Innovator's Edge in Supply Chain Transparency and Food Waste Reduction

Abstract

New digital technologies are transforming fresh produce retail, enabling real-time freshness tracking and allowing retailers to share valuable information—like sustainability certifications—directly with consumers. These innovations promise not only to streamline supply chains and reduce food waste but also to redefine competitive advantage. In a duopoly with freshness-sensitive demand, we explore whether an innovator—the unique adopter of supply transparency technology—gains a competitive advantage over a follower who adopts the technology when her competitor has adopted it. Our analysis reveals that the innovator can achieve higher profits, reduce food waste, enhance consumer satisfaction, and increase demand fulfillment. When consumers value transparency, the innovator’s advantage grows, reshaping the market in her favor. Notably, the innovator curbs more food waste through a "market shrinkage" effect, where the competitor’s market share contracts, easing supply-demand imbalances and mitigating the risk of excess inventory. Meanwhile, the follower's gains are limited, as the non-adopter passively benefits from the innovator’s proactive choices.  We also find that markets with fewer competitors are more inclined toward industry-wide adoption, suggesting that mergers in grocery retail could further amplify food waste reduction and consumer demand satisfaction. Finally, we extend our findings to cases involving freshness-based discounts and sequential technology adoption.

Keywords: fresh produce retail, competition, technology, transparency, innovator's advantage, food waste