The Impact of Retail Pricing on Overeating and Food Waste
Lead Research Organisation:
University of East Anglia
Department Name: Norwich Business School
Abstract
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Organisations
Publications
Chakraborty
(2010)
Go Regular! Who Gains From Large-Size Soda Bans?
in INFORMS Marketing Science Conference Proceedings
Dobson P
(2010)
For a Few Cents More: Why Supersize Unhealthy Food?
in Marketing Science
Dobson Paul W.
(2010)
Fattening Competition
in INFORMS Marketing Science Conference Proceedings
Eitan Gerstner (Author)
(2010)
Dangerous pricing : impact on obesity and food waste
in INFORMS Marketing Science Conference Proceedings
Fruchter G
(2010)
Fee or free? How much to add on for an add-on
in Marketing Letters
Paul Dobson (Author)
(2010)
Wasteful pricing
in INFORMS Marketing Science Conference Proceedings
| Description | The research project has focused on three areas to make a contribution to aid our understanding of retail price strategies and their impact on overeating and food waste. The first area is around the pricing of different portion sizes served in restaurants. Healthcare experts believe that increases in portion sizes served by food vendors contribute to the obesity epidemic. A key finding of our theoretical work is to show that food vendors can profit handsomely by using "supersizing" strategies where regular portion sizes are priced sufficiently high to discourage price-conscious consumers from selecting them, and the prices for enlarging food portions are set so low that these customers are tempted to order the larger portion sizes and overeat. Setting aside the impact of obesity on health-care costs, we show that using supersizing to steer customers toward consuming excessive amounts of food can destroy value from a social perspective; providing another justification for pressuring food vendors to reduce supersizing for unhealthy food. As a public policy response, we consider how "moderating policies" may counter these effects through measures designed specifically to encourage eating in moderation by applying supersizing bans, taxes, and warnings. The second area is around the use of multi-unit pricing in supermarkets and whether this leads to overbuying by shoppers on non-storable items with a short shelf life (e.g. perishable items) that ultimately leads to excess purchases being thrown away as household waste. Food waste is a huge problem in the UK, with households estimated to throw away food worth a staggering £10 billion per year, costing £1 billion a year to dispose in landfill sites (WRAP 2008). Our theoretical analysis shows that while multiple-unit pricing might encourage such waste, it can still benefit consumers with overall better value. This finding follows from the implicit nature of multiple-unit pricing offering greater size choices that can better suit different sizes of households, by its "virtual packaging" nature, where one size effectively becomes multiple sizes without the need to separately package and price different sized items. Even so, if the costs of disposing of the waste are high, then this can negate the advantage of higher consumer welfare and reduce overall societal welfare. The third area is on empirical findings regarding supermarket price promotions and whether these are biased in favour of unhealthy food products high in fat, sugar and/or salt. Our analysis of weekly data on a full year (August 2010 to August 2011) for four UK supermarket retailers (Tesco, Asda, Sainsburys and Ocado) shows that there is a modest bias towards sugary products for price promotions, but no discernible bias towards fatty or salty foods. However, straight price discounts tend to be on relatively more unhealthy products than multibuy deals. Even so, highly prominent deals, notably "buy one get one free" offers, tend to be on relatively unhealthy products. The advice to shoppers is to check carefully what they buy, hunt for bargains but check ingredients and fill baskets for a balanced diet, and buy only what is needed. |
| Description | The research has been cited in the media, with national newspaper and magazine coverage as well as on television, intended to influence the general public's behaviour and attitude towards price promotions on unhealthy foods that have high sugar, fat and/or salt content. In addition, the key empirical research finding on UK supermarkets biasing price promotions towards unhealthy products, especially those with high sugar content, has been cited in the Public Health England report on "Sugar Reduction: The Evidence for Action" intended to influence government policy on tackling obesity. Furthermore, there has been engagement with the grocery retail industry through meeting and advising the UK largest supermarket retailer,Tesco PLC. The research is intended to benefit consumers by encouraging food and drinks vendors to price responsibly and fairly and by making consumers more aware of food/drinks vendors' pricing practices so they can make more informed purchasing decisions which can affect: (a) how much they spend on different food/drink types and quantities; (b) the value for money they receive; and (c) the consequences of their purchases (in respect of how it affects their health if they overeat unhealthy food, consumer excessive levels of alcohol, or throw away uneaten food that needs disposing of in landfill sites with consequent costs borne by individuals and society). In support of this impact objective, so far there has been engagement with the following non-academic users of the research to change behaviour by food vendors and