How to tackle the causes of grocery store food waste

Dec 23, 2024 • 5 min

Editor’s note: This article has been updated since it was originally published in Food Logistics.

Grocery store food waste is a doubly costly issue. There’s the obvious monetary cost to grocers, who toss millions of tons of food every year and destroy margins.

But there’s a more globally concerning cost associated with food waste as well — its environmental impact. A staggering 8-10% of global greenhouse gas emissions come from producing food that will never be consumed.

At times, these two issues may appear to create tension. Retailers face mounting pressure to balance customer expectations, but the need to maintain inventory availability often contributes to food waste, conflicting with sustainability goals.

These two goals don’t need to be at odds. Modern planning platforms that leverage advanced analytics and machine learning can help grocery retailers gain deeper visibility into their supply chains than ever before. This visibility enables businesses to better match supply with demand, tackling the major causes of grocery store food waste without sacrificing the high standards their customers expect.

3 major causes of grocery store food waste

Before grocers can effectively tackle their food waste dilemma, they need to understand its primary sources. A clear analysis of the biggest contributors to waste enables companies to develop targeted strategies and deploy the right technologies for each challenge.

In grocery retail, the three major factors driving food waste are:

1. Overordering rooted in decentralized planning

Properly assessing demand requires grocery retailers to understand both macro and micro trends across locations. For instance, ingredients for baked goods may climb in demand nationwide right before the holidays. But the popularity of fillings for these goods may differ from region to region.

Unfortunately, store ordering is often handled locally by managers who base their buying decisions entirely on manual observations and records. This decentralized approach sidesteps macro trends that could be addressed by technology implemented at the store’s headquarters, leading to over-ordering of goods that the store may not need, and ultimately, unnecessary waste.

2. Overstocking stemming from consumer perception

Food merchandising is a tricky business, especially for the products customers would typically find around the supermarket’s outer ring, such as fresh produce, meat and dairy. Customers are unlikely to purchase bruised or over-ripened fruits and vegetables. Short shelf-life products like steaks, pork and chicken nearing their sell-by dates are also often rejected in favor of food that will stay good for another week or longer.

These perceptions put supermarkets in a cycle of waste: they have a constant supply of new products coming in to ensure these aisles are appealing, but that doesn’t mean the food is selling at the same rate. The leftovers, often caused by overstocking in the first place, are tossed in the garbage in favor of more visually appealing food. And while businesses are trying to get some of these unwanted goods to consumers, there’s still plenty of work to be done to prevent overstocking of time-sensitive goods on store shelves.

3. Limited agility due to outdated, manual planning processes

For grocery stores, the last few years have been one of the most turbulent periods on record. Global disruptions led to supply shocks in every corner of the retail marketplace —and grocery stores felt the heat. Meat suppliers went offline because of outbreaks, and demand soared for products that don’t typically fly off the shelves. (Seriously — who could have predicted a surge of demand for toilet paper?)

An adherence to manual process left too many grocery stores frozen and unable to adapt to radically shifting circumstances. Even now, individual stores only order based on their recent data, lacking the technology to pivot if conditions were to change again.

If any lessons retailers have learned in the last few years, it’s to expect the unexpected. Failing to leverage demand data creates an environment ripe for food waste, with stores order too many of the wrong (or too few of the right) products to address the demand swing.

How to reduce food waste in grocery stores

At the heart of each contributing factor lies a common thread: manual processes and disconnected systems that can’t keep pace with today’s dynamic retail environment. Grocery retailers have historically accepted this version of inventory planning and management simply because there weren’t better alternatives.

That’s not the case today. Advancements in planning technology have created new, more efficient alternatives that help grocers reduce waste while protecting revenue and maintaining the high product availability customers expect.

1. Harness machine learning in inventory planning and management

In the current Age of AI, buzzwords abound. But machine learning earns its buzz and can help grocers transform how fresh item management. These advanced systems analyze both macro and micro demand patterns across locations, enabling stores to order the right quantities at the right time.

This ultimately results in higher product availability with less waste. Stores using these tools can spot emerging trends before they impact the bottom line, helping them stay ahead of demand swings that previously led to overstocking.

2. Enhance visibility into fresh inventory

Modern supply chain tools give grocery stores unprecedented visibility into their fresh inventory. Instead of relying on gut feelings, managers can now track stock levels and expiration dates in real-time, enabling smarter markdown decisions before food spoils. This proactive approach helps stores clear fresh goods at the optimal time, maximizing sales while minimizing waste.

RELEX specifically has a feature that helps grocers track product expiration dates and sell the oldest items first to minimize waste. RELEX batch balance management uses a First In, First Out (FIFO) approach and predicts spoilage based on sales forecasts. This ensures fresh products for customers and reduces waste and overstocking.

3. Connect ordering and replenishment with demand data

The days of managing fresh goods orders through endless spreadsheets are over. Modern technology connects ordering directly to demand data, creating a streamlined system that responds to actual customer buying patterns.

This integration goes a long way toward reducing waste. A bonus benefit: it also frees up staff time previously spent on manual ordering, allowing them to focus on serving customers and maintaining store quality.

Making a real impact on food waste and emissions

The impact of addressing food waste extends far beyond individual store operations. In 2023 alone, RELEX helped prevent approximately 228 million kg of food waste for our customers, resulting in a reduction of 950,000 tons of CO2 equivalents in greenhouse gas emissions. To put this in perspective, that’s equivalent to removing about 200,000 cars from the road for an entire year.

Modern planning technology extends beyond “just” achieving efficiency. It also enables sustainable practices that benefit both business and the environment. Grocery retailers no longer have to choose between maintaining a high product availability or contributing to a more sustainable future.

As global challenges in food security and environmental sustainability continue to grow, the grocery industry has a unique opportunity to lead the way in reducing waste and emissions. With the right tools and strategies in place, grocery retailers can create a future where economic success and environmental responsibility work together seamlessly.

Join the RELEX fight against food waste