Study: How Can Grocers Cut Food Waste? Discounts, Displays Matter

Grocers can grow profits and reduce food waste by strategically discounting and displaying perishable products nearing expiration, according to new research from a University of Texas at Dallas professor and her colleagues.

In a study published online in the journal Management Science, researchers found that such strategies can increase profits by an average of 6% and decrease food waste by 21%.

"Organizing items on the shelves in different ways, and discounting and promoting products that are about to expire can help a retailer limit food waste," said study corresponding author Dr. Dorothee Honhon, professor of operations management and associate dean for sustainability and societal impact in the Naveen Jindal School of Management.

"People who work in retail and reshelving are taught to place older products in front, and it's well ingrained, but they don't always have time to do it," she said. "We know from evidence that it's not always done, but this is the best practice for minimizing waste."

The findings are timely as food costs rise for consumers, and food waste - estimated to be up to 40% of all food produced in the U.S. - continues to be a major source of methane gas emissions, which are linked to climate change.

Researchers set out to determine whether retailers can leverage display settings to shape consumers' purchasing behaviors to improve profit and reduce food waste. They ran numerical models and analyzed thousands of retail scenarios to identify tailored strategies based on store traffic patterns and product type.

When store traffic is predictable, such as in neighborhood shops or those that sell basic staples, researchers determined that two approaches were optimal: Grocers should either toss older, unsold products when a new batch arrives or keep both older and fresh batches, but make the fresh batch more accessible to consumers than discounted older items.

"People who work in retail and reshelving are taught to place older products in front, and it's well ingrained, but they don't always have time to do it. We know from evidence that it's not always done, but this is the best practice for minimizing waste."

Dr. Dorothee Honhon, professor of operations management in the Naveen Jindal School of Management

In settings with less predictable shoppers, researchers found that items that lose quality more quickly, like pastries and bread, should be discarded when fresh stock arrives. In addition, for products that spoil slowly, like dairy, discounted older items should be placed in front where consumers can easily reach them, and full-price, newer stock should be stocked in back.

"This will induce more people to grab the discounted products, reducing waste," Honhon said. "Our work shows that by choosing the right product display setting and discounting old products at the right rate and the right time, retailers can not only increase their profits but also decrease the amount of waste."

Consumers also can help reduce food waste by consciously shopping for suboptimal-looking and soon-to-expire products at their local grocery stores, Honhon said.

"In most cases, soon-to-expire produce items are just as healthy and delicious as their full-priced esthetically pleasing counterparts," she said. "And brown bananas make great banana nut loaves."

Other authors of the study were Dr. Zümbül Atan from Eindhoven University of Technology in the Netherlands and Dr. Xiajun Amy Pan from the University of Florida.

Media Contact: Veronica Gonzalez, UT Dallas, 972-883-4358, [email protected], or the Office of Media Relations, UT Dallas, (972) 883-2155, [email protected].