consumers: i. the media, TV programme makers and public audiences (to disseminate research findings and insights to the general public); ii. consumer groups (to provide research results to inform members and for use in lobbying for policy changes and fair business practices); iii. regulators and policymakers (to provide research results and insights to assist in investigations and provide argument and evidence in support of policy changes); and iv. food vendors and suppliers (to provide research insights on pricing and promotional practices and the effects on their customers and identify win/win solutions that benefit firms and consumers alike). There has already been dissemination of the research and its findings to the general public through a range of media, including the national press, television, radio and public lectures: • National press articles in The Times, The Guardian,, The Daily Mail and The Telegraph quote findings from Professor Dobson in relation to the research, registering impact on the public through comments on the articles and the articles being shared across social media (e.g. see http://www.dailymail.co.uk/news/article-2236037/How-buy-one-free-deals-fuel-obesity-crisis-Offers-favour-unhealthy-food.html; http://www.dailymail.co.uk/femail/article-1255562/Why-supermarket-bargains-end-costing-more.html; http://www.guardian.co.uk/business/2010/feb/22/supermarkets-cynical-price-manipulation; http://www.thetimes.co.uk/tto/life/food/article3024116.ece); http://s.telegraph.co.uk/graphics/projects/fat-Britain-obesity/index.html • National and regional television coverage of the research relating to pricing practices and how consumers might be misled by pricing offers, using interviews with Professor Dobson, including Channel 4 Dispatches ("Secrets of Your Supermarket Shop" broadcast on 21/1/2013 - http://www.channel4.com/programmes/dispatches/episode-guide/series-118/episode-7), BBC News (broadcast on 27/11/2010 - http://www.bbc.co.uk/news/business-11853318) and ITV Tonight Programme ("Supermarkets' Super Profits" broadcast on 1/4/2010), and Mustard TV ("This Week" 30-minute panel discussion broadcast on 21/1/2016 - http://www.mustardtv.co.uk/episode/this-week-62/). • Coverage on national and local radio, including interviews with Professor Dobson on BBC Radio 4: You and Yours (8/3/2012) and Future Radio (28/11/2011). • Public lectures by Professor Dobson on "The Lure of Supermarket Special Offers: A Healthy Choice for Consumers?" at UEA Norwich (29/11/2011), UEA London (21/11/2012 - with supporting promotional video - http://www.youtube.com/watch?v=55QNFrto8rk) and The Forum, Norwich (3/6/2013). Also, in order to reach consumers more directly and engage their support to lobby for changes in business practices regarding how food vendors price and promote their goods, the research team has advised the UK Consumer Association - "Which?" (http://www.which.co.uk/) - on the pricing practices used by the UK's leading retailers and how this can mislead consumers in respect of the value for money on offer and lead consumers into making ill-informed purchasing decisions. Professor Dobson provided detail and commentary on the range of practices employed by supermarkets in an article published in its flagship consumer magazine, Which? ("Supermarket Price Tricks Exposed", October 2010 - www.which.co.uk/documents/pdf/p60-63_supermarkets_r3-231242.pdf). This magazine is distributed to all 700,000 members of Which? A web-link page to the article received 77 comments (see http://conversation.which.co.uk/consumer-rights/the-supermarket-special-offers-that-arent-so-special/). Subsequently, Which? initiated a large-scale empirical study, drawing on the research and advice from Professor Dobson, to examine the circumstances in which pricing offers could mislead consumers (http://press.which.co.uk/whichpressreleases/supermarket-special-offers-not-so-special/). The study then fed into the Office of Fair Trading's investigation of retailers' use of complex pricing which resulted in the leading UK supermarket retailers signing up to a set of principles on price promotions and offers to stop practices that could mislead consumers (as announced on 30/12/2012 - http://www.oft.gov.uk/news-and-updates/press/2012/116-12). This in turn has led to a super-complaint by Which? to the Competition and Markets Authority which has duly reported on this matter in July 2015 (https://www.gov.uk/cma-cases/groceries-pricing-super-complaint). Engagement has also been sought with industry participants in order to influence pricing behaviour in searching to identify win/win solutions. To this end, meetings and discussions with Tesco (the UK's leading food retailer) have already taken place (including a presentation to senior marketing managers and the social purpose team at Tesco HQ at Cheshunt on 21/3/2013), in the context of them developing a corporate responsibility project run by a corporate-level "social purpose team" with the research being relevant in two of its three themes: "healthy living and tackling obesity" and "reducing food waste" (the other theme being "youth opportunities"). These are themes which all the leading food retailers are involved with, notably in relation to their participation and support for the Government-backed "Responsibility Deal" as a voluntary scheme promoting responsible marketing and product development with a view to supporting healthier consumption. Another route to increasing prospects for making impact has been through raising awareness of the research with other researchers working on similar themes, who themselves are engaging with the same set of stakeholders and non-academic users, so can help spread the research findings amongst these users. To this end, the research has been promoted by the ESRC to fellow researchers via an "Evidence Briefing" ("Food price promotions and public health", February 2014 - http://www.esrc.ac.uk/_images/Food%20price%20promotions%20and%20public%20health_tcm8-30007.pdf ), and the ESRC-sponsored magazine "Britain in 2014" (in the article "Too Good to Refuse", November 2013). |
