Expert Column: Reducing Food Wastage, One ESL At a Time

Dion Broeken, director of sales, EMEA, Displaydata

Last week the USDA and EPA made a significant announcement, telling the world that it's stepping up when it comes to food wastage by calling for a 50 percent reduction in food waste by 2030. To achieve this lofty yet attainable goal, the United States federal government says it will work with all organizations that deal with food, including charitable organizations, faith-based organizations, the private sector and local, state and tribal governments.

On a global level, food wastage continues to be a huge concern – especially for grocery retailers. According to the United Nations Environment Program (UNEP), every year consumers in industrialized countries waste almost as much food as the entire net food production of sub-Saharan Africa – 222 million vs. 230 million tons of food wastage. In the U.S. alone, organic waste is the second highest component of landfills, and 30-40 percent of the country’s food supply is wasted, equaling more than 20 pounds of food per person per month.  

On a daily, weekly, monthly and yearly basis, grocery retailers worldwide have struggled with how best to control the amount of food waste and are consistently plagued with huge write-offs on fruits, vegetables and other fresh produce. Some grocers have taken innovative steps to address these problems, either through technological and non-technological solutions. For example, Kroger currently powers its own datacenter with fuel derived from spoiled produce, and both Intermarche France and Raley’s grocery chains have started selling less-than-perfect fruits and vegetables.

As well, Sainsbury’s has partnered with Google to introduce a smartphone app that suggests recipes based on leftovers in the user’s refrigerator, and French retailer Auchan plans to use its mobile app to alert customers of products reaching their expiration dates.

These solutions can all play a part in lowering food wastage, but how can retailers head off potential food waste at the point of decision during the customer journey, and significantly reduce the amount of write-offs, improve sales and margins while boosting their image as responsible and sustainable organizations?

Addressing Food Wastage Through Better Prices and Shopper Communication

In recent years, grocery retailers have taken steps to shore up their food wastage. Many of them, especially in Europe, have pledged to not throw any food away and have invested in technology to help with those efforts. While predictive analytics can play an important role to improve inventory availability, lower logistics and stock costs, electronic shelf labels (ESLs) have proved to be most beneficial in helping to reduce waste – especially in the produce and bakery sections of the store.

As many grocers know, the price on fruits and vegetables can change several times a day based on the quality of the products. By implementing an ESL solution, grocers can easily change their prices in those areas, on a store-by-store basis and based on availability. This eliminates the need for store associates to change burdensome and costly paper labels throughout the day, instead allowing them to focus on helping shoppers find the merchandise they need, move produce and reduce food wastage.

In the bakery department at a grocery store, which often includes a wide assortment of breads, bagels and pastries that must sell each day, ESLs can help retailers with faster price changes based on the availability of the products. Moving bakery products is especially important given the restrictions of the “sell by” date on those items. When a product gets close to the “sell by” date, the current process for most grocers is to significantly markdown the product. As soon as a retailer can’t sell a product anymore, it becomes a huge loss for the company and results in additional food that must be thrown out.

ESL technology, complemented with a dynamic pricing solution, gives retailers a new and innovative way to quickly communicate price changes to their shoppers, encouraging them to purchase items before they spoil. This ultimately improves sales and margins. What’s more, ESLs can be customized and designed to reiterate a retailer’s corporate brand as well as offer more information about a product on the ESL screen or content with personalized offers through beacon-enabled ESLs.

From a purely financial standpoint, it has been well documented that retailers who have implemented ESLs have observed a full return on their investment within 18-24 months. Boosting the bottom line is critical, however grocers must also think about ways to improve from a corporate social responsibility standpoint. ESL investment can play a role in helping to reduce the annual food waste within grocery stores, as well as make an overall contribution to eliminating waste in landfills and reducing methane emissions.