Download The Challenge of Food Waste

The Challenge
of Food Waste
Retailers step
up to the next
level of inventory
management
Björn Weber
Research Director Retail Technology
Sarah Herrlein
Senior Retail Technology Analyst
Greg Hodge
Custom Research Director
Fresh Foods - 2012
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Executive summary
1
1.
Introduction: The problem of high food waste
3
1.1 Food waste in retail stores
3
1.1.1 Dimension of the problem
3
1.1.2 Economical impact on retailers
3
1.2 The environmental and social problems
of discarded produce
2.
3.
3
1.2.1 Government campaigns and actions to
raise public awareness of the issue
3
1.2.2 Retailers’ current non-technology approaches
(food donation programmes, organic composting
and recycling initiatives)
4
Technology-based approaches bring new
dimension to store pricing
6
2.1 Automated replenishment based on sophisticated
forecast avoids overstocks
6
2.2 Accurate stock levels at all times
8
2.3 Dynamic pricing enables price changes according
to current stock and sales forecasts
8
2.4 ESLs and smartphones communicate price changes
10
2.5 Shoppers’ mobiles offer upselling opportunities
11
2.6 The GS1 Databar facilitates automated mark-downs
at the checkout
12
Conclusion and outlook
13
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Contents
PlanetRetail
Executive summary
F
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ood shrinkage and waste can cost retailers up to 4% of revenue. Given the need to
continually drive out costs in the highly competitive grocery sector, this fact cannot
continue to be ignored. To offset food wastage retailers discount items and sell them to
shoppers before they go out of date and become waste. However, this discounting recoups
just 0.75% of the 4% revenue loss. Taking into account the razor thin margins in the
grocery industry, unsold items can be one of the major challenges for food retailers.
Although retailers are already taking some measures to reduce food waste, they do not
take full advantage of the technology that can help tackle the issue. Instead, they focus on
initiatives such as food donation programmes, organic composting and recycling initiatives.
However, the most obvious approach to reduce food waste is to optimise order forecasts in
such a way that the gap between predicted and actual sales is reduced to a minimum. With
this, retailers can avoid food waste at the earliest possible stage.
This immense food waste problem in the highly developed markets is rapidly increasing
in public awareness, especially as a good proportion of wastage occurs in households.
Governments, campaigners and multinational organisations stress the fact that food wasted
in the US and Europe could feed the world three times over.
Of course, food waste does not only occur in households. In the UK alone, retailers and
wholesalers produce around 1.7 million tonnes of food waste each year. Some retailers
react to the situation by donating surplus food - US grocery retailer SuperValu, for example,
donated 22,000 tonnes of food to the Feeding America organisation in 2010. Food that
cannot be donated is converted into energy by some retailers instead of sending it to
landfills. For instance, Sainsbury’s, the UK-based supermarket retailer, generates power for
500 homes in a biomass power plant in Scotland. Aside from the obvious financial benefits,
reducing food waste can therefore also play a part in helping retailers to achieve their own
sustainability targets.
For both financial and environmental reasons, reducing food wastage is therefore an area
that needs to be targeted by retailers. In this report, we will examine the ways some
retailers are tackling the problem. We will focus on the technologies that enable retailers to
optimise their inventory as well as generate pricing more dynamically.
Food shrinkage and waste can cost
retailers up to 4% of sales revenue.
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1
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Over the last ten years, major retailers achieved significant improvements in terms
of inventory optimisation with the implementation of automated replenishment based
on forecasting software. But those initiatives are often limited to the ambient range
and processed chilled food. Implementing sophisticated technologies which enable the
optimisation of inventory in produce and instore-produced food is now also on the agenda
for retailers’ project plans.
• Automated replenishment systems based on sophisticated forecast, in order to avoid
overstocks.
• Utilising real-time inventory management systems to help maintain accurate stock levels
at all times.
• Using dynamic pricing to enable price changes according to current stock and sales
forecasts. This helps retailers to effectively sell excess supply rather than risk it going to
waste and generating no return.
• Effective communication with shoppers through their mobiles provides upselling and crossselling opportunities for retailers.
• Deployment of the new barcode GS1 Databar enables retailers to offer automated mark
2
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These include:
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PlanetReta
1. 1.Introduction:
Introduction:
The
The
problem
problem
of of
high
high
food
food
waste
waste
1.1 1.1
FoodFood
waste
waste
in retail
in retail
stores
stores1.2 1.2
The environmental
The environmental
and and
social
social
problems
problems
of of
1.1.1 1.1.1
Dimension
Dimension
of the of
problem
the problem
discarded
discarded
produce
produce
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With between
With between
50-60%
50-60%
of salesofinsales
a supermarket
in a supermarket
Food waste
Food is
waste
a global
is a global
phenomenon
phenomenon
that that
being derived
being derived
from the
from
perishable
the perishable
category,
category,
it
it impacts
impacts
the environment
the environment
and society
and society
in fourin four
is estimated
is estimated
that between
that between
5-7% of
5-7%
perishables
of perishableskey areas:
key areas:
the energy
the energy
used toused
produce
to produce
food, food,
are lostare
to lost
poortomanagement.
poor management.
