Written By: Gargi Sarma
One of the biggest problems facing the supermarket industry is food waste. More than ever, consumers are concerned about reducing food waste, and unsold inventory puts enormous pressure on the bottom line in a market where margins are already tight.
The key is accurate inventory management. For instance, if businesses overstock goods, especially perishable goods, they have few options if goods don't sell. Retailers must decide whether to mark down the product and cut profit margins as the product approaches its expiration date. If so, by how much? Or do they discard it, wasting resources and creating more waste?
The critical task of reducing food waste necessitates a delicate balancing act. Supermarkets naturally keep a large variety of products with varying shelf life in stock. They need to figure out a way to keep providing this enormous variety of food while keeping it fresh and reducing the amount that gets pulped in the crushers at the back of their stores.
Figure: Food Wastage in Different Sectors
Technologies to reduce food wastage in the retail sector:
Utilise technologies to control expiration dates
Figure: Expiration Date Tracker
Expiration dates are one of the main causes of food waste. The first way that supermarkets may help is by educating their patrons. A lot of edible food is thrown away because people are confused about what the expiration dates indicate for food safety. The distinction between the sell by, use by, and best before dates is not well understood by customers. Supermarkets may help by standardising this information and delivering it to their customers in ways that are accurate, comprehensible, and straightforward.
Additionally, supermarkets are using technology that tracks expiration dates to address the issue. Tools that automatically verify and identify products' expiration dates are now available, giving retailers plenty of time to mark down soon-to-expire items and move stock before it spoils. Dynamic pricing, which alters the price of specific items throughout the day to attract the attention of consumers and minimise possible waste, can even be used to persuade customers to buy produce that is about to expire as opposed to fresher produce.
The Danish-developed Too Good To Go app employs a similar strategy. It informs clients of supermarket food surplus. Before food goes to waste, customers may purchase discounted items through the app and pick them up in-store.
Utilise analytics and data to spot waste tendencies.
Figure: Use of Analytics to Reduce Food Wastage
Supermarkets collect data from a variety of sources, including the eCommerce site, vendor information, loyalty programmes, and smart shelves. Too many supermarkets still rely on paper printouts and spreadsheets, despite advancements in technology. However, by employing ineffective techniques for data collection, analysis, and communication, retailers run the danger of missing out on insights that might boost productivity and growth.
Supermarkets can forecast demand, discover waste tendencies, and place precisely the right number of food orders by utilising powerful data analytics and demand planning tools.
In its cutting-edge, AI-powered store in New York, the Intelligent Retail Lab, Walmart has been experimenting with the promise of data and analytics. No matter what shelf or aisle a product is on, in-store technology can instantly recognise it. It can then compare product amounts with expected sales demand. This makes it simple for it to determine whether it has to stock as much barbecue food Monday through Thursday or whether it has too many boxed sandwiches on the shelves on the weekends.
Although a fully automated store is not on every retailer's wish list, supermarkets can increasingly predict what customers want by utilising purchasing data and artificial intelligence. In addition to dramatically reducing waste, this also enables businesses to immediately capitalise on sales trends, pinpoint high-demand locations, and make sure the right inventory is in the right location at the ideal time.
Another example is RapidPricer which is an AI-powered pricing platform that specialises in reducing food waste through real-time pricing for retailers. The platform uses deep learning algorithms and machine vision to dynamically price products to match their real-time value based on competition, product lifecycle, and market conditions. With deep expertise in retail pricing, RapidPricer computes merchandising actions for real-time execution in a retail environment.
Change to contemporary appliances
Figure: Contemporary Appliances
The International Energy Agency (IEA) estimates that the retail food industry uses 2% of the world's electricity, which is more than data centres do! Implementing energy and asset-monitoring programmes across all stores can have a big beneficial impact and be crucial in creating solutions for the stressed-out global food system.
Maintaining food quality and safety while utilising the least amount of energy is difficult so that items don't waste away. Utilising contemporary refrigeration equipment that is effective, dependable, and keeps food at the proper temperature even while clients help themselves to products is the first step towards success. IoT technologies can go one step further in this regard by providing retailers with useful information about how to enhance energy efficiency. Sensors keep an eye on the temperature of the food and the energy output of the machinery, and they can immediately notify maintenance crews of any equipment problems so they can be corrected quickly with the least amount of downtime.
According to the FAO, IoT solutions have helped food retailers save US$37 million over the previous five years by reducing food waste and preventing more than two million tonnes of carbon emissions.
Accept faulty products
Figure: Wonky Veg Boxes
According to data from WWF International, up to 15% of all food produced is lost before it leaves the farm. This is due to retailers pushing farmers to produce more than necessary in order to satisfy agreed-upon quotas and rejecting products that don't fit their aesthetic standards.
Whole fields of fresh produce are ignored by the supermarkets because they are thought to be too ugly, too little, or too large to sell. Examples include crooked cucumbers, marked apples, and knobbly carrots. The existing food system prioritises homogeneity over flavour and environmental health.
Selling wonky veg boxes—imperfect fruits and vegetables—at a discount is one growing trend. Vegetables with flaws that stores would ordinarily reject are collected by OddBox. Customers can directly purchase a weekly vegetable basket for 30% cheaper than the going rate.
