Written by SmartSense | Food Safety, Supply Chain
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January 15, 2020
Written by SmartSense | Food Safety, Supply Chain
Food retailers are gatekeepers to the U.S. food system. They influence what products travel from farms to shelves, and help determine consumer shopping trends. For these reasons especially, grocers are increasingly under pressure to reduce their food waste footprint. For instance, the Center for Biological Diversity (CBD) recently took the industry by surprise, grading the country’s top 10 largest supermarkets on their waste reduction efforts. Only three got an A. The rest got bad publicity.
That’s understandable. Supermarkets are responsible for 10% of all U.S. food waste – that’s 43 billion pounds annually. According to the Guardian, the food supply chain wastes 45% of all produce, 35% of seafood, 30% of cereals, and 20% of meat and dairy products every year. Additionally, the Environmental Protection Agency estimates that food containers and packaging make up 23% of landfill waste.
“Every year, American consumers, businesses, and farms spends $218 billion a year, or 1.3% of GDP, growing, processing, transporting, and disposing food that is never eaten.” Source: https://www.refed.com/
Chris Cochran, executive director of Rethink Food Waste Through Economics and Data (ReFED), estimates that the amount of food wasted by the retail sector represents $18.2 billion a year in lost value.” It’s a huge problem,” he says, “but solvable. Food businesses can turn food waste into profit.”
Despite the CBD report card, some leading supermarkets are innovating ways to reduce food waste. Because of their direct links with farmers, processors and consumers, powerful companies like Kroger and Walmart can influence every facet of the supply chain to create positive change.
Walmart and Kroger are two of the world’s largest food retailers that recently joined a new initiative to engage their supply chains to reduce food waste. Called 10x20x30, this private sector commitment advances the United Nations’ Sustainable Development Goal (SDG) Target 12.3, which calls for a 50% reduction in food loss and waste by 2030 worldwide.
10x20x30’s founding partners include 5 of the 10 largest food retailers in the world, the world’s 2nd largest food service provider, and leading food retailers in regions such as Africa and the Middle East: AEON, Ahold Delhaize, IKEA Food, Kroger, METRO AG, Pick n Pay, The Savola Group, Sodexo, Tesco, and Walmart. Combined, these participants operate in more than 80 countries.
Here in the U.S., Kroger is leveraging its tremendous size, influence, and distribution operations to divert otherwise wasted food to reduce hunger and food insecurity. Its Zero Hunger, Zero Waste initiative, launched in September 2018, also aims to eliminate food waste by 2025. Kroger is partnering with Feeding America to identify opportunities to distribute surplus inventory to food banks.
The mega-chain also spent the last couple of years conducting a comprehensive analysis to help management better understand and measure food waste and devise strategies to solve it. For example, Kroger is planning to automate its in-store ordering systems across key departments to reduce over-ordering of highly perishable items. Their commitment also extends to eliminating plastic bags from its stores by 2025.
Once Kroger gets a handle on reducing loss internally, the company will then turn its focus to the supply chain and take steps to influence suppliers and customers. To help achieve its goal, executive management established a $10 million innovation fund to support public policy solutions.
Walmart is reducing food waste by means of various innovations that can serve as inspiration for other retailers:
Implementing new technologies: Walmart’s Eden will help the company save $2 billion in food waste over the next five years by improving the quality and flow of fresh groceries from farm to shelf.
The 10x20x30 initiative aims to halve rates of food loss and waste by 2030. Source: https://twitter.com/WorldResources/status/1176857675071668226
Kroger and Walmart have the power and money to catalyze change. But grocery chains don’t have to be national leaders to start making a difference at their own scale. Let’s take a look at some innovative practices to reduce food waste that companies can adopt to fit the size of their operations.
Supermarket management sets impossibly high cosmetic standards for food products. Even slightly “imperfect” fruits and vegetables (asymmetrical, discolored, too small, or even too large) are usually rejected at the loading dock and never make it to the produce bin. The USDA estimates that supermarkets lose $15 billion annually due to these so-called “flaws,” even if the fruits and vegetables are of high quality and nutritional value.
