Thoughts on how an initiative including Refladdin could be implemented

—using the questions for a Coursera course assignment created by HEC Paris as a guide and the answers I initially submitted as a template

Question 1. "Describe the company, product or service you are dreaming to work on. (no more than 300 words)"

Approximately one third of food produced globally is wasted or lost somewhere along the supply chain, contributing to environmental problems, such as climate change. For example, in grocery stores, toward the downstream end of the supply chain, consumers do not want to pay the full price for food items that are nearing expiration. Thankfully, modern digital technology is available to address this problem. By storing expiration data for each product lot with a different expiration date (in addition to traditionally stored data such as price, product name, and barcode number), dynamic-pricing practices can be applied to automate markdowns for product lots as they approach their expiration dates.

One aspect of the problem that has not been addressed by existing solution providers and that even state-of-the-art modern technology cannot overcome is that, if a consumer is able to afford the full price to pay for the newest product (that is, an item that has just been placed on the shelf), they will tend to choose that item instead of items that have been on the shelf for longer, even if those older items have been discounted in proportion to the decline in quality over time. Because of this reality, there is a limit to how much food waste can be reduced.

What I propose is, in addition to the decrease in sale price that is proportional to the decline in quality, I will—through external funding (Figure 1)—develop a feature that enables reduction in price that exceeds the reduction in quality (Figure 2). For example, when a yogurt that has been on the shelf for two days is estimated to undergo a 1% decline in quality, I will use the funds raised to apply a 5% discount. This is expected to lead to consumer appetite to purchase older items.

Figure 1. [References (the below web pages were mostly accessed in July–August 2023):

Question 2. "List 5 gaps in the market for that company, product or service."

[Note:] My answers to this question are based on my incomplete knowledge as of July/August 2023 and are subject to further change and revision as I learn more over the days and months ahead.

#1. There appears to be no solution currently available in markdown automation/dynamic pricing for food-waste reduction that incentivizes a consumer to purchase a food item that is slightly older than the newest ones (“slightly older food item”) by offering a benefit to the consumer that more-than-compensates for the reduction in the quality of that item. If food items are priced exactly at their respective quality levels, people who can afford them will buy the better-quality ones by paying a bit more. This will place an upper limit on how much wasted food can be reduced.

#2. There appears to be no major solution currently available in markdown automation/dynamic pricing for food-waste reduction that presents itself as supported primarily by donation-based external funding, such as from philanthropic organizations.

#3. Some customers might worry about stigma being attached to them if they are always buying items that are lower-priced.

#4. Social-impact-oriented initiatives exist in Japan that incentivize certain types of consumer behavior (e.g., Table-for-Two (TFT)). However, I have not yet found this kind of initiative that is designed to incentivize consumers to purchase slightly older food items.

#5. There currently appears to be no initiative/solution for food-waste reduction through markdown automation/dynamic pricing that can be used as something like an “add-on feature” in conjunction with potentially any of the existing solution providers (see Figure 1 in the first question for some of them) that leverage machine-learning capabilities to optimize and automate markdown operations.

Question 3. "Propose 5 improvements to address the gaps."

re: #1. I am proposing a mechanism that increases the incentive for consumers to purchase slightly older food items by offering extra discounts/benefits to more-than-compensate for the reduction in quality.

re: #2. I am going to pitch my idea to impact-oriented funders (such as impact investors and philanthropic organizations) and raise the necessary funds to realize the extra discounts/benefits to more-than-compensate for the reduction in quality that occurs in food items over time.

re: #3. To address the problem of potential stigmatization, there are two improvements to address this concern.:

First, we will try to make the medium- or even low-price lots appear as the standard. What this means is that we will make visual- and psychology-driven efforts to make a discounted price rather than the full price appear as the standard price for a given product. The goal is to nudge customers to feel that they are being “taxed” when they consider picking up an item from the newest lot with the highest price (full price). There are two possible means to achieve this. First, we will display the prices for the older items on the electronic shelf displays with larger fonts and possibly make them flash. Second, we will shine a different colored light on each section within the shelf containing a different product lot as shown in Figure 3. The section that is furthest from the customers will contain the most recent and therefore most expensive product lot. The color used here can be red, a color associated with danger or warning (*1), to alert consumers about buying items from that section. On the other hand, the sections of the shelf that are closer to the customer (containing items with closer expiration dates) can be lit with colors such as green (conveying peacefulness (*1)) or yellow (invoking caution or awareness (*2)). [The text in purple font indicates material based on advice from ARTHUR'S CONSULTING Ltd.]

Second, I propose that the external funding can be used not only to achieve greater monetary discounts like described above but also to allow the consumer to elect that discount money to be donated to a cause of their choice (social, environmental, economic, medical, recreational, etc.). This feature will be enabled through a smartphone app associated with the supermarket’s loyalty program. Whenever a consumer purchases an older food item, they will be given the choice to choose a cause for the discount money to be donated to. This will attach virtue (in addition to satisfying the need to spend less) to the consumer’s act of purchasing older food items.

re: #4. My idea is an impact-oriented initiative that is designed to incentivize consumers to purchase older food items.

re: #5. We are proposing an "add-on feature" (based on external funding) to further increase the increases in profit for the food retailers that the existing solution providers are already achieving. Therefore, rather than compete against the solution providers already in operation, we can market our feature/service to all of them and help them bolster their offerings to their clients through greater increases in profit.

Figure 3.

References:

*1: “Red Color Psychology” https://www.verywellmind.com/the-color-psychology-of-red-2795821 [Accessed July 31, 2023]

*2: “The psychology behind colors and symbols in safety messaging” https://www.ishn.com/articles/113745-the-psychology-behind-colors-and-symbols-in-safety-messaging [Accessed July 31, 2023]

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