Donating to food pantries does wonders for the public image of grocery store chains.
As it turns out, food donation is also great for the stores’ bottom line—but can result in higher food costs for customers.
Northeastern business professor John Lowrey recently published a paper stating that donation of perishables improves stores’ profitability by making room for more appealing—and higher priced products—and drawing discerning rather than price-conscious shoppers.
“If I’m replacing low-quality goods and only having fresh, high-quality, high-priced products, the markup will be higher on average,” he says.
Food donation is big business, and the more than 200 Feeding America member Food Banks across the US are reliant on retailers for their donations, Lowrey says.
“Just over 30% of the total food supply for food banks comes from retailers, with a lion’s share from hypermarkets like Costco, Walmart and Sam’s Club,” he says.
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