Grocery retailers traditionally measure the cost of waste in write-offs, lost revenue and inefficiencies.
But now, a progressive industry is expected to take a more effective management approach.
As a result, waste is no longer just an operational problem but a strategic, financial and ethical one.
The pressure is on retailers to rethink how they manage perishable inventory under the spotlight of environmental scrutiny, shrinking margins and heightened consumer expectations writes Alex Considine Tong, Chief Product Officer at Retail Insight.
Grocery chains use a wide range of tactics to cut waste, but their impact is often limited. Discounting near-expiry products, for instance, is typically done too late or too inconsistently, which can encourage shoppers to wait for markdowns rather than preventing over-ordering in the first place. Bulk promotions such as “buy one get one free” have the opposite effect, pushing customers to buy more perishables than they can consume. Donations to food banks provide community benefits, but they are logistically difficult and do not reduce the overall surplus being generated. Similarly, schemes for “ugly” fruit and veg tend to attract headlines but only appeal to a small niche of consumers.
On the operational side, basic forecasting systems often fail to account for real-world variables like weather or local events, while disposal methods such as composting or anaerobic digestion still write off the product’s full value. Other initiatives—from awareness campaigns to staff-led markdowns or supplier chargebacks—tend to shift responsibility rather than address the underlying drivers of waste: inaccurate forecasting, poor stock rotation, and rigid supply chains.
Fortunately, there are now smarter solutions that bring a triple benefit: profit, planet and customer trust. In grocery, the misalignment of stock levels, shopper demand and the ability to act in good time all lead to waste. This is particularly true when sell by dates get closer or store layouts prevent high-visibility clearance. At the store level, the signs are now very familiar – cluttered shelves, hastily applied markdown stickers, missed opportunities for donation or perfectly edible food thrown away.
But behind these moments of waste is the more fundamental issue of information gaps. When pricing, stock availability, shelf replenishment and markdown decisions are handled in silos and also reactively, retailers lose both visibility and control. And in a world where shoppers expect value, immediacy and environmental responsibility, that loss can quickly translate into lower loyalty and eroded brand equity.
Customers care about waste and are doing their bit. However, they also expect retailers to play their part in reducing environmental harm, and they increasingly associate waste with carelessness, inefficiency or misaligned values. They will often think, ‘Why are you throwing that away? Why wasn’t I given a chance to buy it, donate it or understand what happened?’ And they don’t just want to hear that retailers are committed to reducing waste, they want to see the evidence, every day, in store.
Shoppers also want consistency. It is inconvenient for the customer when a product is out of stock due to poor forecasting or mismanaged markdowns, and it may also be a trust breaker. And now, as inflation continues to squeeze household budgets, customers notice when a store feels disconnected from their needs.
Retailers who take a smarter approach to waste stand to gain more than goodwill. They can cut costs, streamline operations and position themselves as leaders in sustainability, all while enhancing the shopper experience. But to do this, they need to move away from reactive, manual processes and toward connected, data-driven decision-making.
This starts with visibility, understanding where, when and why waste happens, down to product, store and time of day, in order to give retailers the intelligence to intervene earlier. Retail Insight’s AI-powered waste reduction platform combines dynamic markdowns, prompted markdowns and stock exit management to give retailers proactive control over expiring inventory. This enables faster decisions, higher sell-through and lower shrinkage.
Rather than waiting for sell-by dates to force decisions, retailers can now anticipate surplus, identify slow-moving lines and model the likely outcome of different actions be it markdown, donation or redistribution. Using the Stock Exit Management feature, for example, retailers can optimise the clearance of seasonal or de-listed stock before it becomes a liability. These capabilities allow for precision, not just in pricing but in placement, timing and labour allocation.
The ideal scenario is, before the product hits the shelf, the retailer can know how likely it is to sell at full price in a particular store. If demand is lagging, the system adjusts pricing dynamically, and with the help of Prompted Markdowns, store associates are alerted only when action is needed. Shoppers see discounts that feel fresh, fair and transparent.
This shift away from gut instinct or fixed calendars toward responsive, data-driven pricing is an evolution that unlocks new possibilities. This leads to fewer out of stocks, better sell-through and reduced shrink, all without adding complexity for store teams.
Once this is in place, excess stock can be treated more intelligently. For instance, adding donation and re-use elements into waste strategies, and making those options as seamless and structured as possible. WasteInsight’s Intelligent Donation Enablement streamlines store-level donation workflows, helping retailers identify unsold inventory that is no longer viable for sale but suitable for donation, and automating the labelling and tracking of those products.
None of this happens in isolation. To truly cut waste at scale, retailers need to connect decisions across pricing, merchandising, inventory and store operations. The real breakthrough is when these functions stop operating in silos and start sharing a common view of risk, opportunity and impact.
Retailers need to take a more strategic view and rethink the role of waste. As regulators introduce stricter mandates and ESG commitments become more central to business performance, the ability to track, manage and reduce waste is becoming a board-level priority. Retailers who get ahead of this curve will not only reduce costs and risk, they will also be seen as brands that care, act and lead.
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