Effective Pricing of Perishables for a More Sustainable Retail Food Market

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.

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