How AI-Powered Waste Reduction Software Is Helping Retailers Cut Costs & Stay Green

Picture this: a grocery store shelves too much fresh produce, only to toss piles of unsold, spoiled food by the week’s end. A clothing retailer miscalculates seasonal trends and gets stuck with racks of excess inventory. Packaging waste piles up. The cycle repeats — draining profits and polluting the planet.

No wonder 62% of retailers see sustainability as a growth opportunity, according to Deloitte. Many expect revenue boosts from circular business models in the next five years. But what else can be done to cut waste?

Consider AI-powered waste reduction software. With 46% of retailers expecting artificial intelligence to automate demand forecasting and assortment planning, this tech proves to be a waste reduction game-changer. Read on to explore how it helps.

The Growing Problem of Waste in Retail

You already know waste is an issue — but how bad is it? The statistics are quite discouraging.

• Food waste. In 2023, the US alone wasted 31% of its 237 million tons of food supply — most of it ending up in landfills, incinerated, or simply down the drain. That’s nearly 120 billion meals gone unsold or uneaten yearly, around 1.4% of the country’s GDP.

• Packaging waste. About 40% of the global plastic waste comes from packaging. In the US, it accounts for 37% of total plastic waste, while in Europe and China, the numbers climb to 38% and 45%, respectively. Meanwhile, in Canada, plastic waste reached 4 million tonnes in 2023 — half a million tonnes more than in 2018.

• Returns and overstocking. A report by the NRF and Appriss Retail estimated that, in 2023, retailers in the US handled $743 billion in merchandise returns. That’s lots of products to reprocess, resell, or, unfortunately, discard.

And what does all this waste cost retailers? A lot. For every $1 billion in sales, the average retailer loses $145 million to returns alone. Add rising landfill fees, waste disposal costs, and potential fines for environmental non-compliance, and the financial hit becomes even greater.

But here’s the main thing: consumers are paying attention. More than ever, they expect sustainable practices. Around 60% are even willing to pay extra for products with eco-friendly packaging. So, if you’re not addressing waste, you’re not just losing money — you’re losing customers.

The solution? Forget about outdated, manual waste management methods and adopt AI-powered software for retailers. Stop dealing with waste after it accumulates with proactive measures and real-time insights.

How AI-Powered Waste Reduction Works

Artificial intelligence is already making waves in retail. In fact, retailers use it for various purposes: 46% to increase supply chain visibility, 42% to implement personalized product recommendations, and 41% to optimize workforce management.

But how does AI help reduce waste, save money, and operate more sustainably? Here are key ways:

Inventory Optimization

Stoking too much often leads to waste, and stocking too little — to lost sales. AI software lets you strike a balance by analyzing sales trends, seasonal fluctuations, and even external factors like weather conditions to predict demand accurately. Actually, 14% of retailers surveyed by Deloitte prioritized AI for automated demand planning and inventory management in 2024.

AI-Driven Smart Pricing

What else can you do to prevent overstock waste besides controlling your inventory? Discounting products at the right time. AI-driven pricing tools take this process to a whole new level. They dynamically adjust prices based on demand, shelf life, and competitor pricing.

AI-Powered Returns & Resale Optimization

Returns are a massive waste problem, and stats support this claim. According to SAP Emarsys, 86% of US shoppers returned at least one item in the past year. And here’s the real issue: many of those returned products end up in landfills simply because processing them is too costly.

But not with AI. Waste reduction software lets you evaluate the best course of action—restocking, refurbishing, reselling, or donating. It can also help you analyze why customers are returning items, such as misleading product descriptions or sizing problems, to reduce future returns.

AI for Smart Packaging Design

Excessive packaging, especially plastic-made, is another contributor to retail waste. But here comes the alternative — smart packaging, a more ergonomic, technology-enabled solution. The global market for such packaging is rapidly growing, projected to jump from almost $23 billion in 2023 to nearly $32 billion in 2033.

Artificial intelligence is one of the techs used for designing smart packaging. How exactly? It analyzes product fragility, shipping distance, and consumer preferences and suggests optimal packaging materials. It can also come up with virtual packaging prototypes before production even begins.

AI-Optimized Food Redistribution

If you’re dealing with perishable goods, AI-powered waste reduction software is a must. It predicts when food is nearing its expiration date and automatically connects it with food banks, charities, or discount resale platforms. Ultimately, you make sure that perfectly good food gets to those who need it instead of ending up in the trash.

Clustering and Segmentation

Not all products (and customers) are the same, and AI recognizes that. AI-powered software help retailers segment products based on their characteristics to identify slow-moving items and take corrective action. It also assists in categorizing customers following their location, purchasing habits, and more to adjust stock levels, pricing, and promotions accordingly.

Key Benefits for Retailers

AI-powered waste reduction software for retailers goes beyond sustainability alone. It’s also a way to increase profits. Here’s how:

• Fewer discounts, more revenue. When you’re stocking the right amount of product from the beginning, you don’t have to resort to desperate markdowns to get rid of overstock. With AI, you predict demand accurately and sell your items at full price.

• Less money on storage and logistics. Imagine the savings from not having to rent extra warehouse space for piles of unsold inventory. Plus, AI helps optimize delivery routes, reducing fuel costs significantly.

• Better brand image = more loyal customers. Today’s consumers do care about sustainability. A lot. No wonder 85% of companies surveyed within the Deloitte 2024 CxO Sustainability Report have increased their sustainability investments. Reducing waste with AI means showing your customers you’re all for eco-friendliness — building trust and long-term loyalty.

• Automatic compliance, no risk of fines. Keeping up with constantly changing environmental regulations can be challenging. Luckily, AI software can be used to automate the process. It may track waste-related laws, generate reports, and alert you of potential issues.

How Integrio Helps Retailers Make More Data-Driven Decisions

AI-powered waste reduction software’s efficiency relies on one simple fact: better data leads to smarter decisions. That’s exactly what our solution for Mobiry offers. Designed for omnichannel retailers, it helps brands increase sales, maximize ROI, and, of course, cut down on waste.

How does it work? Our AI-powered platform connects to the retailer’s ERP, POS, and other data systems and synchronizes member, pricing, sales, and inventory information in real time. It also uses machine learning-based analytics, which includes:

• Segmentation engine that clusters shoppers based on behavior, ensuring promotions target the right audience.

• AI-powered A/B testing that evaluates different pricing and marketing strategies to find the most effective ones.

• Purchase frequency prediction model that ensures retailers stock exactly what customers want — reducing overstock and unnecessary discounts.

As a result, with our AI staff augmentation services, Mobiry has received an innovative product that helps retailers sell more with minimum waste.

Why Does AI-Powered Waste Reduction Matter?

Clearly, retail waste isn’t just bad for the environment. It’s a major drain on your profits. Food spoilage, excess packaging, costly returns, overstocking, and compliance issues — all lead to inefficiencies.

The good news is that with AI-powered waste reduction software, you can easily go green while increasing revenue. And in case you need such a solution, reach out to Integrio Systems. Whether you’re in retail, manufacturing, or beyond, we have the right AI expertise to help you cut waste smart.