Sustainability: How retailers need to dispose of less food

Can price reductions for fruit and vegetables shortly before closing time ensure that supermarkets have to dispose of less food? Students of the International Retail Management bachelor's degree program at THI Business School investigated this question in a practical project. The project took place in cooperation with a major German retailer. It was supervised by Prof. Dr. Stefan Rock, Professor of Retail Management and Retail Logistics at THI Business School.

Customers expect to find an abundant selection of fresh fruits and vegetables on supermarket shelves by closing time - an enormous challenge for supermarkets. This often leads to supermarkets ordering larger quantities than actually necessary, with the result that at the end of the day, numerous items of food that are actually still edible are discarded because they would have spoiled by the next day.

In order to avoid this, the team of students tested how supply and demand can be better matched by means of sensible price reductions in a deliberately chosen time window before closing time. In a first step, the students analyzed in detail supply and demand as well as order quantities of all fruit and vegetable varieties that the retailer carries in its assortment. Then, considering the quantities of goods still available, they reduced prices individually for each variety only at 4 p.m. and again at 6 p.m.

The result: even small price reductions resulted in a change in demand and thus higher sales. At the same time, customers paid greater attention to quality. Overall, the students concluded that price reductions are an effective means of reducing the destruction of valuable foodstuffs. However, it cannot replace good disposition.

The project ran several times over one week each in different types of retailer stores.