For produce managers staring down the barrel of daily shrink, the solution to better margins might not be a shiny new artificial intelligence platform or a shift in consumer behavior. According to a new study in the journal Management Science, published by the Institute for Operations Research and the Management Sciences, or INFORMS, the secret lies in two variables already under a retailer’s thumb: shelf placement and discount timing.
The research, “Displaying and Discounting Perishables: Impact on Retail Profits and Waste,” suggests that by optimizing how items are displayed and when they are marked down, grocery retailers can slash food waste by an average of 21.24% while simultaneously boosting profits by 6.01%.
The new study takes a close look at perishables with declining quality over time, such as fresh produce, dairy and meat. Using advanced analytical modeling and thousands of simulated retail scenarios, the researchers examined how three factors interact: product display, discount timing and discount depth.
Complexity of the Produce Department
The findings arrive at a critical time for the industry, as retailers face increasing pressure to balance sustainability with a tightening bottom line.
“Fresh produce and other perishables are among the toughest categories for grocers to manage because quality declines every day,” says Zumbul Atan, co-author of the study. “Our research shows that retailers don’t have to invest in new technology or wait for consumers to change their behavior; simple changes to where items sit on the shelf and when discounts are offered can reduce food waste by more than 20% while still boosting profits.”
Power of the ‘First Touch’
The study used advanced analytical modeling to simulate thousands of retail scenarios, testing how product display, discount timing and discount depth interact to move inventory. The researchers found that “first-touch” visibility — making older, soon-to-expire items the easiest for a shopper to grab — is a major driver of sell-through.
“When older products are made easier to reach and paired with appropriately timed discounts, customers are much more likely to buy them before they spoil,” says Dorothee Honhon, a co-author of the study. “This isn’t about fancy technology or gimmicks. It’s about using placement and pricing together to move inventory more efficiently and cut down on unsold waste.”
Win-Win for the Bottom Line
The research challenges a traditional freshness-at-all-costs mantra, which often assumes that hiding older stock is the only way to protect a brand. Instead, the data suggests that a more transparent, strategic approach to the shelf can satisfy both the chief financial officer and the sustainability officer.
“What makes these results exciting for produce departments is that profit and sustainability goals don’t have to be in conflict,” says Amy Pan, another of the study’s co-authors. “By redesigning shelf strategies with consumer purchasing behavior and product characteristics in mind, stores can reduce spoilage and disposal costs while giving customers better prices and helping the environment.”
Scalable Solutions for Every Store Size
Perhaps most surprising is what the research says about “everyday low price” retailers, such as Walmart, that avoid discounting altogether. Even without changing prices, simply adjusting how products are displayed can reduce waste and improve profitability when customer traffic is unpredictable, which is the reality for most stores.
“One of the big surprises from our research is how much impact small operational decisions — things retailers already control — can have on both waste and revenue,” Pan says. “Whether you’re a small independent or a large chain, adjusting your shelf and discount strategy can deliver measurable gains in terms of profit and waste reduction.”
