Fighting Food Waste: Achieving Sustainability and Profitability in Fresh
Becoming a more sustainable business while maximizing profits is a balancing act today’s grocery retailers are continually challenged to perform. Progressive Grocer reached out to Matt Schwartz, CEO and co-founder of Afresh, to learn how the company’s AI-powered Fresh Operating System can help grocery retailers achieve that balance by reducing food waste in fresh.
Progressive Grocer: How is the Fresh Operating System your company has created different from other technology platforms?
Matt Schwartz: The first major difference is that our system is specifically built for fresh categories. This means it can handle perishability, seasonality, random weights, dynamic displays, fresh workflows, and more. Another difference is that our platform is powered by groundbreaking innovation: our artificial intelligence, developed by experts from Stanford University. Finally, and perhaps most importantly, we built the system in a way that is embraced by store teams. It is the combination of these dynamics — fresh-first system design, the best AI, and purpose-built workflows — that create game changing results.
PG: Why is combating waste at the grocery level so important?
MS: Profitability, loyalty, and sustainability. Profitability: because shrink is usually 4 to 8 percent of sales in fresh departments, slashing shrink by just 25 percent can multiply margins in a 1 to 3 percent net income business. Loyalty: the best way to reduce waste is to accelerate turns, which can add days of shelf life. When shoppers know that a store has the freshest food around, they come back again and again. Sustainability: In the U.S., 35 percent of all food is unsold or uneaten, which translates to $408 billion in wasted food — while 1 in 8 Americans are also food insecure. According to ReFED, retailers account for 28 percent of that food waste today.
PG: What are some of the culprits causing so much food waste in grocery stores?
MS: I always think it’s important first to acknowledge that grocers do an amazing job of managing absurdly complex supply chains. The nearly trillion-dollar grocery industry presents so many challenges, and there are huge opportunities to address the many culprits behind waste.
The biggest problem is that most systems are incapable of understanding and handling what actually goes on in fresh departments. Fresh data is messy, food goes bad, display sizes change dynamically, the berries differ in quality, items are cut in store, demand shifts dramatically — all of this throws off traditional inventory and ordering tools. That in turn means that stores have to rely on manual processes and gut intuition to make important decisions like determining how much to order each time. When the incentive is to stay in stock, most stores then overorder and drive excess shrink.
Innovative technology like ours adeptly handles those challenges and makes
it easy to place orders that prevent food waste, which ultimately optimizes the grocers’ entire fresh food supply chain. We’ve built our company with the goal of enabling grocers to be their very best in fresh, thereby eliminating waste, delighting customers, and multiplying profits.
PG: That’s all great news — but is it really possible to become more sustainable and do well from a bottom-line perspective, too?
MS: Fortunately, waste reduction is one of those areas in which increasing profit and doing good for the world are squarely overlapping. Every time a spoiled banana goes to the landfill, a grocer loses the cash it bought it with. Our Fresh Operating System prevents those losses, making it easy for grocers to embrace sustainability while maximizing profits. Across all our partners, we’ve seen shrink go down by 25 percent while sales increase 3 percent on average.
PG: Are you finding that grocery retailers are eager to embrace the technology?
MS: Yes! Albertsons’ Recipe for Change is one example. They’ve made a remarkable commitment to sustainability, including zero food waste going to the landfill by 2030 — and Albertsons is currently deploying our solution across all of its stores to help them achieve that.
For more information about maximizing profits and improving sustainability in your stores, visit www.afresh.com