Strategy and Operations

Trash Talk

rr-trashtalk-lewis2Lately I’ve been hearing more “trash talk” than at an NBA playoff game.

But this isn’t the usual on-court banter. It’s the conversation about food and solids reaching large proportions. It’s happening as activists, government agencies and even some in retailing view waste  reduction not only as an environmental and business issue, but also as a solution to global hunger. And it’s happening as the world’s population increases and demand for food rises while the amount  of arable land remains the same.

None of these issues is new. When I was growing up, my friends and I would ride our bikes along the shoreline until we came to what we called “Garbage Mountain,” an expansive landfill that towered over an otherwise pristine seascape. When the wind was just so, the cool ocean breezes were overpowered by the sour stench of millions of tons of garbage, and the steady roar of bulldozers pushing the pile higher. That landfill finally closed not because it was an environmental hazard, but because it was full.

Of course, we’ve always been able to bury it, bag it, burn it, and even pay others to take it off our hands. And if we could, we’d probably shoot trash into space or colonize the moon with the first off-planet garbage dump.

Changing the Future

The thorny issue is not just getting rid of garbage, but reducing massive amounts  of waste at every level of the supply  chain. I believe that retailers can become agents of change to solve a problem that’s reaching a critical point.

Food waste is particularly disturbing. Retailers, restaurants—led by fast feed-ers—schools and consumers are wasting an astounding 40 percent of the U.S. food supply, according to U.S. Department of Agriculture figures. Furthermore, food accounts for more than 20 percent of the solid waste in municipal landfills. That 40 percent may be a conservative estimate given that growers and distributors are tossing out tons of food because supermar-kets don’t want produce that’s blemished or nearing or past the “sell-by” date.

To make matters worse, nearly half of consumers tallied in a recent Ohio State University survey didn’t think food waste was a problem. The number startled in a country where one in seven households struggles to afford regular healthy meals and where 20 percent of households are termed “food insecure,” meaning they don’t know where their next meal will come from.

The unvarnished truth is that waste is a byproduct of a consumer culture that places a high value on convenience  regardless of cost or consequence. We’ve been on this disastrous trajectory for decades and only a concerted effort  by every segment of the supply chain  will allow us to sidestep a dystopian future in which the American landscape, indeed that of the world, is dominated  by ugly landfills.

Government Intervention

We want to avoid a scenario in which government mandates supplant industry initiatives. In France for example, the Senate voted to ban large supermarket chains from throwing away food nearing its expiration date, requiring them to either compost the waste or donate the items to charity. Italy has adopted a  similar law and the European Union is looking into legislation that would reduce food waste across the entire European  bloc—an unlikely scenario given the  fragile state of the E.U. and the vocal detractors in Brussels.

Government efforts in the U.S. are a bit more altruistic than dictatorial—at least for now. The Food Recovery Act, which beefs up the Good Samaritan laws protecting retailers from liability when they donate food, is gaining support on both sides of the aisle in an otherwise contentious election year.

Additionally, the Food Date Labeling Act is trying to deal with the complex and often esoteric world of expiration dates, which adds to the waste pile when consumers unwittingly toss out good food they think has gone bad. The legislation would require food producers to use a label indicating quality (“best if used by”) or one indicating safety (“expires on”). The last thing food producers want is another label to deal with. But this requirement would create some standardization and save an estimated 400,000 tons of food annually as long as consumers under-stand that sell-by dates are guidelines and not food safety indicators.

The law could be a tough sell because the Ohio State study found that 68 percent of consumers thought that tossing food after the expiration date reduced the chance of foodborne illness, and nearly 60 percent of those surveyed were convinced that some waste was necessary to make sure meals were fresh.

This tells me that the American public needs a wake-up call.

Private Sector Initiatives

Before anyone starts laying blame, let’s be clear that meaningful waste reduction has to come from the private sector—farm-to-table and manufacturing-to-retail initiatives that will require unwavering discipline at every point in the distribution channel.

