“Sustainable buying behavior has to be incentivized”

Smart price tags reduce supermarket waste

As the world struggles to feed a booming population, a third of all food produced worldwide is lost or thrown away. With their dynamic pricing technology, Wasteless puts a money-saving food waste solution directly onto supermarket shelves.

A version of this article was previously posted on Rabobank.com onOctober 9, 2018.

Listen to this story as a podcast (in Dutch), or read on for the English interview.

Food waste happens all along the supply chain, but supermarkets represent a particular waste hotspot, says David Kat, SVP Global Business Development at Wasteless. With a flexible pricing system matched to products’ sell-by dates, the Dutch-Israeli start-up offers retailers a solution that is good for the planet – and the bottom line.

The facts are grim, Kat points out: “A third of the world’s food production never gets eaten. A third of our land produces food for the bin. A third of the water, fertilizer and farmers’ work are wasted. In money terms, this amounts to 1.2 trillion dollars every year. In Europe, the figure is 60 billion euros. Even in a country like the Netherlands – where frugality runs deep, ‘finish your plate’ is the eleventh commandment and there are still people who remember the famine of ’45 – the trend is similar.”

“Sustainable buying behavior has to be incentivized”

- David Kat, Wasteless

Food system broken

While individuals have a responsibility to minimize waste, the fact is that waste is hard-wired into our food supply system. It’s a system which – and here Kat quotes Unilever CEO Paul Polman – “is broken and badly in need of repair.”

“The supply chain from farm to fork is extremely long and far from transparent. Consequently, consumers have stopped thinking about where food comes from, have lost the sense of wonder at seedlings pushing their way upwards out of the raw earth,” Kat observes.

“Raising awareness is critical, but in itself not enough. Once consumers feel the urgency, they still need help turning this into sustainable buying behavior. And that means such behavior has to be incentivized.”

The Wasteless pricing system: The shorter the sell-by date, the lower the price.

The supermarket funnel

Wasteless aims at doing just that – incentivizing consumers’ sustainable decision making – with digital innovation. They target a supply chain actor very close to the end consumer: supermarkets. Tens of thousands of products are funneled to the Netherlands’ 17 million consumers through just 5,000 supermarkets.

Supermarkets have a major waste problem, but to date, they have done little more than measure and report on it. The day that products reach their sell-by date, they are offered to consumers at a discount. But masses of perishable items still remain unsold. These are – at best! – given to food banks or local farmers as cattle feed. At worst, they are burned, sometimes generating a bit of ‘green’ electricity. Besides being unsustainable, this practice costs supermarkets a lot of money.

Kat understands why this happens. “Supermarkets are brick-and-mortar entities. Well-oiled machines, where changing a single bolt can disrupt the whole process. We need to reassure them that we’re not changing anything, just tapping into the existing system.”

“We’re not changing anything, just tapping into the existing system”

- David Kat, Wasteless

Dynamic pricing

Wasteless’s innovation revolutionizes the way perishable products are priced. Called “dynamic pricing,” it is a system of electronic shelf cards stating prices linked to sell-by dates. De Kat explains. “It’s a principle consumers are already familiar with when booking plane tickets and hotels. The value of a carton of milk is higher two weeks before its sell-by date than two days before. So why should consumers pay the same price for it? If they plan to use the milk soon, they’re rewarded for taking the carton that the supermarket wants to sell first.”

In Spanish supermarkets, where the system is being piloted, the results are spectacular. “Waste has dropped by as much as 40 percent, while sales of the dynamically priced products have risen by 6 percent,” Kat reports. “When the system is properly integrated and streamlined, we expect waste reduction to exceed 80 percent. At this rate, supermarket waste reduction targets set for 2030 can be met in 2019.”

“Supermarket waste reduction targets set for 2030 can be met in 2019”

- David Kat, Wasteless

The ‘Waste Dashboard’

Wasteless was a finalist in this year’s Rabobank Innovation Prize. The bank provides support in various ways, says Kat. “Currently, there are plans to jointly produce a documentary film or even a series about the first supermarket using the Wasteless system.”

As part of a Wageningen University public-private initiative, Wasteless is running a live pilot in three Amsterdam supermarkets. “This time, we intend to have a Waste Dashboard in the supermarket, showing consumers exactly how much carbon emissions they and the supermarket have saved together.”

From high-end stores to discounters

The first supermarkets to work with the Wasteless concept will be opening in 2019. Kat is particularly pleased that among the front runners will be both a high-end store and a discounter. “We’ll be enabling not just the well-off but a large group of mainstream consumers to use their purchasing power to make the world a better place.”

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