If you find yourself having to purge your refrigerator’s crisper bin every few weeks, imagine what goes on at a grocery store. The Institution of Mechanical Engineers estimates that annually between a third and a half of all food produced is wasted worldwide. According to the Guardian, approximately 45% of all fruits and vegetables, 35% of fish and seafood, 30% of cereals, and 20% of meat and dairy products are wasted by suppliers, retailers, and consumers every year.
This waste is growing alongside a growing world population. The United Nations reports that the world population is expected to grow from 7.6 billion to 9.8 billion people by 2050, which makes food security a more pressing issue. Growing food requires water, seeds, labor, machinery, energy, and fertilizer. Letting food go to waste, then, is a frivolous use of natural resources that drives up costs, inflates food prices, and weakens the food supply chain.
Large food retailers such as Kroger, Sainsbury’s, Tesco, Carrefour, and Wal-Mart stand in a unique position to address this global food issue. Because of their direct links with farmers, processors, and consumers, they have the power to influence every facet of the supply chain. And because the traditional supermarket industry is highly concentrated (for example, in the UK, the top seven food retailers account for 87% of the grocery market), retailers have considerable market power to make a change.
However, their high volume–low margin business model also makes them vulnerable to threats such as competition, increasing wholesale prices, and changing consumer demands. For example, super discounters such as Aldi, Lidl, and Amazon are further squeezing already thin food retail margins for large retailers. We propose a four-pronged strategy to help retailers reduce food waste as it occurs in food farming and food production, in the stores themselves, and during consumption. This strategy can also help retailers manage competitive and strategic challenges by strengthening retail partnerships with food suppliers and connecting with customers’ needs and wants in new ways.
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This article was written by Yasemin Y. Kor Jaideep Prabhu and Hult Professor Mark Esposito, for the Harvard Business Review Blog Network
Read the full article, originally published here.
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