A constant theme in the news has been that consumer costs on goods have skyrocketed the past year or so, with many products showing a double-digit percentage rise in price. Some produce products are up 14%, eggs have climbed 12%, and milk has risen 11%.
At times, it’s been easy to fear there is no end in sight. Though there might be ethical questions about whether a company would actually lower its prices if its owners begin to see money saved, certain technologies are being developed with this end in mind.
These technologies are already starting to be used, and may succeed in helping with product efficiency. The result might potentially include lower prices.
Here are three of those new technologies or marketing strategies.
Historically, inventory has been one of the leading sources of rising prices. A company, especially a large one, would rather have too much milk than not enough, even if it may sometimes be compelled to dispose of hundreds of gallons per month.
That’s because store management knows that throwing away a few hundred dollars of milk can actually save more money than provoking their customers into renouncing the store altogether if it regularly fails to have adequate selection.
Companies will almost always side with too much over not enough, but firms like Cetaris are creating apps and software that can help to organize and store data on inventory more efficiently.
For example, when barcodes are used, the app can scan a product and keep track of how well it is selling and when. With enough information, the data can be used to recognize and even predict the spending habits of customers.
On larger items, this can also help the business know whether the inventory is sufficiently stocked, rather than having to order more because the item may not be in the correct location.
Shelf life has always been one of the toughest challenges in the food industry. For some products, the shelf life is only a few days; while others have a shelf life that is years in duration.
Other products contain plastic or wrappers that, if not packed perfectly, can lead to a very quick expiration even if the shelf life ought to be much longer. Though there’s no way to make an item’s shelf life endure forever, some recent advances with packaging have dramatically extended how long a product is able to stay on the shelf.
One of these advances is oxygen absorbers that contain iron powder which reacts with oxygen and absorbs it into sealed food packages. This prevents the growth of spoilage microorganisms and protects against insect damage.
Other advances include irradiation, vacuum packaging, and altering the chemical balance and makeup of foils and plastics. All these practices are extending shelf life, which means less waste is thrown away and less demand.
Supply Chain Technology
AI, or machine learning along with analytics, has changed how spending habits are analyzed. In the past, the technology to follow how well a product was selling was largely linear, meaning only the amount of items being sold in a given amount of time got accounted for.
Machine learning and AI smart technology have vastly expanded the amount of data points that can now be tracked. For example, how well does Gatorade sell when someone also purchases a candy bar?
How well does it do when the weather is 80F and humid versus 100F and dry? As more trends are probed, the data input and analytics add further sub-categories that provide more information for the seller.
The seller is empowered to dive deep into the information and analyze which products will do better in a particular week on an end cap, or even how to rearrange the layout of the store entirely, and match particular foods that on the surface may have no connection, but in reality are often purchased together (such as potato chips and bread).
Will Costs Come Down?
There are two main issues with regard to whether prices will fall or not: supply and demand and corporate justification. Companies will never lower costs if the demand for a product persists a given price range. Even if the seller’s costs drop, if it can still market the product successfully and enjoy further profits, the seller will always do well.
The other side is corporate justification. As companies purchase and spend thousands of dollars on the new technology we are discussing, despite a reduction in prices, they may defend a refusal to lower prices because of the cost of the new services, even if they don’t equal out.
Although this news might sound bleak, the positive side is that there’s room for prices to drop. If the demand lowers, the prices can and will fall because there is now room for that to happen. The only real question is, when?