Not many people are aware of what it takes to run a grocery store. Everything from properly training staff to running carts back from the parking lot to stocking shelves all plays a pivotal role in keeping a grocery store running smoothly. If one domino falls, so do the rest, starting with food spoilage.
One factor that plays a role in how a grocery store is run is food spoilage. According to a survey from Growing and Sustaining Competitive Advantage in Grocery Retail, the annual value of spoilage for grocery companies was on average $70 million and several hundred million dollars for larger companies. For smaller retailers, this may be the difference between staying open and having to close up shop.
How Grocers Can Reduce Spoilage
From increased spending of consumer food dollars to self-driving grocery delivery options and other tech-forward and consumer-friendly appeals, the grocery industry has a lot on its plate already. But throw in revenue loss due to spoiled food and a grocer could have a major problem on their hands.
Looking for Fresh Produce Among Fresh Risks
A major loss that grocers and their vendors’ experience comes at the hands of fresh produce trucked across borders and highways. Tomatoes, apples, oranges, bananas, and so on all have expiration dates and need to not only be moved quickly from the time they’re harvested but need to be sold at their grocery store destination.
Retailers are striving to keep up with the demands of consumers when it comes to fresh produce. This has caused some companies to offer out-of-season fruit year-round, having items trucked across the country when they’re typically not supposed to be. With its limited window of optimal freshness, produce can spoil quickly and groceries have to take a financial hit in the process.
Food Spoilage & Cutting Costs
Currently, an estimated 40 percent of all food in the United States is thrown away, making a $218 billion loss. Since grocery chains have a role to play in this, they can no longer sit back. Previously, grocers factored this cost into their pricing models, but as shipping costs have increased and low-price competitors taking over the market, this is hurting their bottom line even more.
Now, grocers need to measure how spoilage will affect their year-end profits. Some may look to different ways they can cut costs. Instead of cutting costs, including necessary items like grocers insurance and payroll, grocers need a strategy to combat food waste.
Grocers like to put out displays, especially when it comes to fresh produce, but these displays, for example, could, in fact, be hurting their cause to cut down on food spoilage waste. Putting an abundance of produce on display can end with perishable items going bad before they’re consumed. To combat this portion of food waste, grocers can put less on display, which would cut down on overstock and would lower the amount of food waste.
Another way this can be executed is to keep an eye on what your customers are consuming. If bananas are more popular than tomatoes, maybe make the section for the latter smaller.
Utilizing Upgrades in Inventory Technology
There have been advancements in automation and software that have made inventory management scalable for more products and product types. Target, for example, is now using software to input their store layouts so that fulfillment in their shelves are more customer-organized.
Retailers used to rely on intermediaries to move their goods from warehouse to sales floor, but with new inventory technology, businesses can cut out excess time as well as excess inventory, which is great for grocery stores looking into cutting down on spoiled food and overall waste.
Another way that food waste can be limited is to discount any damaged foods in stock. These items don’t usually get shelf life because grocers tend to dispose of them since they’re blemished in transit. Stores assume that consumers won’t want an item that has been damaged, even in the slightest way, and even if it’s still edible.
Consumers may expect grocery stores to look perfect in their displaying of food items, but people still like a deal, so pricing items down at the end of the day could make for a sale and less food spoilage waste.
It’s important for grocery stores to be proactive and creative when it comes to how they can limit waste while also including the consumer. By discounting items that are slightly damaged and limiting the amount of product out in the open, it could help to promote less waste and spoilage, and, in the long run, help the overall profit margin of the grocery chain.
About Irving Weber Associates
At Irving Weber Associates, Inc., we understand what it takes to run a successful grocery, market, or convenience store, including investing in a comprehensive Insurance Program to ensure that they are financially protected against claims. Our program, Grocery Advantage offers overall business insurance coverages including, Food spoilage, General Liability, Property, Liability, Equipment Breakdown, Workers’ Compensation, Business Auto, and many more. For a detailed look at how we can help you safeguard your business with a custom-tailored package, please contact our experts today at (800) 243-1811.