2022 Food Waste Reduction Planning - Six Key Questions for Retailers

by Colin Peacock

Food Waste

Over 200 participants representing over 40 grocery retailers were able to support the six working group meetings over two days on November 17th & 18th 2021. The themes explored included expiry date visibility, the true cost of food waste, innovative food surplus exit strategies, self-service markdowns, dry misting and finally, innovations in bakery waste.

Out of these discussions, and the sharing of results from case studies, emerged six questions that retailers might like to reflect upon as they seek to build their 2022 Food Waste reduction plans. Its unlikely that the answers will all be a simple "yes", however, based on the participants responses, it would be hard to conclude that the answer to Q1 should be anything but a yes.

1) Should we make an assessment of the potential of the 2d data matrix bar code and the new visibility it can deliver of the expiry date? In the meeting, the group heard from leaders from Woolworths Australia, updating the group on progress made since their presentation in 2019, and their early and impressive results from the deployment of 2d data bar codes in the protein category. The key themes from the discussion were firstly around the scanning process, what does it take to upgrade retailer POS systems and then the scan speed, will this new bar code slow down the customer? The second theme was related to suppliers, and questions around their capability (2d bar codes are less easy to print) and the true cost to upgrade their in-line printers to apply the 2d bar codes, can it be zero cost? Finally, the third theme was about implementation, with the first point being that there are so many use cases to go after, choosing where to start is important, with the second being that the full benefits can only be realised when the industry has fully adopted the codes.

2) Should we do some analysis of what food waste is truly costing our business? Decades ago managing food waste was easy, you simply chucked all the out of date food in the dumpster! However, this is not the case today, and the exiting of food surplus in a responsible way is a priority for all retailers. However, there are costs associated with the exit processes, from lost profits on markdowns, to the cost of building apps and software to manage the markdowns and donations, to consumables such as recycling bags, to costs to transport food waste to other destinations, etc, and then store associate and management hours to see over the whole process. And that list excludes the sanctions should any of these processes break down. In this session, Professor Lisa Jack shared with the group a true cost of food waste model, populated with data from the participating retailers to reveal the extent of these costs, in the example shared, on fish. Her next steps are to populate the model with additional retailer data and then publish a report and the model for retailers to consider for adoption. The benefits for this model articulated by the participants were firstly that the model will create new visibility to the full cost of wrong forecasting, having too expansive assortments, shipping too large case sizes, etc. Secondly, by knowing the costs by exit route, businesses can consider potential cost savings with each, and save costs by prioritising one [lower cost] exit route over others. and finally, with the full costs of food waste exposed, these costs can then be added into any business cases that require new investments in people, resources and new technologies.

3) Can we be more imaginative and accelerate the pace of innovation on food waste? With over 60 retailers regularly participating in the ECR working group, the group regularly hears updates on breakthrough food waste innovations, from re-purposing (Sonae), to community donations (Tesco), to dynamic pricing (Nemlig) and on this occasion from Iceland, who shared their holistic approach to exiting food surplus from their business, and at this meeting, there was a lot of discussion on their policy to offer free products to their online customers if the expiry date was on the same day. As the group learnt, Iceland were not the only retailer offering near expiry date items free to the customer, one retailer shared how they would send flowers on their last day to online customers. While the discussion on whether this was right for the retailers and their stores, the group could agree that there is a dearth of good innovation in the exiting of surplus food from dark stores and fulfilment centres, it was suggested that the Iceland free product idea could be a good solution for this context.

4) Have we thought about asking our shoppers to "mark down" the close to expiry date products themselves? In grocery stores, it is not uncommon to find stores where over 75% of customers are scanning their own goods and paying, so what could be next, and why should it not be the application of the expiry date based price discount? In this session, Sebastian from ICA, shared with the group his learnings to date of a system introduced in June 2021, click here for short thirty second video, which with heavy store level marketing he believes can expand, adding "theatre" to the shopping experience while at the same time saving store associate labour hours. Concerns raised by the group centred on the possible misuse and abuse of the discounts, however, others pointed out that some of these same risks and more are also present at self-checkouts. The other big concern was that this will not remove the absolute requirement for the manual checking for expiry dates, it will simply just reduce the number of items to check and mark down, so is it really worth the effort?

5) Should we in 2022, revisit the "dry misting" technology? The technology, click here for video, has been available for decades but other than with a few retailers, it has never scaled across any one retailer or country. But is that about to change? And is the time now right to support a business case built around a better shopping experience in produce, a reduced reliance of and need to reduce plastic packaging, and lower food waste? For one of the working group retailers, Albert Heijn, the answer was a big yes, and in the meeting their dry misting leadership team shared with the group, the results from their estate wide deployment, including a 44% reduction in waste on bananas. Given that this technology is not new, most of the group had started the meeting with the mindset that this was not going to be that interesting for them, but as one retailer put it, after reflecting on the case study results, they shared that if this really was a way to improve the shopping experience, to reduce plastic and food waste, what really is there not to like about dry misting?

6) Finally, is 2022 the year when we take a fresh new look at bakery waste? For most grocery retailers, the volume of waste from the bakery category will account for 35-40% of all the food wasted in the store. In this highly inspirational session, the group heard a great case study from Meny, where they not only reduced bread waste by 34% but also grew sales, the group also heard from Albert Heijn, on their "bread of yesterday" programme. For retailers looking to refresh and update their bakery food waste programmes, the following ideas could be considered. The first is to ensure that the ownership and the single directly responsible leader of the bakery waste programme is the category manager / merchant. The second is the importance of always listening to the shopper, how would they behave if some items were out of stock in the afternoon? how would they respond to a half baked bread being presented in the afternoon? how would they respond to recipe ideas and other ideas to help support reduced bread waste? Finally, for in-store production, every business needs a "fit for purpose" in-store fresh production planning system, and in the Meny case study, they adopted a process of co-creation with the stores, to ensure that there was one system that leveraged data to create the forecast, based on historical sales, inventory, etc, and that was also agile in a way that meant that the bakers in the store could easily adapt and flex the central forecast to best meet local needs. With the buyer having perfect visibility to these decisions and actual production, sales and inventory, the category can be optimally managed for sales and waste.

If you would like to join the food waste & markdown working group and / or get the slides / recordings from any of the six sessions please email Colin Peacock at colin@ecrloss.com


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