"By rescuing fruit and veg from farms, we find a home for the odd, wonky, and tasty produce that supermarkets won't accept, paying a fair price for all the farmers and growers we work with at home, and abroad," the company claims. Not only that but by doing so, we are able to conserve the enormous amounts of water and greenhouse gases that were used to grow each pear and potato that you receive in your weekly boxes.
Food Waste into Clean Energy
Figure: Stop & Shop Green Energy Facility in Massachusetts
In the continuous battle against grocery store food waste, cutting-edge supply chain management and solutions provided by disruptive digital entrepreneurs are two possible allies. However, given the current situation, there will inevitably be situations in which having too much inventory is inevitable and perishability comes into play, especially for produce and deli items.
The Stop & Shop chain, owned by Ahold Delhaize, uses technology to prevent edible food waste from going to landfills by turning it into biogas through a procedure known as anaerobic digestion. As of late 2018, the 24,000-square-foot Stop & Shop Green Energy Facility in Massachusetts was one of just two such facilities in the country. The energy generated there may power a sizable chunk of the nearby Stop & Shop distribution centre.
Stop & Shop has discovered a way to simplify its own operations by converting waste that would have otherwise gone to the landfill into energy. It's a great way to use food that would otherwise go to waste. On the other hand, the extent of the societal influence most merchants imagine they are capable of is far removed from the collection of edible food waste from 208 stores to power barely a portion of a distribution centre. Additionally, from a financial perspective, it would have been wiser to avoid buying the ruined food in the first place because there is no way to recover the cost of it. Overall, though, Stop & Shop's experience has demonstrated that biogas is a promising substitute for the issue of handling waste food from grocery stores.
Mobile applications
Figure: Mobile Applications
The mobile apps on all of our smartphones are another new technology-driven answer to the problem of global food waste. Innovative businesspeople have created mobile apps that connect customers with grocery stores that have extra food they can sell at a discount.
In addition to allowing customers to purchase food at a lower price, it also helps grocery store operators cut down on food waste.
IoT Sensors
Figure: IoT Sensor
As food passes through many production phases and is handled by large machinery, a significant percentage of food is wasted during the manufacturing process. Additionally, food is lost while being handled and stored. IoT provides strategies to cut down on food waste by utilising several sensors and cameras placed throughout companies. These sensors gather crucial information about food production in real-time in order to pinpoint the reasons for food waste.
IoT can retrieve readily available information such as product expiration dates, stock levels, overstock status, and other details. IoT sensors also recognise and group goods based on how quickly they rot so that distribution may be carried out appropriately. All of these characteristics aid in improving supply chain traceability and locating the source of food waste.
What Alterantive Packaging Methods Are Currently Optimising?
Due to massive investments made in it by CPG behemoths like Nestle, P&G, and Unilever, the market is anticipated to be valued at $440B by 2025. Three cutting-edge sustainable packaging solutions that companies and retailers can use to reduce food and plastic waste.
Substitutes for plastic
Currently, 95% of the value of plastic is lost after its initial usage, which has caused an unprecedented level of ocean pollution and a developing crisis in landfills.
To assist CPG companies in moving away from single-use plastic, many startups, including Footprint and Notpla, have created new materials to be used for food and beverage packaging.
Figure: Ooho Notpla (an edible bubble intended to take the place of single-use liquid packaging made of plastic)
Food filters and coatings
Startups are also concentrating on reducing food waste as well as creating filters and coatings that delay rotting and increase an item's shelf life.
Apeel Sciences, for instance, developed a thin, plant-derived film that covers fruits and vegetables to delay decomposition by holding on to water and preventing air from entering.
Figure: Hazel Technologies Pouch
Other businesses, like Hazel Technologies, are creating filters and pouches that can be put inside fruit cartons to lessen the fruit's ethylene sensitivity and respiration rate, extending shelf life, and cutting down on food waste.
Recycling and reuse services
New business models that encourage packaging reuse by consumers and businesses are among the other strategies for sustainability in the CPG supply chain.
Refill services have been introduced by Unilever and Nestle to reduce the demand for single-use packaging. Unilever and Algramo, a mobile refill service for CPG items, collaborated to deliver Quix dishwashing liquid and Omo laundry products directly to consumers' homes. Nestle is presently testing refillable coffee and pet food dispensers in 3 Nestle stores in Switzerland.
Conclusion
There is no one-size-fits-all answer to the issue of food waste. Grocery stores are merely one (relatively big) front in a long-running fight to address a fundamental social issue that affects both household psychology and supply networks.
Retailers might significantly benefit from having the upper hand, not just from a balance sheet perspective but also in terms of reputation. The issue should be assessed over a reasonable time horizon before making any significant investments, whether it be in companies that could produce the next major advancement in food technology or technologies that can revolutionise distribution networks to maintain freshness.
About RapidPricer
RapidPricer helps automate pricing, promotions and assortment for retailers. The company has capabilities in retail pricing, artificial intelligence and deep learning to compute merchandising actions for real-time execution in a retail environment.
Contact info:
Website: https://www.rapidpricer.com/
Email: info@rapidpricer.nl
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