Expired Goods: Pricing Strategies for Today's Market

Photo by Hanson Lu / Unsplash

More Japanese consumers are reportedly buying deeply discounted “expired” or “substandard” foods as prices soar in the country.

Some stores in Japan have reported increased sales in discounted products that are either expired, near their expiry dates, or have their packaging damaged.

Ecolo Marche, a discount supermarket located in a residential neighbourhood in Tokyo’s Adachi Ward, has shelves of products advertised as “expired” in large letters on their price tags.

According to the Singapore Food Agency, the safety of food products is not solely dependent on expiration date. “Best before” dates are for food with a longer shelf life and indicates when the food will be at its best quality.

But “use-by” dates are for highly perishable products such as milk and yoghurt, which consumers are advised not to consume beyond the stated dates.

Memberships went up at Kuradashi, an online marketplace that sells about 3,300 products at low prices, including food products nearing their expiration dates. A company spokesperson told the newspaper that membership in June increased by 25 per cent year on year.

According to The Japan Times, the number of food products in June that have seen or are expected to see price hikes in the first 10 months of 2023 reached 29,106, and has already exceeded the 2022 total of 25,768, citing a survey by credit research firm Teikoku Databank.

In an online survey conducted in October, Kuradashi asked more than 3,000 men and women aged 20 to 80 in Japan how the rising cost of living has changed their lifestyles, reported The Asahi Shimbun.

Some 92.8 per cent of respondents said they “don’t care about the appearance (of products) as long as there are no problems with (the) taste or quality”, while 70 per cent said they “are willing to purchase products that are substandard or nearing the expiration date” because they are happy with the lower prices.

“I do care about ‘use-by’ dates,” she said, adding that the regulations for expiration dates in Japan are so strict that she does not mind if some products are a week or so past their expiration date.

Original article by Thian Wen Li. Updated December 5, 2023. Japanese consumers buy discounted ‘expired’ food as prices soar. https://www.straitstimes.com/asia/east-asia/japanese-consumers-buy-discounted-expired-food-as-prices-soar 

In a recent poll, 70% of Japanese respondents expressed willingness to purchase products nearing their expiration date due to affordability concerns. This action resonates globally, driven by the relentless bite of inflation on consumers' wallets. Even items past their prime attract demand when priced right. But amidst this dynamic lies a crucial question: how can businesses effectively price their products to match supply with demand and minimize waste?

Let's look into some key observations:

Market Disparities: Mature vs. Emerging Markets

In mature markets like Japan and the West, formal discount retailers ease the distribution of near-expiry goods. However, in emerging markets, fragmented distribution channels, dominated by small retailers, pose challenges in pricing, product placement, and logistics optimization.

Varied Consumer Attitudes Towards Expiry Dates

Attitudes towards expiry dates vary by country, often influenced by the absence of formal off-price channels. Yet, at the right price point, even hesitant consumers are willing to purchase near-expiry items, underscoring the importance of pricing strategies.

The Complexity of Expiry Dates

In many Asian markets, retailers shy away from inventory with less than 50% remaining shelf life. As expiry dates approach, there's a rush to clear stock, followed by logistical bottlenecks when unsold items linger in distribution centers, incurring hidden costs.

Balancing Cost with Value

The price a brand or retailer pays for a product may not align with consumer willingness to pay. Data-driven pricing strategies, facilitated by AI, offer opportunities for dynamic pricing management, albeit with concerns about potential cannibalization.

Product Segmentation and Pricing

Everyday essentials command consistent demand at the right price, while discretionary items face variable price elasticities. Segmenting and pricing thousands of SKUs across various expiry dates present a compelling use case for AI-driven pricing analytics.

Navigating liquidation pricing complexities demands data-intensive approaches. At Pollen, we witness this firsthand daily. Successful liquidation hinges on digital workflows, pricing analytics, and diverse off-ramps. By embracing digital solutions, powered by AI and machine learning, we strive to efficiently match supply with demand while minimizing waste.

As each order ships and near-expiry products find new homes with budget-conscious consumers, our conviction grows stronger: a robust demand for liquidation goods exists, awaiting the right pricing strategy. The path to scalable, sustainable liquidation lies in digital innovation, underpinned by data-driven insights from AI and machine-learning, and pricing experimentation.

At Pollen, we're committed to building this future.

If you’re interested in learning more about Pollen’s approach to sustainable liquidation, feel free to explore our website at https://www.pollen.tech/

This article is featuring Michael Schindler’s observations related to dynamic pricing and sustainability. Michael Schindler (LinkedIn) is Pollen's Chief Operating Officer and has a long track record of leading teams, uncovering insights, and driving business results across US, EMEA, and APAC. At Pollen, he’s leading our business teams as well as directing overall company strategy and operations.

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