Smarter Retail Planning: Bringing Pricing And Inventory Together

Forbes

a day ago

Devadas Pattathil, retail thought leader, cofounder & CEO of OnePint.ai, and previously online grocery executive at Walmart.
Back in March 2024, NPR's Planet Money featured a fascinating episode called 'Is Dynamic Pricing Coming to a Supermarket Near You?' It highlighted REMA 1000, a Norwegian grocery chain that's doing something smart—using real-time competitor data and electronic shelf labels (ESLs) to update prices rapidly.
But what set REMA 1000 apart wasn't just dynamic pricing. Their biggest innovation was how they connected pricing with inventory management to reduce waste, improve sell-through, and protect margins. This story isn't just about grocery stores—it's a lesson for retailers and brands everywhere, whether you sell in stores, direct to consumers or through marketplaces.
The Problem: Planning in Silos
Today, many companies still plan in disconnected steps. They forecast demand, assuming prices won't change; buy inventory based on those forecasts; and only later adjust prices—often as a reaction to market conditions. This siloed approach causes common issues. Inventory planning doesn't take pricing into account, leading to overstocked items that end up with late markdowns and fast-selling products running out too soon, leaving money on the table. Promotions are also planned without fully understanding inventory availability or margin impact.
REMA changed this by combining real-time competitor price tracking with dynamic price updates on ESLs. They marked down perishables early to avoid spoilage, raised prices on scarce items and used pricing data to continuously improve demand forecasts. This created a tightly connected system where pricing, inventory and forecasting all worked together seamlessly.
What Retailers And Brands Can Learn
Traditional demand forecasts often assume a fixed price, but in reality, price affects demand a lot. Promotions cause demand spikes, price sensitivity varies by product and region, and competitor prices constantly change. Instead of forecasting one fixed number of units at a set price, it's better to model demand as it changes with price. For example, you might forecast selling 1,300 units if the price is $20, 1,000 units at $25, and 600 units at $30. This approach lets you plan inventory and pricing together, rather than separately.
Moving beyond this, companies should use integrated models that recommend how much to buy based on pricing strategy, simulate sales depending on price and promotion timing and adjust prices according to expected inventory levels. For brands, this means planning product launches, bundles and promotions while keeping inventory realities in mind. For retailers, it means rethinking how markdowns, sales and restocking interact.
Looking Ahead
The future points toward intelligent Agentic AI systems where pricing agents collaborate closely with inventory planning agents, all connected with forecasting and replenishment. These systems can help answer important questions like: 'What's the best price to sell 90% of stock in four weeks?' or 'How much inventory do I need to support a 30% off sale?' or 'Which products should I push based on current stock and margin?'
To answer these questions, you need systems that simulate pricing, demand and inventory together—not just separate demand plans or price calendars. Instead, these elements form an adaptive loop where each influences the other in real time.
That said, as with any emerging technology, Agentic AI systems come with their share of limitations and challenges. A recent study highlighted that many agent-based systems today are still under development and can fail to perform efficiently under real-world constraints. Retailers should approach these tools with clear performance benchmarks, tight integration testing and human oversight to ensure decisions made by AI agents align with broader business goals.
Summary
REMA's example is powerful, but the bigger truth is this: price and inventory decisions are deeply linked. Whether you're a global retailer or a growing brand, your success depends on your ability to forecast demand based on price, price products based on inventory and plan inventory based on your pricing path.
The next era of retail planning will be defined by real-time responsiveness, powered by models that treat pricing and inventory as two sides of the same coin. If you want to stay ahead, it's time to start thinking of pricing and inventory as a connected team, not separate tasks.
While the operational benefits of dynamic pricing and ESLs are compelling, it is important to acknowledge consumer sentiment. Surveys show that many shoppers view dynamic pricing skeptically—especially when it resembles surge pricing.
To build trust, retailers must communicate clearly about how and why prices change. Transparency, consistency and fairness must be foundational. Leaders can set the tone by committing to guardrails—like avoiding exploitative pricing in emergencies—and by emphasizing how pricing flexibility helps reduce waste, ensure availability, and improve sustainability.
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