Effective Pricing of Perishables for a More Sustainable Retail Food Market

Jaekwon Chung

doi:10.3390/su11174762

Abstract

Developing effective ways to manage perishable foods is crucial for food retailers to survive in the highly competitive retail food industry. Due to the nature of perishability, it is necessary to find an effective selling strategy to reduce waste from unsold perishables. Prior studies have proposed using dynamic pricing to develop an optimal pricing structure that compensates the consumer for the loss of freshness as the expiration date approaches. However, these studies have not considered consumer demand that more consumers are likely to purchase units of perishable products with relatively more or fewer days before expiration. In addition, prior studies have not compared dynamic pricing to a “no discount” policy whereby a retailer only displays those perishables that have the fewest remaining days to expiration, keeping units with a longer time before expiration in a warehouse. The results of this study show the potential impacts of different pricing by considering these issues. This study provides new insights for retailers to manage perishable foods with small and large packages that improve the sustainability of food retailing.

Highlights

Perishable foods can be characterized as products that are highly sensitive to storage conditions, that deteriorate in value over time, and have a consumable period of thirty days or less [1,2]
This study shows that food retailers and consumers should work together to reduce unnecessary perishable food waste, which reduces costs to both retailers and consumers, and supports a sustainable environment
Dynamic pricing can help consumers to plan their consumption, which could reduce waste generated from households, and improve consumer satisfaction, which in turn contributes to improving sustainable food retailing by generating better sustainable relationships between retailers and consumers

Summary

Introduction

Perishable foods can be characterized as products that are highly sensitive to storage conditions, that deteriorate in value over time, and have a consumable period of thirty days or less [1,2]. Consumers wish to purchase perishable foods that have a comparatively longer time until expiration due to the nature of perishability [3]. By purchasing perishables that have more days remaining, consumers can expect to consume fresher food and keep that food for longer periods in their refrigerator, which helps consumers to plan their consumption. It is logical that consumers would prefer to purchase perishables with a longer time to the expiration or “Sell By” date if no price reduction is offered for products with fewer days left [4,5]. A perishable food item that has fewer days left may not be purchased if the price of the identical product with more days remaining is the same

Objectives

Findings

Discussion

Conclusion