This means
This means
that thatthe food
thedisposed
food disposed
of by retailers,
of by retailers,
the food
the food
food shrinkage
food shrinkage
and waste
and can
waste
cost
can
retailers
cost retailers
up
upwastedwasted
in the household
in the household
and the
and
energy
the energy
used used
to 4% to
of their
4% ofoverall
their overall
revenue.
revenue.
To offset
To food
offset food to dispose
to dispose
of foodofwaste.
food waste.
wastage
wastage
retailers
retailers
discount
discount
items and
items
selland
them
sellto
them to
consumers
consumers
before before
they gothey
out go
of date
out ofand
date
need
and need
1.2.1 1.2.1
Government
Government
campaigns
campaigns
and and
actions
actions
to raise
to public
raise public
awareness
awareness
food recoups
food recoups
just 0.75%
just 0.75%
of the 4%
of the
revenue
4% revenue
loss. loss.
the issue
of the of
issue
to be disposed
to be disposed
of. However
of. However
the discounting
the discounting
of
of
Food waste
Food at
waste
retailatstores
retail stores
is a bigger
is a bigger
problem
problem
in
in
Consumers’
Consumers’
understanding
understanding
and awareness
and awareness
of
of
developed
developed
markets
markets
than inthan
developing
in developing
countries.
countries.
food waste
food are
waste
keyare
areas
key when
areaslooking
when looking
to tackle
to tackle
Consumers
Consumers
demanding
demanding
constant
constant
availability
availability
this widespread
this widespread
issue. More
issue.than
Morethree-quarters
than three-quarters
and fulland
range
full of
range
choice
of choice
in retailinoutlets
retail outlets
leads to
leads to
of US consumers
of US consumers
mistakenly
mistakenly
believebelieve
certaincertain
excessive
excessive
supply supply
and therefore
and therefore
increased
increased
waste waste
foods are
foods
unsafe
are unsafe
to eat after
to eatthe
after
expiration
the expiration
date date
of foodof
infood
mature
in mature
markets.
markets.
The moral
The and
moral
social
and social
has passed.
has passed.
In the UK,
In the
theUK,
confusion
the confusion
between
between
argument
argument
between
between
consumers
consumers
demanding
demanding
choice choice
‘best before’
‘best before’
dates and
dates
‘use
and
by’‘use
dates
by’has
dates
created
has created
and retailers
and retailers
supplying
supplying
it is complicated,
it is complicated,
while while a political
a political
storm with
storm
lobby
withgroups
lobby groups
suggesting
suggesting
the environmental
the environmental
and economic
and economic
impactimpact
is far is far that packaging
that packaging
should should
displaydisplay
a ‘use by’
a ‘use
date
by’ date
more measurable.
more measurable.
only toonly
avoid
toconsumers
avoid consumers
from misunderstanding
from misunderstanding
the twothe
differently
two differently
labelledlabelled
expiration
expiration
dates. dates.
1.1.2 1.1.2
Economical
Economical
impact
impact
on retailers
on retailers The EUThe
andEU
UNand
have
UNcommitted
have committed
to reducing
to reducing
In the In
UK,the
retailers
UK, retailers
and wholesalers
and wholesalers
produce
produce
food waste
food by
waste
50%
byby
50%
2025
bythrough
2025 through
the “Joint
the “Joint
Declaration
Declaration
AgainstAgainst
Food Waste”.
Food Waste”.
about 1.7
about
million
1.7 million
tonnestonnes
of foodofwaste
food a
waste
year.a year.
The costs
Theand
costs
complications
and complications
of giving
of giving
this this
In the UK
In the
theUK
government-funded
the government-funded
Waste Waste
and and
food away
foodmeans
away means
that over
thathalf
over
of half
it is of
sent
it istosent toResources
Resources
Action Action
Programme
Programme
(WRAP)
(WRAP)
has tasked
has tasked
landfills.
landfills.
In the In
US,the
supermarkets,
US, supermarkets,
restaurants
restaurants
itself with
itself
halving
with halving
the amount
the amount
of waste
of that
waste
goes
that goes
and convenience
and convenience
stores stores
throw away
throw27
away
million
27 millionto landfills.
to landfills.
