The global volume of food waste is estimated at 1.6 billion tonnes, 80% of which is considered edible; this represents more than 30% of all food produced, and 6% of global greenhouse gas emissions. While a part of this waste can be attributed to the production and harvesting phase of food and to consumer behavior, a considerable part of it is due to supply chain weaknesses on the manufacturer and retailer front. This is thankfully becoming a source of investigation and optimization, especially given that food waste or loss costs them around 3-6% of their COGS according to McKinsey research. As reducing food waste becomes a business imperative, retailers are increasingly looking for ways to optimize their supply chain, but are also increasingly trying to appeal to shoppers to help them on their mission.
Incentivize shoppers through discounts
The low-hanging fruit initiative to avoid food waste when food is already on shelves is through promotions, which can be done efficiently through dynamic pricing. Wasteless is a startup leveraging an AI-powered pricing engine to help retailers optimize their revenues and decrease waste by incentivizing shoppers through discounts. The technology is able to track and adjust products’ prices in real time based on their expiration dates, encouraging shoppers to pick up an item that is on promotion because it is nearing expiration.
Another startup whose mission is to reduce food waste at the retailer level is Too Good To Go. Founded in 2015 in Europe and live in the U.S. since 2020, the startup connects consumers and retailers to save meals from going to waste. The incentive for both parties is clear: consumers get fresh food at a discount, while grocery stores reduce unsold items while making money off food that would otherwise go to waste.
In 2022, the company saved more than 78 million meals and is rapidly expanding in the U.S. with a goal to be in every city within the next year. Its business model is an obvious win-win for both retailers and consumers, explaining why its customer footprint is expanding so rapidly across countries. “For us, the cooperation with Too Good To Go has brought several advantages. In addition to the fact that we are happy to be able to give our leftover groceries a second chance, we are seeing a clear increase in customers who come to us through the app. In addition, sales are increasing because app users buy additional products when they pick up the Surprise Bag,” shared a manager of Edeka, Germany’s largest food retailer, in a press release earlier this year.
Develop creative labelling to extend the life of fresh foods
In Europe, over 50% of European consumers don’t know the difference between “use by”, “best before” and “sell by” according to TNS research, often leading to unnecessary food disposal. In addition to providing consumer value and a solution for stores to reduce unsold inventory at the end of each day, Too Good To Go is working with retailers like Carrefour to tackle food waste by better managing expiry data labelling in store, while providing clearer ways for consumers to understand these labels, which is another concrete way to alter consumer behavior towards food waste prevention.
The startup has developed a“Look-Smell-Taste” label used by more than 400 brands to make shoppers think twice before deciding not to buy an item because of its expiry date (or because of the look of certain foods). With more than 40% of food wasted coming from fruits and vegetables with poor-looking appearances, retailers are trying to develop initiatives to change consumers’ attitudes towards produce that is not visually pleasing while at the same time relaxing their internal quality standards to allow such products to being sold in the first place.
Another retailer testing the impact of creative labelling to limit food waste is Makro. The colombian, dutch-owned cash-and-carry retailer worked with local agency Grey Colombia to develop a low-cost, creative initiative to encourage shoppers to purchase fruits and vegetables regardless of their state through the use of life extending stickers. “We wanted to generate a simple yet powerful change in people’s behaviour, to educate about responsible consumption of fruits and vegetables,” Juan Yepes, marketing director at Makro Colombia told Contagious. “The insight was that when fruits and vegetables’ aspect isn’t “perfect”, that is the stage when they become more delicious, but people miss it for preconceived cosmetic reasons.” The campaign is live since April in 22 stores and is set to extend product life by six more days and reduce food waste by 70 tons a week.
Retailers must dive into their supply chains to minimize food loss and waste
While half of food loss and waste happens before it reaches grocery stores, the other half happens under retailers’ watches and within consumer households, making it imperative for the industry to better prevent food waste at the store level and educate consumers at the same time. Startups like Too Good To Go are helping retailers decrease their unsold fresh inventory that would otherwise go to waste, while allowing shoppers to enjoy fresh food at a discount making it a win-win for both parties. Other initiatives around promotions and labelling are being tested to influence consumer behavior, which is a good and necessary step forward.
However, to truly tackle the food waste challenge, much more will be required from the industry at a supply chain level. From better forecasting demand to optimizing transport and storage conditions, grocers are increasingly being urged to take action as awareness increases and governments tighten legislation around food waste. This represents an incredible opportunity to not only solve a costly and unfortunate crisis, but also to turn food waste into both cost reduction and revenue generation, by being able to sell products that would otherwise be lost at a cost.
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