The Impacts of Scheduling price Discounts for Perishable Foods on Retailer Performance

서지정보

· 발행기관 : 한국유통학회
· 수록지 정보 : 유통연구 / 18권 / 4호 / 107 ~ 125페이지
· 저자명 : 정재권, 최대헌, 박일진

초록

Perishable foods, which spoil within a short time, and therefore experience significant value deterioration, represent a product category that is important to success in the food retail industry. This is because perishable foods can significantly influence sales in food retail stores, and are considered by consumers as an important indicator of a store’s quality.
Despite the importance of perishable foods, food retailers face challenges in pricing perishables, because they require a more complex pricing procedure than non-perishable products. Unlike non-perishable products, perishable foods experience a significant loss of value as they approach their expiration dates. Also, it is true that consumers’ willingness to pay for perishable foods generally decreases as the expiration dates approach. Consumer confidence in perishable foods decreases as expiration dates come closer, since fewer days remaining can mean deterioration of freshness, and foods that have remained in inventory for a long time are thought to be inferior. Therefore, it is important to dynamically manage the price of perishable foods to compensate for the value deterioration associated with the approaching end of the selling period.
Many previous studies have investigated the pricing of perishable products, and most of these studies focused on the optimal price structure to maximize profit. A recent study has investigated the effects of discount frequency on retailer performance, using a simulation model. However, these prior studies have failed to show the effects of the price discount starting time on retailer performance. Therefore, this study aims to demonstrate how the price discount starting time for perishable foods could affect retailer performance in terms of inventory aging, waste due to unsold products, and sales volume. A simulation model, which represents the general business process in the food retail stores, and conducted in the C programming language, was built. The general business process at food retail stores and consumer demand assumptions in Chung and Li(2013ab) was used to build the simulation model in this study.
The results of this study present the value of an earlier price discount and its ability to increase retailer sales, reduce wastage due to unsold products, and mitigate the inventory aging of perishables. Specifically, this study found that for a specific perishable food, for which the average demand exceeds supply, an earlier price discount does not assist retailers in improving performance. When the average demand is equal to supply, an earlier price discount slightly increases sales volume. As for wastage due to unsold products and inventory aging, retailers can expect positive impacts from an earlier price discount. For a specific perishable food, for which the average supply exceeds demand, significant positive impacts can be expected from an earlier price discount. An earlier price discount can enhance sales volume, reduce waste due to unsold items, and mitigate inventory aging. These positive impacts are expected to be more significant for perishable foods that have relatively longer shelf lives. With the results of this study, we propose that retailers should discount the price of perishable foods earlier, but at a smaller rate, by considering the value lost as the remainder of shelf life decreases.
This study presents valuable practical implications and academic contributions, which provide a better understanding of the value of earlier price discounts for perishable foods.
This study has several limitations. This study has investigated the general impacts of an earlier price discount for perishable foods on retailer performance; on the other hand, it does not show the optimal time and rate of price discounting. Furthermore, this study assumed that every consumer behaves rationally, and considers their consumption needs when making a purchase. However, some consumers may not behave rationally when purchasing perishable food. Further studies considering these issues may provide a better understanding of the positive impacts of an earlier price discount for perishable foods.

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