July 29, 2015 Industry news
Food waste is a global phenomenon and has an impact on our environment and society in four ways:
- The energy and resources required to produce food
- Food disposed of by retailers, wholesalers and food service operators
- Food wasted at home
- The energy and resources required to dispose of food waste
Here in the UK, we continue to waste a significant amount of food. According to waste experts WRAP, of the 7.0 million tonnes of food wasted, approximately 60% was avoidable whilst a further 17% was possible avoidable.
A problem of this size has social, environmental and economic impacts on our society. Retailers, wholesalers and manufacturers usually discount food close to its ‘best before’ date in an effort to avoid waste, although this only affects 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, use of new technology in sales and demand forecasting (including automatic sales replenishment) is helping to narrow the gap between forecast and actual sales. Better inventory management allows retailers to maintain accurate stock levels. Improved on-pack labelling and guidelines are helping shoppers to take better care of food at home enabling them to keep food for longer.
Tesco are taking an active role in reducing food waste, which covers the entire spectrum of their retail operations. When they started looking into instances of food waste, the in-store bakeries were the worst offenders. As a result, stores are encouraged to bake smaller batches, more frequently, throughout the day. They’ve also been working with suppliers to extend the shelf life of some products.
Many retailers set high standards to which fruit and vegetables have to conform, which prove a headache to growers, after all a carrot with a few blemishes, is still a carrot. Asda announced a trial earlier this year, where they would sell mis-shapen vegetables at lower prices to reduce food waste in the fields. Under the banner of ‘Wonky Veg’, the trial is taking place in 5 stores.
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. 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. Thankfully, parliament in this country is not as keen to take the same route and would prefer greater collaboration throughout the industry.
Shoppers also hate wasting food. Retailers have recognised this and started 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 have 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.
Here at GS1 we have a number of solutions designed to improve inventory management of fresh and chilled foods. One such solution (in use in many markets around the world) is to encode additional information into a bar code, such as batch code, sell by dates and even country of origin.
By encoding additional data into the bar code, the product is able to be scanned throughout the supply chain, the store, right through to the point of sale. This can be achieved by deploying the GS1 Databar (a linear barcode) or a two dimensional carrier such as a QR code.
There are several benefits to using the Databar, product can be shipped in the correct order, during a conversation with a store General Manager, one of his biggest frustrations was receiving date coded product from his company’s distribution centre with shorter shelf life dates than stock already in the store. This caused the in store team operational issues, especially in the replenishment process.
The Databar can also prevent out of date product being sold at the checkout as the scanner captures the sell by date (also applicable in the event of a food safety incident). 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 mark downs.
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 the idea and would this help them at home to manage fresh foods more effectively. Half of the shoppers who took part thought the Databar was a good idea, 66% thought managing food waste at home was very important and over half thought that applying a discount at the till was also a good idea.
Moving forward, there will be more progress made in lowering 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. Being seen to actively reduce food waste can only enhance the retail brand’s reputation with shoppers.
The biggest area where we can all make a difference to reduce 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 will continue to develop new applications to support our members, if you’d like to know more about the benefits of the GS1 Databar, we’d be happy to share them with you.
This article has been adapted from a column written by Ian Walters, Head of Retail at GS1 UK for Essential Retail.