WRAP launched
WRAP launched
the campaign
the campaign
“Love “Love
tonnestonnes
of foodofannually,
food annually,
representing
representing
wastage
wastage
Food - Food
Hate -Waste”
Hate Waste”
in 2007inwhich,
2007 which,
by January
by January
valuedvalued
at €28.6
at billion
€28.6 billion
($41.9($41.9
billion).billion).
On topOn top2009, had
2009,
already
had already
saved €337
savedmillion
€337 million
($493 ($493
of this,ofconsumers
this, consumers
waste an
waste
additional
an additional
25.9 25.9 million).
million).
The scheme
The scheme
persuaded
persuaded
two million
two million
UK
UK
millionmillion
tonnestonnes
of foodofannually.
food annually.
households
households
to taketo
steps
taketo
steps
reduce
to reduce
food waste
food waste
and stopped
and stopped
137,000
137,000
tonnestonnes
of foodof
from
foodbeing
from being
thrownthrown
away. away.
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1.2.2
Retailers’ current non-technology
approaches (food donation
programmes, organic composting
and recycling initiatives)
Retailers are faced with a difficult dilemma they do not want the costs and social stigma
to maintain availability at their stores. A simple
solution would be to enter into food donation
programmes and simply give away the surplus
food at the end of each day. Unfortunately the
costs involved and the scrutiny that fresh in
© WRAP
particular has to go under before it is re-sold
WRAP’s “Love Food - Hate Waste” campaign was launched in 2007.
or given away makes this virtually impossible
for retailers. Such schemes also don’t take
into account the environmental impact of over
producing food.
The success of WRAP’s “Love Food - Hate Waste”
campaign convinced Australia’s Department
of Environment, Climate Change and Water
to adopt the concept. It focuses heavily on
the emotional side of food waste, using subtle
messaging and statistics to nudge consumers
into changing their behaviour. It focuses on four
key ways to prevent food waste:
• Buy It - for great ideas on food shopping.
• Cook It - to find out how much food you
really need and for nutritious recipes that
use up leftover ingredients.
• Save It - for information on keeping your
food fresh and prevent it from ending up in
the bin.
• Love food - to learn about the issues
and how wasting less food helps our
environment.
In the Netherlands, the government is
committed to reducing food waste by 20%
by 2015, with the country throwing away an
estimated €2.4 billion ($3.5 billion) per year.
The Dutch campaign was instrumental behind
the creation of a global campaign called www.
tastethewaste.com.
4
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Foods
- 2012
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2011
- www.planetretail.net
Retailers of course want to remove the
economic burden of food waste but also
want to make the right social decisions
around their business. Walmart has a global
goal of creating zero waste. Even if it just
achieved an 80% reduction in waste in the
US alone it would prevent more than 11.8
million tonnes of carbon dioxide emissions
annually - equivalent to taking more than
two million cars off the road for a year. To
achieve this, the retailer looks to convert
food to energy and enters into food donation
programmes. This is something that is
mirrored around the globe.
Sainsbury’s, the UK-based retailer, runs
a scheme that converts food waste into
electricity. Almost 42 tonnes of waste food
from 28 Sainsbury’s locations in Scotland are
delivered weekly to a biomass power plant for
processing and generates enough electricity
to power around 500 homes. Sainsbury’s has
a long-term plan to send zero waste to landfill
and will roll out the scheme across the UK.
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associated with food waste but they also want
PlanetRetail
PlanetReta
Often subtle
Oftenand
subtle
simple
andsolutions
simple solutions
are the most
are the most
In the US
In grocery
the US grocery
retailer SuperValu
retailer SuperValu
donateddonated
effectiveeffective
ways of ways
tackling
of tackling
major problems,
major problems,
22,000 tonnes
22,000 of
tonnes
food (37.5
of food
million
(37.5 meals)
million meals)
by educating
by educating
or nudging
or nudging
consumers,
consumers,
retailersretailers
to Feeding
to Feeding
AmericaAmerica
in 2010.inFeeding
2010. Feeding
AmericaAmerica
with
work
them
with
to them
prevent
to prevent
food waste.
foodIn
waste. In
has more
has
than
more
200
than
food200
banks
foodacross
banksthe
across the can workcan
conjunction
with UK with
grocer
UKWaitrose
grocer Waitrose
celebritycelebrity
country country
designeddesigned
to aid the
to distribution
aid the distribution
of
ofconjunction
chef,
Smith,
Deliacreated
Smith, the
created
ultimate
the ultimate
food waste.
food 72%
waste.
of 72%
the food
of the
donated
food donated
by
by chef, Delia
Christmas
Christmas
cake kit cake
for €11.50
kit for ($16.10)
€11.50 ($16.10)
that
that
came with
came
ready
with
weighed
ready weighed
ingredients.
ingredients.
