• Navya Sri

Top 5 ways to reduce waste on Grocery shelves

Updated: Jul 22, 2021

Farmers have been looking for solutions to prevent product loss from numerous sources, including damage and expiration, since they first began trading their fresh fruit. They've utilised a variety of measures to lessen this "shrink," including more precise demand projections, optimised and faster transportation, more enticing product displays, longer shelf lives, and frequent pricing adjustments to maximise profitability while clearing the shelves before goods spoil.

Shrink absorbed 2 to 3% of a typical grocer's sales before the COVID-19 outbreak and subsequent economic downturn—a considerable portion in a business where razor-thin margins are usual. As buyers' requirements and tastes change faster than ever before, shrink is now on the rise in several locations and product categories. Shrink has climbed to 5 to 15% of revenues in ready-to-eat and ready-to-heat products, drastically reducing earnings. In markets roiled by the pandemic, accurate forecasting is more challenging.

Leading supermarkets throughout the world are already planning for the "new normal," recognising the problem. They're providing shoppers more of what they want in every store, every day, while decreasing shrink by 20 to 30% and reinforcing their bottom lines by using 21st-century tools, mastering new tactics, and even going back to basics.

1. Advanced algorithms to forecast sales: The natural starting point of a shrink-optimization is to order the proper amount of each product. Forecasting methodologies and algorithms that are only based on past data are no longer accurate in today's much more dynamic supermarket industry. People shopping dur

ing the pandemic, for example, have radically modified their baskets as they visit stores less regularly, cook more at home, experiment with online and delivery channels, and adjust to their new normal.

Some supermarkets are gathering, cleansing, and investigating more internal and external data, to make far more accurate demand projections, reduce shrink and stockouts, and right-size inventory to save space, labour, and capital. Some companies are even using predictive analytics to help category managers alter pricing, promotions, and assortment in each physical and online store on a daily basis.

Recognizing that daily predictions are sometimes inaccurate, particularly in time-sensitive categories like ready-to-eat and frozen foods, several supermarkets are increasing prediction granularity to allow them to make decisions by the hour or even minute

Accurate hourly estimates assisted managers in scheduling supplier supplies and planning in-store production, resulting in a 15% reduction in shrink and improved product quality for customers.

2. Changing layouts and shelf space over the day, week, and year: A method in avoiding shrinkage is to optimise the quantity of each SKU on each shelf. New modular solutions enable dynamic display scaling throughout the day to handle fluctuations in footfall, such as the decline in consumer flow in most businesses toward the end of each day. Similarly, utilising a shelf-planogram design that integrates predicted sales with the planned frequency of shelf replenishment at the SKU level, staff may manage monthly assortment and sales-volume changes. This allows employees to combat their natural urges to overfill shelves, which can cause shrink, while also avoiding stockouts and maintaining appealing displays.

This potential was realised by a large worldwide grocer, which corrected employee behaviour by establishing standard tools and methods based on these principles to size shelf space in the fresh sections, as well as rigorously training employees on these new standards. Customers liked the redesigned appearance and attractiveness of the new displays and selling space, which reduced shrinkage by 5 to 15% in less than two weeks.

3. Extending shelf life: Leading supermarkets around the world are doubling down on shelf-life investments like vacuum packing and Cryovac, especially to prevent shrinking of high-value products like those in the meat, seafood, and deli sections. Vacuum packaging is also being used to marinade meats and create other value-added goods, as well as to improve food delivery variety and quality. Consumers can keep things in their freezers for longer periods of time and only defrost and consume them when they're ready.

4. Developing bargain-hunting apps: Most supermarkets have discount clearance procedures in place for out-of-date produce, meat, and seafood, but customers don't always know where to go for savings, resulting in subpar clearance. Some supermarkets are combining advanced analytics with apps that provide shoppers with real-time information on discounts and remaining shelf life to control markdowns. Employees review things that are due to expire and submit those reviews on the app, along with a discounted price, so deal seekers may skim through and buy.

They can make purchases straight in the app in some situations, generating revenue to the supermarket even if the clients never show up. Those that do are sent to a customer service or "click and collect" facility, where they can pick up the item. This type of innovation encourages people to come back to the store more often, which usually leads to more purchases.

Several grocers who are experimenting with this have seen shrink rates drop by more than 20%, depending on the depth of the discount and the items sold.

5. Re-evaluating upstream operations and inbound quality control in distribution centres:

Many supermarkets are reverting to their roots, improving cold chains and utilising technology to track conditions at every stage. Some companies are implementing these adjustments in tandem with ever-evolving processes and systems to keep staff and consumers safe. To deliver ongoing insights into the end-to-end product life cycle, old approaches are being combined with modern technology.

By maintaining the correct temperature from source to store through storage, loading, and unloading, a Middle Eastern merchant reduced shrink for the most sensitive categories, such as berries, by more than 30%. To reduce the amount of time sensitive products, spend outside temperature-controlled rooms, staff first optimised the speed and order of pallet loading and unloading from vehicles. They now perform routine audits to verify that best practises are followed and that operational improvements, and hence savings, are maintained over time.

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