Startup's solution lowers prices on food as expiration date approaches
- European startup Wasteless recently introduced a solution that uses dynamic pricing to lower the price of products as they get closer to their expiration date. The company has received an investment from Dutch venture capitalist firm Slingshot Ventures to expand its real-time tracking solution, and is currently testing with several retailers in Europe.
- According to Food Ingredients First, Wasteless’ solution uses item-level electronic-shelf labeling to monitor stock levels and anticipate when items are out-of-stock or low-in-stock. Wasteless also aims to reduce food waste by automatically dropping prices as products approach their expiration date.
- In America, an estimated 10% of the food that hits grocery shelves goes to waste each year, according to the U.S. Department of Agriculture.
In the fight against food waste, a high-tech solution similar to the one Wasteless offers is one potential weapon. Lowering prices on products as they approach their sell-by dates could motivate more shoppers to make a purchase and generate revenue on products that would otherwise be tossed out. According to the U.S. Department of Agriculture, food retailers and other businesses throw away a collective $940 billion annually on food waste.
Having an automated inventory management system in place can also save retailers time and improve margins, which is critical in the razor-thin-margin grocery space. Research from Forrester shows that using price optimization technology can improve gross margins by up to 10%, and that implementing a dynamic pricing approach could boost profits by 25%.
Coupled with the idea of reducing waste, those are big incentives for retailers and socially-conscious consumers alike. But will picky American consumers be turned off by such last-minute discounts on their food? Moreover, will they be willing to disregard the “sell-by” label for a cheaper price tag? The latter is perhaps the biggest hurdle. For 40 years, Americans have been conditioned to mind these labels, of which there are 10 variations, from “expires on” to “use by.”
On the plus side, consumers seem to have grown more receptive to the idea of eating slightly less-than-pristine foods, as supermarket campaigns around "ugly produce" have shown. Hy-Vee has sold "misfit" produce in its stores, while startup Imperfect Produce delivers cosmetically flawed fruits and vegetables to consumers at 30% to 50% off store prices.
Still, if this type of dynamic pricing technology Wasteless offers is to succeed in the U.S., there will need to be educational efforts aimed at informing consumers that “sell by” doesn’t mean inconsumable. That will be a big challenge: A recent survey found that 84% of Americans throw away food based on the date stamped on packages, wasting about 8 million pounds of food. This costs American consumers nearly $30 billion a year. Additionally, a Food and Health Survey found that “expiration date” is the most important factor on a food package for 70% of Americans when considering purchasing or eating an item.
That is a big chunk of consumers to convince otherwise. But considering the amount of money and food wasted, it’s worth at least a try.
- Food Ingredients First Combating food waste in retail: Pioneering technology cuts price as product expires
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