To buy To buy
The company
The company
is in the is
process
in the process
of expanding
of expanding
the ingredients
the ingredients
in individual
in individual
packets packets
would have
would have
the scheme
the scheme
across its
across
retailits
estate
retailand
estate
has and has
cost consumers
cost consumers
€27 ($37.81),
€27 ($37.81),
so not only
so not
did only
it
did it
already managed
already managed
to achieve
to achieve
zero waste
zero waste
reduce food
reduce
waste
food
but
waste
saved
but
customers
saved customers
money. money.
classification
classification
at two ofatits
two
Albertson
of its Albertson
stores stores
Managing
consumption
consumption
or preventing
or preventing
in SantainBarbara,
Santa Barbara,
California.
California.
The two The
stores
two storesManaging
customers
customers
from buying
fromunwanted
buying unwanted
or unneeded
or unneeded
are successfully
are successfully
divertingdiverting
95% of their
95% waste
of their waste
possible
is possible
through through
loyalty card
loyalty card
through through
recycling,
recycling,
food donation,
food donation,
organic organic goods isgoods
composting
composting
and other
and
means.
other means.
information.
information.
For example,
For example,
a simpleareminder
simple reminder
when shopping
when shopping
online that
online
youthat
mayyou
already
may already
The onusThe
should
onusnot
should
solely
not
rest
solely
withrest
retailers
with retailers
have a certain
have a product
certain product
could gocould
a long
goway
a long
in way in
to reducetofood
reduce
waste.
foodInstead
waste. there
Instead
should
there should
preventing
preventing
food waste.
food waste.
be more be
of more
a co-operation
of a co-operation
betweenbetween
retailers retailers
and consumers
and consumers
in doing in
so.doing
A new
so.tactic
A new tactic
retailers retailers
such as Tesco
such as
and
Tesco
Sainsbury’s
and Sainsbury’s
in the in the
UK are pursuing
UK are pursuing
is the ‘buy
is the
one‘buy
get one
one later’
get one later’
promotion.
promotion.
Sainsbury’s
Sainsbury’s
calls the calls
marketing
the marketing
promotion
promotion
‘Buy Now,
‘Buy
Free
Now,
Next
Free
Time’.
Next
Customers
Time’. Customers
receive areceive
coupona at
coupon
the checkout
at the checkout
offering the
offering the
chance to
chance
claim to
a second
claim aitem
second
during
itemtheir
during their
next shop,
next
rather
shop,
than
rather
pickthan
it out
pick
immediately.
it out immediately.
Consumers
Consumers
have twohave
weeks
twotoweeks
redeem
to the
redeem the
vouchersvouchers
and onlyand
fouronly
items
four
involved
items involved
in the in the
scheme can
scheme
be used
can be
perused
transaction.
per transaction.
Traditional
Traditional
‘buy one,
‘buy
getone,
one get
free’one
offers
free’
have
offers have
long been
long
criticised
been criticised
for wastage.
for wastage.
While many
While many
people buy
people
items
buy
– particularly
items – particularly
food – when
food it
– when it
is on special
is onoffer,
special
they
offer,
arethey
unable
areto
unable
use the
to use the
quantityquantity
provided.
provided.
This contributes
This contributes
to additional
to additional
household
household
waste. The
waste.
UK government’s
The UK government’s
Food
Food
2030 report
2030inreport
August
in 2009
August
was
2009
especially
was especially
critical ofcritical
retailers
of retailers
encouraging
encouraging
people to
people
buy to buy
goods they
goods
don’t
they
need
don’t
through
need through
marketing
marketing
initiatives.
initiatives.
With theWith
new the
‘buynew
one‘buy
get one get
later’
one later’
food purchases,
food purchases,
helping to
helping
drive to
loyalty
driveto
loyalty
their to their
stores and
stores
reduce
andfood
reduce
waste
food
atwaste
the same
at the
time.
same time.
© NDFS
approaches,
approaches,
retailersretailers
allow customers
allow customers
to defer to defer
© NDFS
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SuperValu
SuperValu
was fresh
was
food.
fresh food.
Awareness Awareness
campaigns campaigns
increase the
increase
public’sthe
attention
public’stoattention
the
to the
problem ofproblem
food waste.
of food waste.
