Store donations to reduce food waste - Myth V Reality of giving to colleagues

In this episode, host Colin Peacock speaks with food waste expert adviser Richard Thaleman about the challenges and opportunities of store donations  to reduce food waste – focusing on colleagues.

Drawing on Professor Lisa Jack’s work on the hidden costs of food waste, they discuss why colleague donation is often the cheapest way to get surplus food to people, yet remains underused, with fewer than a quarter of surveyed retailers doing it. Richard shares insights from retailers who have successfully run colleague donation schemes for years, addressing fraud concerns, recording and tech hurdles, and starting with lower-risk categories like bakery.

The conversation also highlights how colleague programmes can build agility during disruptions, support communities and still keep “sell more, lose less” front and centre.

 

Cleaned transcript

Introductions and context

COLIN:

Thanks for joining us on the ECR Retail Loss podcast.

This week I’m joined by our food waste expert adviser, Richard Thaleman, and we’ll be talking about the challenges and the opportunities of donating unsold food to store colleagues.

It’s something we’ve visited as a topic quite a few years ago, and just recently we had an update this year.

It’s particularly interesting because Professor Lisa Jack – and again, thank you for your help on the paper – has just written her paper on the true cost of food waste and the hidden costs, which in her calculations come out at roughly about 1.8% of sales.

So if your food waste is 3%, you’ve got to add another 1.8%. That covers all the cost of identifying the products that need to be marked down, handling the donations, and managing that exit process.

One of the things that jumps out when you look at her analysis is that donating to store colleagues would seem almost – after mark-downs, of course – the cheapest way for a business to donate products to humans.

Yet we found in our survey that less than a quarter of retailers – we had just under 40 retailers in the survey – actually donated product to their store colleagues.

In the recent meetings we’ve had, we’ve been trying to explore what’s going on here. We had one retailer proudly share their programme that has been going since 2016. Other retailers then added on and shared their thoughts as to why they didn’t, or why they thought that this retailer could.

You’ve been in this space for many, many years, Richard. What are your reflections on this whole space around: do you, or do you not, donate to store colleagues?

Why colleague donations to colleagues to reduce food waste matters – and what blocks them

RICHARD:

It’s a topic close to my heart. It’s something that I dealt with previously in other roles, and I helped another business to roll out colleague donations.

The same narrative comes up time and again. People get blocked by concern about fraudulent activity within the process. That’s the bit that really gets in the way.

The interesting part – which was brought up on our call – is that we have to remember it is by far the cheapest option. As you said, in Lisa’s paper it clearly stands out as the cheapest option.

And yet there is still nervousness about adopting it.

Keeping product on sale as long as possible

RICHARD:

One thing I always go back to with colleague donation is the opportunity it gives. As a business, you want to maintain product on sale for as long as possible.

This cuts across reductions and charity donations as well. When colleagues are really up against it and have a lot of tasks to do, they sometimes start doing things that make life easier for them, but not necessarily right for trying to sell to the customer.

What I mean by that is: even with reductions, if they’ve got a lot to do, they sometimes take everything out the back to get them done for various reasons. Products might be off sale for an hour or more before they come back out.

So the key thing to remember in the flow through to colleague donation is that you’re trying to sell it as a business first and foremost.

With the example we saw with the retailer, what they’ve achieved after nine years is keeping that product on sale for the maximum amount of time, until a colleague wants to go and take it.

They’ve actually got the “holy grail” of colleague donation, as well as eradicating a lot of worries around fraudulent activity.

Yes, there is always going to be an element of risk. It will play on people’s minds that some might want to take advantage of the scheme and find loopholes. But as in many other store processes, if you’re that way inclined, you’ll probably find a way anyway.

So I think it is definitely the right way to go about it.

Recording food waste donations to colleagues and the tech challenge

RICHARD:

Recording colleague donation is always a bit of a challenge as well.

Normally, if people are following the hierarchy and have charity donation, they’ll record the charity donation and then it moves on to colleague donation, which is the right way round to do it.

With charity donation, you know when the charity is coming in and you can book all of those products out.

With colleague donation, people are finishing at different times of day. If you want to maximise it, colleagues are invited – as in the retailer we spoke to – to come back in even if they’re not working at that time. After nine o’clock, they can come and choose product.

Recording that is quite difficult. Unless, like in their example, it goes through the till, you’re relying on somebody with a handheld device every time somebody turns up and wants one product. You’ve got to log into a handheld to record it.

That is always going to be a challenge. When I worked with another retailer to record this, sometimes it wasn’t just on a handheld device.

The greatest example we have from the retailer is that the tech integration or tech build they needed to do was quite considerable. Not everybody can get to the top of the tech priority list within their business.

Designing the programme as a ‘sale’

COLIN:

We certainly heard that if you’re going to be a retailer that looks at store colleague donation, treating it as a sale seemed a big decision – and the right decision.