| First Year Of Impact | 2009 |
| Sector | Agriculture, Food and Drink,Retail |
| Impact Types | Cultural,Societal,Economic,Policy & public services |
| Description | Reference in Public Health England report "Sugar Reduction: The Evidence for Action" - October 2015 |
| Geographic Reach | National |
| Policy Influence Type | Citation in other policy documents |
| Impact | The report by Public Health England provides evidence on the adverse health effects of overeating sugary products and the need to curb sugar consumption amongst UK consumers. Reference is made to this ESRC project on page 18, figure 6, in relation to "Price Promotions", where it quotes the ESRC project as "Promotional bias towards discounting sugary food items and fatty and sugary items in UK supermarkets.In particular, 'buy one get one free' deals are heavily skewed towards less healthy products (source: Economic and Social Research Council)", which is quoted from http://www.esrc.ac.uk/news-events-and-publications/evidence-briefings/food-price-promotions-and-public-health/ |
| URL | https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/470179/Sugar_reduction_The... |
| Description | Contribution to Telegraph newspaper article on "How did Britain get so Fat?" published on 26 February 2016 |
| Form Of Engagement Activity | A press release, press conference or response to a media enquiry/interview |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Media (as a channel to the public) |
| Results and Impact | Contribution to a Telegraph newspaper article written by Tom Rowley and Ashley Kirk, titled "How did Britain get so fat?" and published on Friday 26 February 2016. The article quotes Professor Dobson and the research findings of the ESRC project: 'According to a 2011 study by the University of East Anglia, supermarkets are more likely to promote unhealthy foods. Foods on special offer were 20 percent more likely to have red "traffic light" labels for high sugar and 50 percent more likely to have the same designation for high fat than non-promoted products. "Often the most frequently promoted products are high in combinations of concerning constituents such as fresh desserts and chocolate, which have high levels of both sugar and fat," said Prof Paul Dobson, head of the university's Norwich Business School.' In addition, the article provides an infographic representation of evidence drawn from the ESRC study on which unhealthy food products are highly price promoted. |
| Year(s) Of Engagement Activity | 2016 |
| URL | http://s.telegraph.co.uk/graphics/projects/fat-Britain-obesity/ |
| Description | Participant in panel discussion for 30 minute TV programme about obesity and sugary food consumption shown on Mustard TV |
| Form Of Engagement Activity | A broadcast e.g. TV/radio/film/podcast (other than news/press) |
| Part Of Official Scheme? | No |
| Geographic Reach | Regional |
| Primary Audience | Media (as a channel to the public) |
| Results and Impact | A 30-minute TV programme called "This Week" shown on Mustard TV at 7:30pm on Thursday 21st January 2016, as a panel show with three expert participants (of which Professor Paul Dobson was one of them) discussing the British Heart Foundation finding that 31% of children leaving primary school in the East of England are obese or overweight, and their call for a ban on adverts for unhealthy foods prior to 9pm and a 'sugar tax.' Professor Dobson spoke on the pricing drivers of overbuying and overeating and possible industry and policy responses, including a sugar tax, citing evidence from the ESRC project. |
| Year(s) Of Engagement Activity | 2016 |
| URL | http://www.mustardtv.co.uk/episode/this-week-62/ |
| Description | The lure of supermarket special offers : a healthy choice for shoppers? |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | Regional |
| Primary Audience | Public/other audiences |
| Results and Impact | Special offers are big business for supermarkets, with over £50bn in sales and two-fifths of all spending. Price promotions can offer great savings for consumers. BUT...while the deals are good for our wallets, are they good for our waistlines and health? Do supermarkets over promote unhealthy foods and encourage excessive consumption? Are special offers fuelling the UK's obesity epidemic? This lecture examines these concerns and presents new evidence on the nature of supermarket price promotions. As a result of the positive feedback from this presentation as an inaugural lecture, I was invited to repeat and adapt the same lecture for (I) an academic seminar to the ESRC Centre for Competition Policy at the University of East Anglia, (ii) presenting a lecture to a public audience in London hosted by the University of East Anglia, (iii) presenting a lecture to a public audience in Norwich as part of the University of East Anglia's 50th Anniversary celebrations, and (iv) presenting an invited talk to Tesco senior managers in corporate social responsibility at the headquarters of Tesco PLC |
| Year(s) Of Engagement Activity | 2011 |
| URL | http://www.uea.ac.uk/mac/comm/media/press/2012/November/supermarkets-offers-paul-dobson |