Monday, September 1, 2014

Price Optimization in Real Time

Food is a commodity and we treat it that way at the wholesale level, and since free market economics are all about 'Supply and Demand' shouldn't we take that whole concept and philosophy down to the street level? Well, we kind of do that now right? I mean when supplies are abundant and a particular fruit or vegetable is in season, the prices becomes stunningly low, and then at the end of the season it rises up again.

Why? Supply and Demand, and somewhere there is a climate where such fruit or vegetables can grow in the off-season, South America and Australia for instance - opposite seasons right? Yes, but figure the cost to transport and hazards of perishables being shipped across the planet and every crop competes for field space, water, and farmers plant what's most profitable or what they think will be at the end of its growing season.

If this all sounds like the type of writings Adam Smith put forth in the Wealth of Nations or a Milton Friedman economics speech (still available on YouTube by the way) that's because all of these things are the basics and fundamentals of free markets and supply and demand dictates. Okay so, about the street level, what if the supply and demand in the store were to take all that into mind?

You see, there was an interesting article in Grocery Retail Online News on August 14, 2014 titled; "KSS Retail Introduces New Automation Solution To Enable Real-Time Price Optimization," and I wonder if they might take this even further, let's talk.

What if the cash registers were connected to the produce 'electronic price' sign guaranteeing that price for one-hour if you hold a little tag or have an app on your iPhone synchronizing that price until you get to the register where you scan your phone for the 'special price' even if that price is less than the advertised price you received in your junk mail coupon flayer?

Lastly, I wonder if people will complain of price gouging were this to be taken to its Free Market limits? And would it cause people to come to the grocery store every day to see what was on sale? What if something isn't in the mailer coupon flayer and yet, when you run to the store to get that item for your recipe you see there are only a few left and the price is now $5.00 per pound? Time to think on all this, because it seems others already are and they are ready to implement these real-time systems for pricing at the consumer level.

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