ASDA, the UK arm of Wal-Mart recently gave away trolleys load of free food to avoid wastage.
Tesco, UK’s biggest retail brandhas a section in its stores where it gives away free fruits and vegetable to kids.
Tesco has also team up with a charity to give away up to 30, 000 tonnes of it 55.400 tonnes of food wasted each year to avoid wastage.
Co-op supermarket has also joined the photo op buy promising to sell its ‘best before’ date food for ten pence (cents).
If I was a shareholder of any of those supermarkets, the question I will be asking is, why are those supermarkets generating so much surplus food?
Tesco CEO Dave Lewis said in a press interview “This is potentially the biggest single step we’ve taken to cut food waste, and we hope it marks the start of eliminating the need to throw away edible food in our stores.”
If I was the chairman of Tesco board, I would have fired him the moment I read that interview.
There cannot be a dumber response to a situation that is causing Tesco to lose millions.
What the statements means is, he is focusing on the wrong thing.
Instead of cutting food wastage, his attention needs to be focused on preventing the surplus in the first instant.
How do Supermarkets Generate Surplus Food?
The biggest news of 2017 Christmas celebration was Tesco customers waking up to smelly house on Christmas day because their Christmas turkey had gone bad.
The situation almost resulted in divorce in one household when the wife accused her husband of having smelly feet.
And lots of people were forced to order takeaway for their Christmas dinner because there was no turkey to serve.
Why is Tesco Christmas Turkey Fiasco Relevant to Retail Sales & Profit?
The biggest problems retail brands face that directly affects their sales and profitability is forecasting and inventory inaccuracy.
Every attempt made to resolve retail forecasting and inventory inaccuracy remains fruitless.
Reason being retail brands continue to adapt the wrong solutions to the problem.
Instead of viewing forecasting and inventory inaccuracy as policy and process problem, retail brands view them as technology problem.
When the Tesco Christmas turkey fiasco occurred, instead of acknowledging the distress caused to the individuals affected, Tesco chose to excuse their cockup by boasting about the millions of turkeys they sold.
Tesco response to the turkey fiasco is critical because it highlights the reason retail brands continue to struggle with forecasting and inventory inaccuracy, which ultimately affects sales and profit.
Why do Retail Brands Struggle with Forecasting & Inventory Inaccuracy?
Our nearest supermarket is Tesco.
But we do not purchase our fruits and vegetables from Tesco.
We only buy from Tesco if our supplies ran out before our online food delivery arrives or I was out of town and Tesco was the only big retailer around my immediate vicinity.
The reason for that is Tesco fruits and vegetables always appear dated.
I have been in Tesco stores on many occasions when staff are placing fruits and vegs on the shelves and they appear dated fresh from the back.
Which is a clear indication that they have either been sat at the back for a long time, not properly preserved or the vendor is supplying close dated products to Tesco.
Whatever the reason for the fruits and vegs appearing dated, the fact of the matter is there is definitely an issue with Tesco supply chain.
Secondly, surplus food is a symptom of forecasting and inventory inaccuracy.
Therefore, instead of focusing on preventing wastage, retail CEOs need to be addressing the root causes, which are forecasting and inventory accuracy.
I believe addressing the problems with forecasting, inventory accuracy and supply chain delivery quality will dramatically reduce retail food waste.
Lending a Helping Hand Without Killing the Goose
It’s a good thing that retail brands are helping feed the poor.
However, there are better ways of making contribution to society without engaging in practices that are counterproductive to their business.
Their current avoidance strategy provides good PR as an attempt to demonstrate social responsibility but does not help the brands sales and profitability.
55,400 tonnes of food waste is a symptom of bad loss prevention and supply chain strategies.
Therefore, instead of drumming PR that does not help their bottom line, retail brands need to be devising effective loss prevention strategies to tackle their food waste.
The only strategy most retail brands know for boosting sales and profit is price discounting.
Price discounting is bad for the profitability of any business.
With profit margin razor thin in retail, instead of engaging in activities that further erodes profitability, retail brands need to focus on optimising outliers.
Optimising outliers in this sense means engaging in activities that boost sales without sacrificing profit.
Such activities include: effective loss prevention strategy, optimising supply chain, preventing known loss, minimizing shoplifting or employee theft and optimising the buying process.
Those are the outliers when optimised results in 10X sales and profit increase.
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About the author
Romeo Richards is an experienced retail trainer and consultant with knowledge of retail marketing, store performance and retail loss prevention.
He has the ability to choreograph the customer journey, boost store conversion and enhance in-store experience using store design and visual merchandising.
Specialises in increasing retail profit through shrinkage reduction.
He is the author of 23 retail and marketing books including:
• How to Increase Retail Sales
• How to Make Profit In Retail
• Store Design Blueprint
• Visual Merchandising Display
He is the creator of five retail home study courses.
Frequently presents webinars on shoplifting prevention and boosting retail sales.
Featured in Professional Security Magazine, Retail Week & Retail Technology Magazine