The most aggressive attempt to change the industry’s environmental footprint is the Food Waste Reduction Alliance, which consists of the Food Marketing Institute, The Grocery Manufacturers of America and the National Restaurant Association. The Alliance is co-chaired by ConAgra Foods, one of the world’s largest food processors, Wegmans Food Markets, a leading U.S. grocery store chain, and Wendy’s QSCC, the exclusive supply  chain manager for all Wendy’s  restaurants in North America.

New data is expected this fall. But based on recent FWRA research, approximately 7.1 billion pounds of food waste is  generated every year, and for every  $1,000 in supermarket revenue, 10 pounds of food waste is created. The upside here is that more than 40 percent of waste is donated or recycled for animal feed, compost or biofuel. Meanwhile, the alliance helped get Congress to pass legislation in the 2016 Omnibus Budget that provides comprehensive tax incentives for food donations. It’s working with federal and state governments to further ease restrictions and within the food industry to overcome transport and storage issues.

Retailing Dives In

But some retailers, recognizing the urgency of the situation, are to be applauded for taking matters into their own hands. In the U.K., Asda is making waste reduction a dollar and cents—or pound and pence—issue for consumers. In a multi-channel campaign with the University of Leeds, the chain is telling consumers that throwing out good food is costing them about $75 a year. At the same time, Asda is re-evaluating pressure points within its own supply chain and Tesco admitted that it’s own food waste exceeded 59,000 tons last year, equal to 119 million meals. The chain, with operations worldwide, has reduced the amount of time food sits in the supply chain to increase shelf life and has introduced a line of blemished produce called Perfectly Imperfect.

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In Denmark, a new store called Wefood  is the country’s first surplus food  supermarket and is striking special deals with importers, producers and other retailers to obtain surplus or blemished foods at deep discounts. Similar no-waste supermarkets have cropped up in Vienna, Barcelona and Berlin.

In the U.S., Asda’s parent company, Walmart, as well as Whole Foods have launched their own initiatives amid heightened concerns among consumers and activist groups. The Daily Table, run by former Trader Joe’s president Dough Rauch, is a nonprofit supermarket in the lower-income Boston neighborhood of Dorchester that exclusively sells products near or past their expiration dates donated by growers, wholesalers and manufacturers.

Creating Energy

One of the most interesting, and all encompassing, projects comes from Stop & Shop, part of the Ahold/Delhaize group, which has opened anaerobic digestion facilities at distribution centers. Stores backhaul waste to the DCs where a “digester” breaks down the food and creates a slurry. That goes into another tank which produces methane, which  is then fed to a generator to create renewable energy for the facility’s refrigeration system.

Every segment of retailing needs to address packaging, or more to the point, excess packaging, one of the major sources of waste paper and plastics and accounts for one-third of garbage sent to landfills. A growing number of companies are using more minimalist and environmentally safe packaging. Trouble is, packaging has long been used to make products more attractive to consumers. And industries like cosmetics are not about to give up any competitive advantage.

Vendor Cooperation

The next move for retailers will be to work with vendors on supplying products with less packaging or using reusable materials like cardboard or polystyrene packaging peanuts. Vendors should also supply small containers for business recycling programs.

Mall stores are encouraged to talk to property managers and anchor stores to coordinate waste prevention and recycling programs. These kind of multi-tenant programs that collect large amounts of material can make recycling more cost-effective.

On a corporate level, companies like the Gap, Walmart, Levi’s, Nike and others  are part of the Clean By Design program run by the National Resources Defense Council to leverage the power of the multinationals to get overseas suppliers  to reduce waste.
Not everyone will like this idea, but retailers could be convinced to eliminate catalogs, newsletters and simply rely 100 percent on digital marketing.  Truthfully, it’s not a big deal since we’re going in that direction anyway.

Retailing, which is always looking for ways to cut costs and service customers, has a unique opportunity to shape its own legacy. Do you want to talk trash  or do something about it?

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