Supermarket Perimeter - September 2023 - 70

Technology
AI and
FOOD
WASTE
By Andy Nelson
THE U.S. WASTES AN ESTIMATED 40% OF ITS FOOD, with 7% of this
tied to expiration and " best before " labels. But much of the waste is
simply because it didn't get sold before it perished, said John Clear of
the Alvarez and Marsal consultancy.
" While waste might seem inevitable, it's possible to reduce the
amount of scrap and AI shows some promise in this effort. "
A new report from Alvarez and Marsal, The Grocer's Sustainability
Playbook: How sustainability can boost your bottom line, addresses the
role of AI and other high-tech solutions - as well as some decidedly
old school methods - in meeting grocers' and their supplier partners'
sustainability goals.
Among the report's highlights are ways of increasing visibility into
and control of the end-to-end supply chain process, including:
* Using data rather than gut feeling: The importance of proper training
for store managers and fresh leads on how to correctly order
for stores.
* Proactively managing the assortment to prioritize high velocity SKUs
and mitigate potential scrap items with lower turns.
* Future state of grocery waste management: AI/Machine Learning that
combines all the sales/ordering variables to increase volume on high
turning items, reduce holding on low velocity SKUs and recommend
assortment reductions.
" Does sustainability need to come at the expense of profits, " the
report asks. " The answer is an emphatic 'No!' "
In fact, according to Alvarez and Marsal, being a more
environmentally responsible retailer typically means being a more
effective and profitable one.
" While the supply chain shocks and labor shortages of the pandemic
have pulled the focus of many executives away from sustainability,
savvy grocers are acting now to meet the demands of today's
70 - SEPTEMBER 2023
eco-conscious consumer and investor, "
according to the report.
Improving inventory management is
critical to reducing waste, focusing on the
most problematic categories in fresh. Over
40 billion pounds of food is wasted in grocery
stores in the U.S. every year, according to the USDA.
" This waste is not only bad for the planet; it can also
quickly erode margins, with typical levels of waste ranging between
5-10% across fresh departments. "
Improving inventory management not only reduces this waste,
but also improves margins and drives on-shelf availability of these
categories which are key drivers of primary shopper traffic, according to
the report.
There are a range of tools in the marketplace to improve forecasting
and ordering.
Perhaps one of the most advanced, according to the Alvarez and
Marsal consultants, is being used in Albertson's stores, where the food
giant recently launched AI-powered food waste reduction technology
as part of its plan to reduce waste by 50% by 2030.
The technology leverages data on perishability, historical sales and
customer demand to optimize ordering.
Not every retailer has the infrastructure to launch a technology
of this scale today, according to the report. But they can target
the categories where waste is causing the biggest losses and find
opportunities to make immediate improvements.
" For example, could targeted promotions be used to reduce excess
inventory, " according to the report. " Are existing forecasting tools
being used to their fullest capability? Targeting the root cause and
implementing a simple solution can have surprising results. "
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Supermarket Perimeter - September 2023

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