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Comment: How retailers are coping with the challenge of food waste

Food waste is a global phenomenon and has an impact on our environment and society in four ways:

As a nation, we continue to waste a significant amount of food. According to waste experts WRAP, of the seven million tonnes of food wasted in the UK, approximately 60% was avoidable whilst a further 17% was possible avoidable.

The size of the problem has both a social, environmental and economic impact on our society. Retailers, wholesalers and manufacturers usually discount food close to its 'best before' date in an effort to avoid waste, although this is only a small percentage of the loss. From a retailer's perspective, fresh food sales account for a significant amount of a store's revenue. As it's usually the first department shoppers' encounter when entering the store, it's important to retain the image shoppers are looking for in both range and availability.

The moral and social dilemma between shoppers demanding choice and retailers meeting those needs is complex. The environmental and commercial impact however is more measureable. Food waste can account for as much as 4% of a retailer's revenue, so it's critical that this is an area of focus as food retailers strive to become more efficient and drive cost out of the business.

Currently there are many industry initiatives aimed at reducing food waste, such as:

The onus in reducing food waste doesn't just rest with retailers, there are several examples of joint retailer/shopper initiatives as well as government and other bodies associated with the industry all adding their contribution. And the charity Fairshare has links to a number of major grocery retailer’s in the UK where unsold food is redistributed to communities and families where it’s needed the most.

In France, the authorities have taken a stronger stance with the industry to reduce food waste by introducing legislation requiring supermarkets over 4,000 sq ft to link with a charity by July 2016. Failure to comply could result in a fine or imprisonment. Parliament in this country is not as keen to take the same route and would prefer greater collaboration throughout the industry.

Shoppers too hate wasting food, and retailers have responded by beginning to move away from 'buy one get one free' promotions to a 'mix and match' mechanic, where shoppers can make savings by buying across a wide range of featured products. Aldi for instance has an ongoing 'Super 6' promotion where six items of seasonal fruit and veg are offered at the same retail price, allowing shoppers to buy what they need rather than too much.

And existing technologies, such as barcodes, can also help improve inventory management of fresh and chilled foods. This is achieved by means of adding additional information to a barcode such as batch code, sell by date and other variable data. By encoding additional data within the barcode, the product and its associated data can be scanned throughout the supply chain and in-store through to the point of sale.

There are several benefits to barcodes like these that can help reduce food waste.

Importantly, product can be shipped and put on sale in-store in the correct date order.  One of the biggest frustrations of store managers is receiving date-coded product from a distribution centre with shorter shelf life dates than stock already in the store. This causes the in-store team operational issues, especially in the replenishment process. Using date-coded products throughout the supply chain means product can be shipped and sold in date order.

Encoding dates in the barcode can also prevent out-of-date product being sold at the checkout, as the scanner captures the sell-by date. And in the case of product approaching its 'sell by' date, store management can apply an automatic price discount according to the time left before the product becomes unsaleable. This allows better management of any stock markdowns, encouraging sales rather than wasting food. Of course, additional data stored in the barcode, such as the batch number, can also be used in the event of a food safety incident, helping with the recall.

To assess shopper reaction in this country, GS1 UK commissioned shopper research earlier this year involving 1,000 shoppers. We wanted to know what they thought about food waste, and if date-encoded barcodes would help them at home to manage fresh foods more effectively.

Moving forward, there will be more progress made in reducing the amount of food wasted, through better forecasting and inventory control. Retailers not only want to be seen to be offering the best range of fresh and chilled products, available when shoppers demand them, but being seen to actively reduce food waste can only enhance the retail brand's reputation with shoppers.

But of course the biggest area where we can all make a difference to reducing food waste is by making the next generation of consumers (our children) more appreciative of food in general, but aware of the impact and consequences of letting food go to waste.

GS1 UK will be providing a regular column for Essential Retail on technology in relation to retail industry standards and the wider supply chain.

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