65 Retail Practices to Sell More, and Waste Less

by Colin Peacock

Food Waste

Food Waste, and preventing food waste can be seen from one viewpoint as a brilliantly simple problem to solve, all the levers are known and yet, it is also bound by the complication of competing priorities, limited store hours, supply chain optimisation, product margin, risk appetite, importance of brand reputation, vendor capabilities and more. These are both limitations and trade offs, both of which need to be considered as you reflect on the list of possible ways below to sell more and waste less.

The 65 practices are broken into aspects around managing the supply side (waste less) and demand (sell more) and by part of the organisation who can influence and action the practices:

First, the Supply Side....(waste less)

Actions for the Stores and Store Operations functions

Management

  1. Create awareness among store associates of the importance of waste reduction, for example, by giving them frequent feedback on actual value of waste
  2. Ensure sufficient workforce is available for timely shelf restocking
  3. Record expiration dates per SKU and stimulate demand for items where expiration date is approaching and excess stock is large
  4. Introduce easy to understand KPIs related to waste, set realistic targets, and give incentives when targets are met
  5. Educate and train store management and employees
  6. Ensure the delivery of promotions in every store is aligned with promotion conditions (especially display) as used in forecasting
  7. Ensure every store executes the markdown strategy perfectly
  8. Introduce in-store final processing (for example, bake-off or butcher)

Shelf replenishment

  1. Put oldest items at the front
  2. Make shelves large enough to prevent OOS
  3. Align the actual number of facings on the shelves (not necessarily equal to planogram) with demand
  4. Create a well-organised and accessible backroom
  5. Use easy-access and handling-friendly crates or boxes (e.g. plastic crates with standardised sizes)

Actions for the Category and Supply Chain Replenishment functions

Replenishment logic

  1. Supply goods for promotions in two waves and use early sales information during promotion of second wave
  2. Use age-based replenishment logic
  3. Allow flexible lot-sizing for items with high waste
  4. Apply a new replenishment logic: using inventory and order up to levels at aggregate level for categories with high substitution willingness (i.e. first determining the aggregate desired number of products for the entire product category and then breaking it down to the SKUs)
  5. Increase inventory, sales and supply data accuracy

Case pack size

  1. Optimise case pack size, making trade-offs between handling costs and waste
  2. Minimum stock Optimise safety stock and commercial display stock to balance customer service and waste
  3. Differentiate target service levels for items with long and short shelf life
  4. Differentiate target service levels for items with high and low average demand for categories with high substitution willingness
  5. Align customer service definitions in management report systems and in replenishment systems
  6. Timely reduction of safety stocks for items near phasing-out or near end-of-season

Actions for the Supply Chain/ Vendors

  1. Discuss options for products with longer shelf lives with current supplier
  2. Select new suppliers with flexible production, short lead times, and longer product shelf lives
  3. Educate and reward buyers for waste reduction
  4. Apply cross-docking
  5. Increase delivery frequency (for example, by combining fresh and ambient products in one truck or use retail DCs instead of direct delivery by suppliers)
  6. Pick orders in the DC during the night
  7. Optimise the balance between the target service levels for the DCs and the stores. Optimise the minimum shelf life left for the store when the product leaves the DC
  8. Use different ingredients or different production technologies to improve products’ image of freshness and the shelf life
  9. Use innovative packaging to increase the shelf life
  10. Cooperate with supplier to exchange operational data (inventory, forecast, actual sales) and KPIs to align production at suppliers with demand
  11. Implement vendor-managed inventories
  12. Implement supply chain synchronisation and push the majority of the inventory downstream as soon as storage space is available

Secondly, the demand side (Sell More)

Ranging, Assortment and Markdowns

  1. Review assortment and eliminate bleeders (waste rate = >80% of sales) thereby increasing demand for substitutes
  2. Stimulate sales for slow movers through better information to consumers (e.g. explaining benefits of organic food)
  3. Offer damaged or ugly food at discounted prices
  4. Only markdown if items would not be sold otherwise (based on actual inventory and demand forecast information)
  5. Optimise the timing and the extent of the markdown

Change withdrawal / shopping behaviour

  1. Reduce space between shelves
  2. Reduce number of batches with different shelf lives on the shelf
  3. Educate consumers on differences between sell-by-dates, use-by-dates, and best-before-dates
  4. Inform consumers on possibilities of using misshapen food items

Reduce demand uncertainty

  1. Increase average demand per SKU - reduce assortment
  2. Apply EDLP strategy

Reduce demand dynamics

  1. Deliver smooth weekly sales pattern, e.g. by having special promotions on days with low traffic
  2. Give additional stimulus to sales during phasing-in or –out of products (extra promotion, taste for free, reduced prices)

Improve demand forecasting

  1. Use different forecasting techniques for items in different situation (whether item is regular, on promotion, phasing-in or out, with trend, and/or with seasonal pattern)
  2. Detect trends and/or seasonal patterns when forecasting demand, and, if necessary, apply different forecasting parameters
  3. Remove promotional sales data when forecasting regular sales (also when selected stores prolong the promotion to avoid waste)

Promotion management

  1. Apply EDLP
  2. Investigate substitution effects and reduce forecasts for items facing cannibalisation
  3. Avoid multi-consumer-unit offers like ‘2 for 1’

Change planograms/displays

Use alternative ways to display items (for example, partly fake items with smaller amount of real items, or use pictures or multi-media) so that even in the face of out-of-stocks there is a customer perception of wide choice and abundant inventory

Only use multiple facings for fast moving items

Improve storage conditions within store (install chilled cabinets with transparent doors)

Change merchandising policies from “Pile ‘em high” to new, store-specific merchandising policies

Assortment

  1. Carry a dynamic assortment for the slow movers/specialties based on the production schedule of the supplier
  2. Remove bleeders or replace them by new items
  3. Add items to assortment that can be used with items near to sell-by-date as ingredients (e.g. fresh soups) or consume on the premises like in food markets

Educate and reward category managers on waste reduction

Align assortment and/or planograms with average demand for individual stores or groups of stores

Offer smaller consumer units


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