Nearly every supermarket in America and much of the world follows the same business model. Supermarkets promote packaged items from brand names in order to bring people into the store but rely on perishable items to make a better profit.
In these supermarkets, customers who enter the store are forced to pass by abundant, bright displays of polished fruits. As customers pass by, they load up their carts with these perishable items, which stores can make a large profit off of. Supermarkets also profit off of meats, seafood, bakery items, and deli meals. The supermarkets are arranged to expose consumers unknowingly to these items to convince them to purchase them because the margins made are far greater than those of processed goods from brands.
However, the same perishable foods that are meant to bring in a profit also make up the biggest portion of costs for supermarkets. The large displays meant to attract customers generally go unpurchased, which leads to huge amounts of waste. In fact, it is estimated that $15 billion is wasted annually on produce in supermarkets.
Recently, some supermarkets, most notably Sprouts, has switched to a different business model in an effort to lower costs. Sprouts has changed their advertising, focusing on produce itself rather than brand-name foods. They have also utilized "low displays" to avoid wasting on abundant piles of foods. Because of this, Sprouts is the fastest growing supermarket chain currently and is one of the fastest growing businesses overall in the United States. Other supermarket chains that are adopting their methods are hoping to reap the same benefits by ditching the traditional and costly conventional supermarket model.
Works Cited:
https://qz.com/223190/the-disruptive-supermarket-revolutionizing-how-the-us-buys-produce/
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Teagan, this was an interesting piece. It was a window into the economics of an industry that not many people think about. What fascinated me especially in your post was how reducing waste actually helps profits. This seems obvious at first to us as students of economics, but I think corporations have a different goal in mind. The large corporations must be operating on such a scale that the waste incurred through the displays is not enough to make them stop doing it. It's a sad fact of reality that food is simply wasted this way, but nature of the American economy is such that it is allowed, perhaps even encouraged, to do things like this. I'm glad that Sprouts is changing the norm and reducing waste. Whether or not it is a moral choice or an economically driven choice, in the end it doesn't matter. What matters is that food is being saved. Thanks for a great post!
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