteless has developed a dynamic pricing mechanism based on expiration dates and the pace at which a specific product is being sold.
Its algorithm will gradually lower the price of an item, such as a pack of raw hamburger patties, as the expiry date gets closer while monitoring the effect of the reduction on sales.
The aim is to keep the prices as high as possible to maximize earnings for the retailer, while ensuring that they remain attractive enough to customers planning to use the item within a short time frame.
In the case of the above example, a shopper planning a barbecue that evening might be expected to snap up burgers with a sell-by date two days away if they are cheaper than those that expire after a week.
The prices, which can change throughout the day, appear automatically on electronic shelf labels, as well as on employee stock applications and at the checkout.
On Tuesday, Wasteless announced that it had signed with the Dutch Hoogvliet chain, which has 71 stores across the Netherlands. The technology has been introduced in three of the stores and will be rolled out to the rest next year.
An additional two new retailers in the Netherlands are set to start using the tech next year.
Wasteless is already being used by Metro and Edeka supermarkets in Germany, and at Makro — a Metro subsidiary — in Slovakia.
According to company cofounder Oded Omer, the Wasteless algorithm in Europe is leading to a 50 percent to 90% reduction in retailers’ discarded food.
It is also halving the current 2.5% to 4% loss in annual sales resulting from what Omer calls the “broken” system dating back to the 1970s. Under this model, retailers wait until just before a product hits its expiration date and then slash the price dramatically. They either manage to sell the item for very little profit, or end up throwing it away at the end of the day.
The developed world — including Israel — dumps around a third of the food it produces.
This starts with the farmer discarding misshapen fruit and vegetables because the supermarkets refuse to buy them, and ends with the consumer who buys and prepares too much food and tosses much of it into the trash.
In Europe, according to Omer, retailers throw away around 15 million tons of food each year, worth 143 billion euros ($150.7 billion).
The waste is not only in the food itself, but the water, energy, fertilizers, pesticides, and land used to produce it.
Furthermore, food production generates more than a third of the manmade greenhouse gas emissions spurring climate change, with more than half the emissions coming from the meat and dairy industries.
Omer launched Wasteless in 2017 with his long-time business partner Yossi Regev.
In the early years, he tried to pitch the product to Israeli supermarkets, which were not interested. Not only was sustainability awareness even lower than it is today, he explained, but Israeli supermarkets can send unsold products back to the supplier for a refund, which reduces their incentive to sell everything on the shelves.
In addition, Israeli supermarkets and grocery stores lack the range of fresh, ready-made goods found in many other developed countries.
In general, Israelis like to prepare their food, by buying fresh fruit and vegetables and either frozen meat or fresh cuts prepared by an in-store butcher.
Wasteless was cited as a food loss and waste reduction innovator in the UN’s Food and Agriculture Organization’s 2019 report. It received the 2020 and 2022 EU Seal of Excellence.
The company has also won several awards, taking first place for food tech and agriculture at the international Extreme Tech Challenge (XTC) startup competition and scooping an Accenture AI Award for its proprietary AI pricing engine.
Last year, Wasteless was included in a World Economic Forum‘s list of 17 innovations that are accelerating the transition to a circular economy.