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PlanetRetail
2. Technology-based approaches bring
new dimension to store pricing
Even though retailers are already taking some
measures to reduce food waste, they do not
take full advantage of technology that can help
to tackle the problem. Technology can help
forecasts in such a way that the gap between
predicted and actual sales is reduced to a
Coop expands automated ordering to fresh
produce
minimum. With this, retailers can avoid food
Swiss grocery retailer Coop began automating
waste at the earliest possible stage.
the ordering of its fresh produce range in
April 2011. Already in 2005, Coop started
2.1
Automated replenishment based
on sophisticated forecast avoids
overstocks
Over the last few years, major retail groups
have managed to significantly reduce
overstocks by implementing automated
replenishment based on software that is able
to predict sales at item level. However, this
technology, which is highly successful for
ambient ranges, is hard to deploy in product
using forecasting software to automate the
ordering process for its ambient range. With
this, the Swiss retailer was able to reduce
inventory in its stores by 8% and at the same
time managed to increase on-shelf availability.
Due to this success, Coop decided to use
automated forecasting for its fresh produce
category too. Following a pilot with 30 dairy
products, the retailer started to roll out the
solution to the rest of the dairy category, as
well as meat, convenience products, fruit and
categories that have a short shelf life such
vegetables, fresh bakery products and plants
as fresh produce. Nonetheless, retailers
in April 2010. Coop plans to have automated
are constantly working on this topic and
the ordering for around 230,000 stock keeping
are continuously looking to improve their
units across its various channels in 2012.
forecasting solutions for fresh items.
Additionally, the retailer plans to implement
automated replenishment in its distribution
centres by 2012.
In order to secure the supply of necessary
amounts and to prolong the response time
for suppliers, Coop plans to establish preordering for fresh produce 72 hours before
the anticipated delivery to the store. 48
hours before the products are supposed to be
delivered to the store, a mandatory order will
be sent to the supplier. There will also be the
opportunity to manually override automated
orders in stores. This could be important if, for
example, the store managers know that there
will be a street festival close to the outlet,
something of which the centralised forecasting
solution could not be aware of. In this case,
the store manager could increase the order
amount for items such as beer, soft drinks or
barbecue meat. Overall, though, this override
functionality is very rarely used, especially in
ambient categories. In fact, Coop employees
only alter 0.7% of automated orders.
6
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them to reduce food waste by optimising order
PlanetRetail
Plane
for fresh produce
For replenishment
For replenishment
automation, itautomation,
is crucial
it is crucial
ReplenishmentReplenishment
automation forautomation
fresh produce
in order
to avoid
food be
waste
should be a topic
that a retailer that
has accurate
a retailer inventory
has accurate
data.
inventory in
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Planet Retail
7 2011
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8
Fresh
Foods
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8 8 Retail
Planet
Planet
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2011
Retail
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- www.planetretail.net
2011
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PlanetRetail
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their
onto
handhelds.
their handhelds.
The concept
The concept
study that
study
wasthat
presented
was presented
at
at
The foodThe
waste
foodreduction
waste reduction
programme
programme
receivedreceived
computer
computer
expo CeBIT
expofor
CeBIT
the first
for the
timefirst
in 2010
time in 2010
many positive
many positive
reactionsreactions
and wonand
the won
EHI the
Retail
EHI Retail
has already
has attracted
already attracted
the interest
the interest
of German
of German
Institute’s
Institute’s
Retail Technology
Retail Technology
Award for
Award
‘Bestfor ‘Bestretailer Metro
retailer
Group.
MetroHowever,
Group. However,
contrarycontrary
to
to
Instore Solution’
Instore Solution’
in 2010.in
Even
2010.
though
Even original
though original
Albert Heijn,
Albertthe
Heijn,
concept
the concept
study has
study
selected
has selected
plans foresaw
plans foresaw
the expansion
the expansion
of the solution
of the solution Electronic
Electronic
Shelf Labels
Shelf(ESL)
Labels
and
(ESL)
shopper’s
and shopper’s
to other to
perishable
other perishable
productsproducts
beyond fruit
beyond
andfruit and
smartphones
smartphones
as the means
as theof
means
communication
of communication
vegetables,
vegetables,
the project
the was
project
discontinued
was discontinued
after
after
for marked
for marked
down prices.
downThis
prices.
promises
This promises
to be a to be a
almost 14
almost
months
14 in
months
January
in January
2011. 2011.
Fresh Foods - 2012
more cost-effective
more cost-effective
solution.solution.
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Retail 2011
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- Planet -Retail
2011
9
PlanetRetail
ESLs and smartphones
communicate price
changes
In the concept study from SAP and SAF, several
instore technologies enable the retailer to
monitor sales of fresh produce throughout
the day and mark down prices accordingly if
products do not vend as well as anticipated. The
solution is currently being tested at SAP’s Future
Retail Center in Regensdorf, close to Zürich.
Using an automated forecasting and ordering
system, it compares actual sales during the
course of the day at product level with a
continuously updated forecast, and identifies
significant deviations. The system alerts the
retailer to products that will be overstocked
or out of stock at the end of the day. Staff on
the shop floor can then carry out appropriate
measures such as applying price reductions or
automated discounts at the checkout.
