Like other sectors handling food, the retail industry has struggled with how to address the national food waste crisis. But this $18 billion problem also presents retailers with opportunities to address the challenge. Innovations in reverse logistics can help retailers divert food from the landfill or the compost pile to where it’s most needed, dramatically reducing costs in the process.
According to ReFED, a multi-stakeholder nonprofit committed to reducing food waste, U.S. retail enterprises generate about 16 billion pounds of waste a year. This astounding figure means each retail location in the U.S. must contend with millions of pounds of spoiled vegetables or expired vegan wraps per year.
But within this massive social, environmental and business problem lies an economic opportunity. In the form of unsold kale, pineapples and yams, retailers are surrounded by cost saving opportunities: ReFED estimates that the average value of wasted food in retail is about double the profits from food sales. For managers dealing with notoriously low margins, the savings from reducing food waste could be an enormous.
Retailers are already taking steps to lower the amount of food waste they generate.
For example, a few chain retailers, such as Walmart, employ basic customer engagement campaigns, issuing reminders to help buyers make conscious decisions on food purchases. Kroger has committed $10M to find new solutions to food waste. Others are increasingly donating surplus food to nonprofit organizations.
These helpful strategies are a big step in the right direction, but more can be done. To scale up food recovery to a level that matches the size of the problem, retailers must tap into new, data-driven reverse logistics technologies to answer this fundamental question about every item: What, Where and When?
The management guru Peter Drucker wasn’t a food waste crusader, but he did understand exactly how to begin solving the problem. To paraphrase, “if you can’t measure it, you can’t manage it/grow it/improve it.”
A decision engine for the back of the store can offer item-level transparency and tracking, creating recovery options for each unsold, returned or aging food product. Whether waste or recovered, this allows any grocer to measure what happens with every organic item they don’t sell down to the SKU level.
Managers can use this highly specific level of data to donate food more effectively and make more precise purchasing decisions. For example, knowing not only the number of bananas that are unsold, but also when a certain shipment is set to over ripen can enable the retailer to a) send the bananas to donation centers before it’s too late and b) more accurately estimate when and how many new bananas to order. Vast amounts of data combined with machine learning technology can even allow stores to predict when these types of donation events will occur in the future so donation partners can plan in advance...or so retailers can find and create new opportunities to monetize soon to expire products.
Data-powered solutions open up new recovery opportunities that stores may have missed. The same smart systems also allows entrepreneurs, food banks and homeless shelters greater transparency into the kinds of items available at stores – optimizing matches between retail stores and waste reduction pathways . Retailers can also bolster their corporate responsibility strategies by tracking where their donated items end up – and have a data trail of the efforts they’re making to reduce food waste and give back to their communities.
For retailers that are open to new strategies and new technologies, the opportunity exists to reduce the social and environmental impacts of the food waste they generate – while also recouping associated economic losses.
-Scott Mackey, Smarter Sorting