Store Colleague Donations: Key Learnings

In February, we hosted an online discussion on the case for, and the case against, donating unsold food to store colleagues. Ahead of the meeting, we had invited retailers to share their current policy via an online survey. We received replies from 37 retailers, from USA, Canada, UK, Europe, Middle East and Australia / New Zealand.

From this sample of 37 retailers. there were 10 (27%) who shared back that they had such a scheme, leaving 73% sharing that they did not have such a scheme.

The meeting, attended by over 40 different retailers, started with a presentation from a UK retailer who started their store colleague donation scheme in 2017.

Their presentation highlighted both the benefits and challenges of implementing such initiatives, and the discussion that followed was informed by this retailers learnings and the differences between their respective operations. Below, we explore the arguments for the case for and the case against donating unsold food to store colleagues.

The Case for Store Colleague Donation Programmes

1. Food Waste Reduction & Redistribution Efficiency
   Store colleague donation programmes provide a cost-effective and agile means to redistribute surplus food, reducing waste significantly. Their model ensures that food is offered to store colleagues only after charities have had the first opportunity to collect donations. This hierarchical approach prioritises external donations while still preventing food waste within stores. This model retailer is donating, on average, 15% of their unsold food to colleagues.
2. Operational Cost-Effectiveness
   Compared to other exit routes, such as charitable donations or disposal through animal feed, colleague donations are the cheapest option, involving minimal additional labour. This retailers process integrates with existing markdown procedures, requiring no extra handling time for staff. The company has fine-tuned its system to ensure efficiency with minimal disruption to store operations.
3. Improved Employee Engagement & Well-being
   The programme is seen as a valuable employee benefit, allowing workers to access surplus food free of charge. This initiative supports staff, particularly those on lower wages, and contributes to their financial well-being. The retailer has also extended the donation programme to "family and friends" doubling the number of families that can benefit from free unsold food. Their employee feedback has been overwhelmingly positive, with many describing it as one of the best benefits the company has introduced.
4. Scalability and Adaptability
   The retailer demonstrated how its donation programme can be adapted for seasonal changes (e.g., Christmas, extreme weather) and scaled across different store formats. The system's flexibility allows the retailer to adjust donation times and prioritise redistribution when charities cannot collect food, such as during public holidays or extreme weather. By way of example, a recent extreme weather incident lead to 150 of their stores being forced to close for 24 hours, with no charities collecting, the presence of their store colleague donation programme ensured that they were able to maximise the redistribution of unsold food to humans.
5. Use of Technology for Security & Compliance
   The integration of the colleague discount card into the donation process, where every item donated is treated as a "sale" and scanned at the POS, ensures the full traceability of the free unsold food items distributed. There is an automated system to flag irregularities and prevent potential abuse, such as excessive food collection by employees. This real-time monitoring helps store managers investigate suspicious activity while maintaining fairness in the distribution process.

The Case Against Colleague Donation Programmes

1. Potential for Fraud and Abuse
   Several retailers, cited concerns about theft and employees manipulating markdowns to benefit from free food. The model retailers early iterations of the programme encountered similar issues, prompting the introduction of stricter controls and automated tracking via employee discount cards.
2. Tax & Legal Implications
   Some U.S. and UK retailers, expressed hesitation due to uncertainties around taxation. There were concerns that free food for employees could be classified as a taxable benefit, potentially leading to financial implications for both the employer and staff. The model retailer clarified that their system operates below taxable thresholds, eliminating this issue.
3. Perceived Employee Hierarchy Issues
   Some companies worry that prioritising employees for food donations could be perceived negatively, particularly when charity donations are insufficient. In some cases, there was resistance to the idea that colleagues should receive leftover food rather than external beneficiaries.
4. Implementation Complexity
   While the retailers system is automated and integrated into store operations, other retailers noted that they lack the technological infrastructure to implement a similar model. Manual processes are more prone to inefficiencies and abuse, making large-scale adoption more challenging.
5. Cultural and Market Differences
   The discussion revealed that while the retailers model is effective in the UK, adoption in other markets varies based on cultural and regulatory differences. Some U.S. retailers, for example, are still exploring the feasibility of implementing such programs due to differing tax laws and internal policies.

Takeaways

The discussion underscored the point that store colleague donation programmes can be a valuable tool in reducing food waste, improving employee benefits, and maximising redistribution efficiency.

However, successful implementation requires robust fraud prevention measures, clear policy guidelines, and technological integration, to the POS and employees discount card for example.

The model retailers programme, refined over nine years, serves as a benchmark for other retailers looking to develop similar initiatives.

Retailers considering such programmes must balance the benefits with operational, legal, and ethical considerations to ensure sustainable and fair food redistribution policies.