Store managers are equipped with tablet PCs
which show a dashboard with a list of alerts
sorted by urgency. Messages such as ‘the
private label strawberry yoghurt does not sell
as expected today’ are sent to the dashboard.
Together with the alert, the store manager
receives recommendations on what measures
he could take such as marking down the price
for the strawberry yoghurt and communicating
the new price to the store’s ESLs or to
shoppers’ smartphones. For the latter, shoppers
have to be holders of a loyalty card and
download a special app. Alternatively, the store
manager could also select a promotion which
could be sent to customers’ mobiles. Contrary
to the Albert Heijn approach which marks down
Similar to the alert for underperforming
products, the store manager is also warned
of overperforming products which vend better
than anticipated. While the latter is certainly
good for the retailer in terms of sales, it can
turn into a problem when it results in out-ofstock situations.
In addition to communicating prices to ESLs
and shoppers’ smartphones, the technology
providers are also considering digital signage as
a means of communication. Additionally, they
are currently in talks with providers of scales
that could also be used to inform customers
about mark downs and promotions. This could
be especially helpful at manned counters for
meat, cheese or fish, where an employee
can verbally alert shoppers to the latest price
changes or promotions.
This approach goes beyond store level and also
includes the supply chain. The solution foresees
that additional technologies such as RFID tags
and temperature sensors on pallets deliver
additional data which is then shown within the
dashboard on the shop manager’s tablet PC. If
the temperature for a certain batch of yoghurt
has, for example, fallen below the mandatory
temperature during transportation, an alert
would be sent to the store manager. He could
then either decide not to sell the yoghurt at all
or to mark down the price if it is still saleable.
In addition to data from the supply chain,
historical data such as how certain promotions
have done over the course of time are visualised
on this dashboard. This facilitates decision
making for the shop manager and enables him
to carry out the appropriate measures.
prices automatically, this solution addresses the
For the time being, this approach exists only
store manager who then triggers the necessary
in SAP Research’s laboratory in Switzerland
actions on the shopfloor.
and has not been tested at a retailer’s store.
However, there have already been several
meetings with Metro Group which is very
interested in the solution and was, according
to the technology providers, very enthusiastic
about it at CeBIT.
10
Fresh 2011
Foods -- 2012
Planet Retail
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3 Marketing Tools
2.4
PlanetRetail
PlanetRetail
2.5
Shoppers’ mobiles offer
upselling opportunities
The solution showcased in Regensdorf,
For mobile self-scanning, customers usually
have to sign up for a retailer’s loyalty card
programme. Retailers can take advantage of
this and use information about shoppers and
3 Marketing Tools
For mobile self-scanning, customers usually
2.5
Shoppers’ mobiles offer
past purchases to further increase sales
Switzerland already incorporates shoppers’ have totheir
sign up for a retailer’s loyalty card
upselling
opportunities
and compensate for losses from marked down
smartphones
to which
price alerts and special
programme. Retailers can take advantage of
They can
provide
customers
with
discounts
sent. Retailers
can also go one this andproducts.
use information
about
shoppers
and
The
solution are
showcased
in Regensdorf,
tailor-made
coupons
and promotions
purchases discounts,
to further increase
sales
step further
and use
customers’
mobiles for their past
Switzerland
already
incorporates
shoppers’
smartphones
topromotions.
which price alerts
cross-selling
Withand
thespecial
latter,
and compensate
for losses
from marked
down
for products
they might
not have
on their
products.
They can
providelist,
customers
with they have
discounts
Retailers
canofalso
go one items
current
shopping
but which
retailersare
cansent.
increase
sales
full-priced
tailor-made
discounts,
coupons and promotions
step further and use customers’ mobiles for
bought
previously.
to counterbalance lower sales from marked
cross-selling promotions. With the latter,
for products they might not have on their
retailers can increase sales of full-priced items
currentFor
shopping
list, but
they have
example,
if awhich
customer
has logged a special
bought diet
previously.
in their profile such as vegetarian or vegan
down products.
to
counterbalance
lower
from marked
However,
this level
ofsales
interaction
requires that
down products.
or a preference
forhas
certain
retailers also offer self-scanning with mobile For example,
if a customer
loggedproducts,
a special they will
be immediately
alerted
onceorhis
favourite
devices this
or shoppers’
smartphones.
this is diet in their
profile such as
vegetarian
vegan
However,
level of interaction
requiresIfthat
veggie burger
or vegetable
is being
for certain
products, they
will discounted.
the case,
can send messages
retailers
alsoretailers
offer self-scanning
with mobile such or a preference
devices
or shoppers’
this is
as ‘Would
you likesmartphones.
to buy someIfspaghetti
as be immediately alerted once his favourite
the
case,
retailers
can
send
messages
such
well?’ to any customer who decides to buy a veggie burger or vegetable is being discounted.
as
‘Would youtomatoes
like to buyand
some
spaghetti as
discounted
self-scans
them.
well?’ to any customer who decides to buy a
discounted tomatoes and self-scans them.
