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Wasteless to reduce supermarket waste through dynamic pricing

© Shutterstock / Maxx-StudioPost Thumbnail

An Israeli start-up has developed electronic food labels that help retailers find the right discounts to encourages customers to buy before products expire. 

  • Israeli start-up Wasteless has developed a ‘dynamic pricing’ system, which uses technology to automatically adjust electronic price tags before food products expire.
  • Reducing  the price of perishable products as they approach their sell-by date helps supermarkets, and conscientious consumers, reduce food waste.
  • The increased use of technology in food distribution will help reduce the 1.6 billion tons of food, worth $1.2 trillion, wasted each year, but further tactics will be needed to truly resolve the food waste crisis.

Goal 12 of the UN sustainable development goals (SDGs) establishes the need to “ensure sustainable consumption and production patterns”.

Among its specific objectives is to “halve per capita global food waste at the retail and consumer level, and reduce food losses along production and supply chains by 2030”.

Currently, however, the UN Food and Agriculture Organisation (FAO) estimates that the methane gas generated by rotting food waste accounts for 8% of global greenhouse gas (GHG) emissions, while analysis by the Boston Consulting Group (BCG) suggests that food waste will rise to 2.1 billion tons by 2030, a third higher than current levels.

Reducing food waste via dynamic pricing

To address the ongoing food waste crisis, Israeli start-up Wasteless has taken a technological approach, with a solution that can help both retailers and suppliers.

For suppliers, the dynamic pricing system helps match supply with demand, reducing the number of returned orders going to waste.

Retailers, meanwhile, can use the smart pricing engine to directly manage consumer demand by using lower prices to incentivise the purchase of products before they are wasted.

A large amount of food waste is driven by expiration dates. Although the application of discounts is nothing new to retailers,  they have usually been associated with marketing promotions, and applied in a somewhat arbitrary and labour intensive manner, with discount tickets being applied manually to expiring products (when they are noticed in time).

Using the Wasteless’ dynamic pricing engine in combination with electronic shelf labels, supermarkets can automatically update product prices up to four times a day. The labels can also be used to highlight discounts in comparison to original prices, further encouraging the decision to purchase.

The company’s technology has been sold to food retailers and wholesalers in seven countries across Europe and Asia, and in the US. Commercial deployments by supermarkets have so far reported food waste reduction of between 15% and 40%.

Incorporating dynamic pricing as a sustainable business model

Dynamic pricing has been hailed as a strategy for building more sustainable business models, according to a research paper published by the British Food Journal. 

The findings of the paper reveal that dynamic pricing strategies can reduce food waste by up to 35% in comparison with static pricing models.

Research conducted at Kookmin University in South Korea adds further support, concluding that dynamic pricing can be useful in reducing household food waste as well as that generated by retailers. The Korean research goes on to suggest that these benefits should be maximised by providing more education throughout the food value chain.

A broader study by BCG finds that digital supply chain tools, like the one being offered by Wasteless, can improve supply chain dynamics in food retail. More specifically, it identifies dynamic pricing as a mechanism that prevents food products nearing their expiry dates from becoming waste.

These conclusions highlight the sustainability benefits of dynamic pricing strategies, while also hinting towards opportunities for increased revenue through the sale of items that would otherwise not be purchased.

As such, there is a strong case for the introduction of technology-enabled dynamic pricing systems to the food sector.

We need to talk about food

According to WRAP, a non-governmental organisation working to promote waste reduction, food waste contributes around 23% of the UK food system’s greenhouse gas emissions.

If the country were successful in reducing its food waste in line with the targets of SDG 12, WRAP estimates that 90,000 tonnes of CO2 equivalent emissions could be saved.

Increasing awareness about the extent of food waste, and its impact on the economy and the environment, will be vital in driving any meaningful improvements.

Retailers should be educated and on how their pricing strategies contribute to the problem. Promotion techniques such as ‘buy one get one free’ deals, for example, encourage excessive purchasing and food hoarding by consumers.

Education on this issue alone may not be enough to sway the mind of businesses seeking to turn a profit but, if supplemented with alternative suggestions such as dynamic pricing automation, they may be more open to change.

Consumers also need more information regarding food waste. Simple solutions such as choosing frozen items over fresh, for example, could help buyers lower their waste at home. This tip would be particularly for items that are grown out of season and likely to spoil more quickly while incurring extra carbon emissions through transportation.

Food seasonality is not a difficult concept to understand, nor is the freezing of food a challenge to implement. This demonstrates how easy it could be to empower consumers with actionable strategies for meaningful impact.

The use of technology can help tighten up supply chains and improve food distribution, but the ultimate resolution to the food waste crisis will demand a systematic approach that addresses the problem throughout the food value chain.

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