To curb this unreasonable food waste, Walmart is experimenting with selling “ugly” vegetables at discount prices. Simple as that. It takes no more time than displaying conventional produce. Better yet, Walmart is making a profit on sales to customers who value sustainability.
Some food manufacturers are creating food products from ugly produce for the retail market. These items can be advertised to health-conscious consumers looking for nutrient-dense foods. Moreover, consumers are willing to pay a higher price for products with an “added value,” such as they currently do with organic, vegan, and sustainable foods. The result? Both manufacturers and retailers reap more profits.
Going beyond rejected produce, many companies are transforming food waste into new products that grocers can sell at a premium price. For instance:
Just as gluten-free and organic products get their own shelf space, a section of an aisle or refrigerator case can be reserved to showcase “upcycled” foods for a growing customer segment dedicated to recycling.
Investing in new technology can reduce excess inventory and the number of wasted perishables. Advancements in automation and software have made inventory management scalable across more SKUs and product types. Companies can set KPIs related to food loss and waste, track performance against those metrics, and adapt their processes to improve performance.
For example, Whole Foods and Target in the U.S. are now using software to input their store layouts so that deliveries can be organized in shelving sequence. This practice eliminates intermediaries between the distribution warehouse and the retail floor.
After taking an in-depth look at its perishables departments, Stop & Shop discovered that piling produce in bins high caused greater damage and labor costs. Finding new ways to display produce while reducing stock levels ended up boosting customer satisfaction because their produce stays fresh for longer. This practice also helped Stop & Shop reach an estimated savings of $100 million per year.
Food waste by consumers has escalated, while only 3% attach a social stigma to throwing away uneaten food. Changing habits is a long-term endeavor, but food retailers can play a crucial role in educating consumers to cut household food waste.
Research shows that consumers view supermarkets as a source of guidance for reducing food waste. Stores can offer consumers free branded food magazines that share waste reduction tips and recipes to utilize leftovers. Supermarkets can also sponsor and team up with chefs to demonstrate how to make meals with leftover ingredients. Dinner events that feature food made from discarded scraps get significant social media attention and are a great way of educating and engaging customers.
Some entrepreneurs see a solution in the biggest store change imaginable: designing waste out of retail altogether by creating what are known as zero-waste grocery stores. Over the last decade, some retailers also started rethinking their waste footprint and designed stores that encourage customers to bring their own containers.
The Filling Station In New York, for example, has dedicated its entire store to selling olive oil, vinegar, salt, and beer that customers purchase using refillable containers. While this refill model, which emphasizes reduced packaging waste, has worked for specialty shops, larger grocery stores are trying to figure out how to successfully apply this model to a zero-waste design.
Zero-waste saves businesses money by reducing disposal, labor and energy costs. The concept is better for the environment because it avoids wasting water, oil and other natural resources used to grow and deliver food. It also helps keep oceans free of plastic pollution and reduces greenhouse gas emissions.
Champions 12.3, a global coalition dedicated to tackling food waste, analyzed 700 food manufacturing, retail, and service companies in 17 countries and found that half of those that invested in measures to reduce food waste saw at least a 14-fold return on those investments. Even more interesting was the finding that big payoffs came from small changes – such as consumer education and clear date labeling – that helped minimize food surpluses before the consumption stage.
Although addressing food waste has made some progress over the past few years, the grocery industry still needs to shift its focus to reducing supply chain and in-store waste. Maintaining the status quo by focusing only on donation and recycling programs, instead of prevention and zero-waste commitments, diverts attention from the environmental costs of wasted food and the systemic change needed to address them.
The grocery sector would be smart to publicly embrace solutions that include concrete, measurable deadlines for zero waste and comprehensive prevention programs. Those programs would involve better ordering practices, clearer date labels, improved tracking and distribution technology, promotion of imperfect produce, and minimizing daily waste of meat and dairy.
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