With the help of this dashboard, store managers can immediately see how their store is currently performing.
With the help of this dashboard, store managers can immediately see how their store is currently performing.
© SAP
© SAP
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11
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11
PlanetRetail
2.6
Rather than custom-made promotions for
individual shoppers, a retailer can also segment
customers into different groups according to
their demographics and previous shopping
baskets and send out price alerts, coupons and
The GS1 Databar facilitates
automated mark-downs at
the checkout
Since October 2010, and following on from its
promotions to a group of shoppers.
discontinued project with price displays (see
tackle the problem of food waste. The retailer
about a customer’s past purchases to alert
automatically reduces the prices of game and
them if they want to buy a product they
poultry products in one store in Zaandam with
already acquired during a previous shopping
the help of the GS1 Databar. On the day of
trip. For example, if a customer wants to
expiration, checkouts at the store automatically
purchase tomato ketchup, the retailer could
apply a 35% discount to the normal price
send a reminder such as ‘Are you sure that
of these products. This works because the
you want to buy a bottle of ketchup? You
GS1 Databar does not only carry the Global
already purchased one yesterday.’ These
Trade Item Number (GTIN) but can also store
alerts may reduce food waste generated
information such as serial numbers, lot numbers
at shoppers’ homes and may improve the
and expiry dates. Products from the game and
retailers’ image as being sustainable and
poultry range are promoted instore with their
socially responsible. However, this kind of
normal prices, with mark down prices also
reminder can be counterproductive when it
promoted on the day of expiration.
comes to every retailer’s objective of selling
as much as possible. Therefore, retailers
While this seems to be quite a simple approach
have to think twice if they want to potentially
to automatically carry out discounts in order to
sacrifice sales for the sake of preventing food
avoid food waste, there is also a drawback. Not
waste outside their stores.
all retailers are ready to scan the GS1 Databar at
the checkout. The global retail standards-setting
organisation GS1 originally set a date of 1
January 2010 for the global adoption of this new
barcode type. However, due to not all retailers
being prepared, the date was pushed back to 1
January 2014. So, as of 2014, all manufacturers
worldwide will be able to label their packages
with the GS1 Databar as an alternative to the
GTIN used today.
However, even when all retailers can read the
GS1 Databar, there will still be the question of
how to communicate price changes in the store.
Customers will want to know which products are
© GS1CH
discounted before they head to the checkout.
In addition to the GTIN, the GS1 Databar can also store serial or lot numbers and expiry dates.
Overall, the GS1 Databar approach to mark
down perishables is certainly a more costeffective solution. Nonetheless, it marks down
prices only at the day of expiry and therefore
does not offer the same possibilities as more
comprehensive approaches such as the one
communicated to shoppers’ smartphones.
12
Fresh2011
Foods-- www.planetretail.net
2012
Planet Retail
3 Marketing Tools
above), Albert Heijn is testing another way to
Finally, retailers can also use information
PlanetRetail
PlanetReta
3. 3.
Conclusion
Conclusion
and
and
outlook
outlook
Aside
thefrom
purethe
financial
pure financial
benefits,benefits,
there there
Looking Looking
ahead, technology
ahead, technology
solutionssolutions
that helpthat helpAside from
are
clear
other
reasons
clear reasons
why retailers
why retailers
should should
to avoid to
food
avoid
waste
food
will
waste
become
will become
increasingly
increasingly are other
important
important
for retailers.
for retailers.
Quite simply,
Quite any
simply, any
invest ininvest
tackling
in tackling
the issue.
theFirstly,
issue.retailers
Firstly, retailers
are emphasising
their credentials
their credentials
through through
opportunity
opportunity
to reduce
towaste
reduce
will
waste
havewill
financial
have financialare emphasising
their fresh
their
produce
fresh produce
offer. Customers
offer. Customers
expect an
expect an
benefits benefits
for retailers
for retailers
at a timeatwhen
a time
already
when razor
already razor
extensive
extensive
and lushand
product
lush product
offer of fruit
offer and
of fruit and
thin margins
thin margins
are coming
are under
coming
growing
under growing
pressure.
pressure.