Having a loyalty card as well, tying that purchase to a person, also seemed to be a must-have.

Even with this one retailer, there was consideration given to whether it should be a 99% discount versus free.

There are categories – and again, I’ve seen retailers do this – that are perhaps less dangerous, if you like. Bakery, for example.

With bakery, there’s never too much not to donate to colleagues. Starting on bakery seemed to be quite a neat way to get started.

Starting small and managing the data impact

RICHARD:

For sure. To your point about making it a discount or whether it’s free, in that retailer example the only way we could work out how to do it in the initial stages was to reduce products to 1p.

So there was a cost of one pence to pay. It’s a small cost, but that does register as a sale and a reduction on your waste line.

There are still some back-office changes needed to make sure the system understands that not everybody has reduced everything to 1p, because that would obviously change the forecasting and ordering systems.

It’s great that we have this example that’s gone over nine years now and come out the other end with what is absolutely the platinum standard of what this could look like.

You can pick and choose which parts of that you can do or want to do, without the risks and downfalls that may have been seen throughout that journey.

It was really valuable to share that.

Managing concerns and starting slowly

COLIN:

You’re right. Starting slowly on this, if there are concerns around abuse, is a good way to go.

I have to say, I hadn’t thought about some of the agility that this programme gives you.

We heard the example where, due to bad weather, about 100 stores were closed for a day or so. Suddenly you’ve got all this food, and the food hasn’t taken any notice of the weather or extended its shelf life.

Of course, the charities are also affected by the poor weather and their ability to get to the stores.

A store colleague programme really does give you that flexibility – having a way of exiting a lot of the food to humans, rather than having to throw it away, when charities can’t collect.

Otherwise you probably would be throwing it away if the charities aren’t collecting.

That seems a really big idea. I think they talked about 15–20% of all their surplus food that could be donated actually going through the store colleague route.

You mentioned earlier the dilemma between: do you give it to charities first, or do you give it to store colleagues first?

Charity versus colleague donation – sequencing and sufficiency

RICHARD:

I don’t think it’s so much of a challenge unless you’ve already been doing charity donations for a long time.

The one retailer I worked with to launch colleague donation didn’t really have a charity donation in place, so it was easy to do colleague donation first and then bolt on charity donations.

For some people, it doesn’t really matter, as long as it’s going to people.

And as we know, there is enough food to go around to be donated.

Colleagues, community and not calling it a ‘benefit’

RICHARD:

One thing that I know is not necessarily something people think about: when you present this to colleagues, you try not to describe it as a “benefit”.

The minute you describe it as a benefit, there are tax implications, I’m pretty sure.

But when you present it and say, “This food is available to you as colleagues,” and even if it’s extended to friends and family, however they manage that, the key part is that some people in the store don’t personally need that food.

You can explain to them that they can take it and offer it to their neighbours and the community.

So they could take it knowing there’s an elderly neighbour who may be in need of some of that food, and they can take it for them.

I don’t think we do enough of that, in all the examples that I see – encouraging colleagues to do something good in their community would be really helpful.

Third-party sharing and other options

COLIN:

That’s a great point.

There is OLIO, of course, as you know, but that sounds a pretty neat idea as well.

I think that is interesting. Thanks for that.

Practical design features and fraud prevention

COLIN:

Anything else that we think we should call out from what we know about this subject so far?

We’ve talked about the advantages if you’ve got some sort of loyalty card, and the tech to be able to put it through.

You can have barcodes and all the rest of it to help.

This particular retailer had a special thing on the bar – on the mark-down labels – that said it was a store colleague programme.

Starting with bakery is low risk, I suppose. There are always products available.

RICHARD:

I think you’ve got to show within your business that whatever it is – whether it’s a marker on the label to show that we can see it’s colleague shop – you have things in place, and everybody understands them, so that opportunists don’t take advantage.

That’s really key.

If somebody wants to hide a steak and put a reduction label on it, they could do that. But if you need a reduction that has a colleague donation indicator on it, then they can’t do that.

Therefore it’s less likely that they’re going to try and take that opportunity to defraud the business they work for.

I know it’s a sad state that we have to think about that, but we do.

And I’d go back to the point I made earlier: make sure product stays on sale for as long as possible.

If you’re in a position where you’re going to have to store it out the back in a location, then you need to think carefully about at what point in time you’re going to do that, because you’re taking it away from customers and from availability.

Wrapping up and looking ahead

COLIN:

Very good.

No doubt we’ll touch on this again. We’ve got 75% of retailers who don’t do this.

A lot did express interest in progressing with trials.

We’ll catch up again in 12 months’ time and see where we’ve got to.

Thank you so much for your time, and we will see you next time.

RICHARD:

Thank you very much.