Food waste is a major global problem, not merely in terms of wasted goods that could support a person’s life, but also in terms of environmental and economic damage. In a new report a number of measures are considered through which retailers can better support consumers to reduce their waste, including improving the freshness of items in-store as well as reducing package size and promotions that create consumer oversupply.
Wasted food has been a topic of some interest in recent years as the scale of the problem has started to filter through to consumers, governments and businesses alike. Globally, around a third of all produced food is discarded, which, considering the environmental impact of production as well as the social issues pertaining to global hunger, is more than simply a shame. The environmental impacts of food waste in the UK are also considerable; food sent to landfills to decompose produces the equivalent of 1/5 of all the cars on the UK roads in terms of greenhouse gas emissions, while many of the nutrients contained in the plant material are wasted; additionally the wasted food equates to a loss of £250 to £400 a year per household.
In a bid to reduce the amount of wasted food within the wider supply chain the European Commission has set up a working group to address the issue, and has set a target to halve the per capita food waste at the retail and consumer level by 2030. Retailers in many EU member states have, following considerable government and consumer lobbying, seen fit to end their practice of purposefully spoiling thrown away food – some, particularly in France, are instead delivering what is still edible to food banks. In a new report from Oliver Wyman, titled ‘Reducing food waste: how can retailers help?’, the consulting firm considers the wider phenomenon of food waste, as well as the moves retailers can make to reduce the amount of wasted food by optimising their supply chain and meeting customers’ needs.
According to research into the major sources of food waste, the report notes that by far the largest food waste is the result of household consumers at 61% of all waste*, followed by the supply chain, at 17%, and large consumers (e.g. restaurants) also at 17%. Retail stores, although a lack of transparency by the majority of stores makes the figure an estimate, represent just 5% of all wasted food. Unfortunately, the environmental damage of waste becomes more pronounced the higher up the food supply chain, with the consumer end also the most costly in terms of waste.
Different factors influence the loss of food in different parts of the supply chain. Immediately and post-harvest, spillage, grading and improper storage can see product lost, while in the processing production and distribution stage, overproduction, poor cosmetic quality and a range of production related mishaps can see product dumped. At the retail supply chain level a number of factors influence loss, including overstocking of fresh products and poor supply demand forecasting. At the store level a range of factors could see shelved products binned, including improper handling, delivery of near use-by-dates and the cosmetic appearance of stock. Consumers are to blame for a number of factors that influence waste, including buying too much, consuming in the wrong order, poor storage, misinterpretation of best-before dates and general errors in preparation.
Particularly at the consumer level, loses have grown over time on the back of increased income and changes to consumer behaviour. Some of these changes are structural, with constant work pressure reducing the time in which consumers have to relax and cook, and sometimes upsetting cooking schedules. While the structural conditions are difficult to challenge, a number of factors influencing waste can be better organised.
The research highlights that retailers have been actively seeking to reduce shrinkage in their supply chain for a number of years, as a reducing in waste could save large stores hundreds of millions while improving freshness – which is a key driver for consumer sentiment towards shopping at specific stores. The report highlights that stores can make gains in these areas through a number of relatively simple methods within their wider supply chains.
One move is to improve the handling of fresh food throughout the chain as a whole. Many perishable foods are relatively delicate, requiring specific conditions to remain in optimum condition – buying from local suppliers to reduce transit time is one means. As consumers continue to be highly influenced by the cosmetics of food in their aim for freshness, improving the delivery of fresh products not only sees them leave the store shelves faster, but also reduces waste as they stay viable longer. Getting the supply/demand picture for specific stores, times of the year and special events remains key in reducing waste, with a range of tools now available for retailers to better plan their purchases. Retailers can also support suppliers reduce their waste, by, for instance, collaborating on demand planning and reducing stringent rules surrounding product grading.
While retailers can collaborate with their respective suppliers and influence rules surrounding cosmic requirements, influencing the behaviour of consumers – the largest and most damaging wasters – is also something that can, with a range of measures, be achieved. The consultancy notes two major areas in which retailers can support consumers to reduce their waste.
The first is a focus on bring products to the shelves faster, such that they thereby have longer shelf-life both in store and in the homes of consumers. As lifestyles change, an unplanned missed day, or two, of cooking means that foods with longer shelf-life are more likely to be eaten. Here, again, the treatment of food is as important as the velocity of its progression through the supply chain – food that is properly treated last longer and, the research shows, extra costs associated with specific treatment can be recouped through improved revenues from consumers keen to buy fresh.
Additionally, retailers can support a reduction in waste by selling products in reflection of what a consumer needs, rather than oversupplying them through large pack sizes and multi-buy promotions on perishable products - which can mean customers have little choice but to buy more than they need or, retailers can make it so cheap that customers buy food on the offchance that it might get eaten. The sale of unripe products next to ripe products, with clear labelling, further creates a means for consumers to balance their purchasing. While having a clear labelling system that differentiates between best-before and use-by, where those date reflect reality rather than a sales mechanism, are further tools available in supporting consumers to reduce their waste.
* A recent study by McKinsey puts a much lower estimate to this figure, at around a third.