3 Marketing Tools
The most
The
obvious
most obvious
approach
approach
to reduce
to food
reduce food
vegetables,
vegetables,
meat, fish
meat,
andfish
dairy
and
products
dairy products
at
at
all times.
allHaving
times. aHaving
well-stocked
a well-stocked
fresh produce
fresh produce
waste iswaste
to optimise
is to optimise
order forecasts
order forecasts
through through
department
department
will givewill
a retailer
give a a
retailer
key advantage
a key advantage
automated
automated
replenishment
replenishment
systemssystems
in such in such
over lessover
efficient
less efficient
rivals. rivals.
a way that
a way
thethat
gap the
between
gap between
predicted
predicted
and
and
Secondly,
food waste
foodreduction
waste reduction
measures
measures
actual sales
actual
is sales
reduced
is reduced
to a minimum.
to a minimum.
The
The Secondly,
improveimprove
the retailer’s
the retailer’s
public image
publicwhen
image
it when it
past decade
past has
decade
seenhas
leading
seen grocery
leading grocery
retailersretailers
comes to
comes
sustainability
to sustainability
and social
andresponsibility.
social responsibility.
achieve achieve
significant
significant
improvements
improvements
in termsinofterms of
Most retailers
already already
take some
take
measures
some measures
inventory
inventory
optimisation
optimisation
through through
investment
investment Most retailers
in this
including
area, including
donatingdonating
food to good
food to good
in thesein
systems.
these systems.
However,
However,
their impact
their has
impact hasin this area,
typicallytypically
been limited
been to
limited
the ambient
to the ambient
and
and
causes and
causes
recycling.
and recycling.
However,
However,
these initiatives
these initiatives
typically
typically
occur after
occur
wastage
after wastage
occurs and
occurs
the and the
processed
processed
chilled food
chilled
ranges.
food ranges.
The adoption
The adoption
of
of
retailer
still impacted
is still impacted
by the financial
by the financial
costs costs
new technologies
new technologies
to help the
to help
optimisation
the optimisation
of
ofretailer is
of
of wastage.
AdoptingAdopting
the newthe
technologies
new technologies
inventory
inventory
in the key
in the
fresh
key
produce
fresh produce
categorycategory
is
is wastage.
now firmly
nowonfirmly
the agenda
on the agenda
for retailers.
for retailers.
AlthoughAlthough
automatic
automatic
replenishment
replenishment
can helpcan help
identified
identified
above can
above
helpcan
retailers
help retailers
avoid and
avoid and
limit food
limit
before
fooditbefore
gets to
it this
getsstage.
to this stage.
With between
With between
50-60%50-60%
of sales of
in sales
a supermarket
in a supermarket
close theclose
gap,the
there
gap,
will
there
always
will be
always
somebe
excess
some excess
being derived
being derived
from thefrom
perishable
the perishable
category,
category,
it is
it is
supply insupply
the fresh
in the
produce
fresh produce
department.
department.
Other Other
estimated
that between
that between
5-7% of5-7%
perishables
of perishables
are
are
technologies
technologies
where investment
where investment
will helpwill
limit
help limitestimated
lost to poor
lost management.
to poor management.
This wastage
This wastage
could could
the impact
the of
impact
wastage
of wastage
where itwhere
occursitinclude
occurs include
impact
to 4%
upoftooverall
4% ofsales,
overallwith
sales,
only
with
a only a
real-time
real-time
inventory
inventory
management
management
systems,systems, impact up
small proportion
being recouped
being recouped
through through
mark mark
which can
which
be used
can be
to used
enable
todynamic
enable dynamic
pricing pricingsmall proportion
downs. As
downs.
consolidation
As consolidation
and competition
and competition
within within
according
according
to current
to stock
current
and
stock
sales
and
forecasts.
sales forecasts.
the grocery
the grocery
industryindustry
intensifies,
intensifies,
and margins
and margins
AffectedAffected
productsproducts
can quickly
can be
quickly
identified
be identified
and
and
facing constant
downwards
downwards
pressure,
pressure,
the issuethe issue
the pricethe
changed
price changed
accordingly.
accordingly.
Increasingly,
Increasingly, facing constant
of wastage
of wastage
should be
should
addressed
be addressed
as a priority
as a by
priority by
such changes
such changes
will be communicated
will be communicated
to shoppers
to shoppers
grocery grocery
retailers.retailers.
through through
relatively
relatively
cost-effective
cost-effective
methodsmethods
such
such
as ESLs as
and
ESLs
smartphones.
and smartphones.
Going forward,
Going forward,
deployment
deployment
of the new
of the
barcode
new barcode
GS1 Databar
GS1 Databar
will enable
willretailers
enable retailers
to offer automated
to offer automated
mark mark
downs on
downs
products
on products
reachingreaching
their expiry
theirdate.
expiry date.
Fresh Foods - 2012
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1