Luca’s Use of Mathematical Optimisation for Dynamic Grocery Pricing

Luca, a retail price optimisation company, has transformed grocery pricing by enabling retailers to make smarter, faster pricing decisions. With thousands of products across numerous stores, traditional methods of pricing were too slow and simplistic to meet modern retail demands.

The Problem

Retailers face several interrelated challenges when setting prices. They must manage vast product ranges, adjust prices based on fluctuating demand, and respond to competitor movements—all while balancing profit margins, market share, and customer satisfaction. Adding to the complexity is the need to model price sensitivity accurately, as even small price changes can significantly affect consumer behaviour. Manual systems or outdated technology simply couldn’t keep pace with these requirements.

The Solution

To overcome these challenges, Luca incorporated Gurobi’s advanced solver into its pricing platform and built robust optimisation models using Pyomo. This new system replaced slow, inefficient processes with high-performance optimisation, allowing real-time analysis and price adjustments. Retailers could now respond quickly to market conditions and test multiple pricing strategies without delay.

The Value 

Solve times were reduced from over 30 minutes to just seconds, making real-time pricing a practical reality. Retailers can now explore various pricing scenarios instantly—whether for promotions, competitor reactions, or seasonal changes. Most importantly, Luca’s ability to model price elasticity helps clients optimise the trade-off between demand and profitability, leading to smarter pricing and improved business outcomes.