Food Surplus Management in Retailing: A Global Perspective

Foreword

Food waste reduction is a priority for retailers, in all parts of the world. This global study on food surplus management in retail was commissioned to bring new insights as to how retailers were managing surplus food in the store and later its exit from the business if it cannot be sold. Is there a best way and / or one set of global best practices?

As the report highlights, the answer is no. The report shares some commonalities but perhaps more differences, differences that can be explained by retailers’ own choices and external factors such as local government.

What the report provides is a large “menu” of different choices and strategies for retailers to consider, and as such we believe makes a valuable contribution to the industry. We urge all retailers to reflect on the findings. To guide those discussions, the report shares a self-assessment maturity model that can help retailers identify opportunities for improvement.

I would like to thank Professor Arzum Akkas for carrying out this research and the retailers who helped contribute to the thinking and the findings presented in this report.

As with all the research undertaken on behalf of ECR Retail Loss, it would not be possible without the active support and involvement of the retail community and the many employees who generously gave their time to participate in the most meaningful of ways. Thank you for taking the time to share your thoughts and experiences – by working together we are much more likely to Sell More and Waste Less!

Finally, I encourage you to not only read and share this study, but also take part in the work of ECR Retail Loss. Further details can be found at: ecrloss.com.

John Fonteijn
Chair of the ECR Retail Loss Group

Executive Summary 

We conducted surveys with 19 retailers globally to understand their practices in managing food surplus (edible food that did not sell or is unlikely to sell before it expires or becomes undesirable for purchase due to age). These retailers represent diverse regions across North America, Europe, Asia, Africa, and Oceania, collectively generating over $727 billion in annual sales from a network of more than 45,000 stores.

Our research examines key strategies for managing food surplus: repurposing, markdowns, donations for human consumption, sales or donations to store employees, sales or donations for animal feed, recycling through composting or anaerobic digestion, and landfill disposal. Additionally, we shed light on the varying regulations across regions, organizational incentives, metrics, and waste reduction goals.

We identified both divergent and convergent practices. Notably, there is no unified definition of food waste; for instance, only some retailers categorize donated food as waste. Retailers also exhibit disparities in technology use and processes for identifying surplus and managing markdowns. Common practices show that for most retailers, donating or selling surplus for animal feed is not a priority, nor is giving surplus to store employees. Also, retailers frequently cited the challenge of capturing reliable data about donated food.

Our study also highlights ongoing food waste initiatives and emerging developments, such as circularity through insect feed. Finally, we provide a maturity model for retailers to self-assess and benchmark their capabilities.

It should be read alongside other ECR Retail Loss Research on reducing food waste across the retail supply chain.

For retailers looking for a practical action list alongside the maturity model in this report, see our summary of 66 practical ways to reduce retail food waste.

1. Introduction and Background 

Despite substantial advancements in forecasting demand, optimizing ordering and assortment, reducing case sizes, and extending shelf life through packaging and other preventative measures, retail stores continue to grapple with a considerable food surplus, especially in bakery, fruits, vegetables, and meat, approaching or surpassing their expiry date.

Our study centers on the strategies and pathways retailers use to remove food surplus from their stores. We examine various exit routes, including repurposing of food (e.g., through upcycling), markdowns, donation for humans, sales or donation to store employees, sales or donation for animal feed, recycling through composting or anaerobic digestion, and disposal at landfills.

We intentionally exclude delving into the root causes of food surplus or methods for preventing food waste from our scope, as these topics have been extensively addressed in previous academic and industry studies 1. We also exclude direct-store-delivery (DSD) products from our scope as the inventory and waste of these items are directly managed by the retailers’ suppliers, not by the retailers’ themselves, which is the focus of our research.

Our goal is to understand current retail store practices for managing food surplus once it nears waste status, particularly focusing on fresh products having less than 14-day shelf life. This includes bakery items, fruits, vegetables, and meat. Furthermore, we aim to investigate the current role of technology in identifying and directing food surplus, recognizing its significant potential to aid retailers in efficient management of this issue. Lastly, to contextualize our understanding, we explore different approaches adopted in establishing food waste goals, organizational incentives, and metrics.

For data collection, we followed a three-stage research approach:

1 Store visits: We conducted visits to 10 stores in the Boston area to observe the flow of near-expiration items from their identification as surplus to their removal from the stores – whether for donation to charities, utilization as animal feed, or disposal in landfills. Four of these stores belong to two retailer chains affiliated with ECR Retail Group Loss. During these visits, we observed the daily inventory culling process, involving the removal of loose produce that no longer meets consumer standards due to aging or dated products nearing or surpassing their expiration dates.

Access to the remaining six stores was facilitated through our partnership with a local non-profit food rescue organization 2. This collaboration allowed us to observe the backend operations of food donations. The six stores included in our food rescue route are part of different regional or national retail chains.

Throughout all our store visits, whether engaging with corporate representatives, store employees, or the food rescuer, we inquired about the identification, removal, and routing of food surplus to various disposal avenues.

2 Online open-ended interviews: Building upon insights from the store visits, we conducted online interviews with members of the ECR Retail Loss Group, employing open-ended questions primarily focused on the pathways taken by products nearing expiration across different categories. 17 retailers participated in these interviews: 6 from the EU, 4 from the USA, 4 from the UK, and 3 from other regions.

3 Online interviews for assisted survey: Based on the learnings from the open-ended interviews, we designed a comprehensive survey and conducted it via online meetings with ECR Retail Loss Group members. 18 retailers participated in this survey, with 5 being new participants and 13 from the first round of interviews. This adjustment had minimal impact on the geographical composition of participants between the first and second rounds of interviews (see Figure 1). The survey includes 6 sections: 1) General, 2) Rules and Regulations, 3) Identification of Food Surplus, 4) Food Exit Routes, 5) Goals, metrics, and organizations, 6) Outlook. Section 4 (Food Exit Routes) further has 5 subsections: Repurposing, Markdowns, Donation, Animal feed, Recycling/landfill.

Our research participants collectively represent a very significant part of the markets they serve. Refer to Figure 2 for statistics about participants from Europe, the UK, and the USA. The total annual revenue of these participants exceeds $727 billion from a network of more than 45,000 stores. We also had several retailers from the Africa, Oceania, and Asia continents in both rounds of interviews. However, in accordance with our research agreement, we refrain from reporting statistics about these regions due to their lower representation within their respective geographies. Hence, we categorize these retailers under the “other” category in our references.

This research spanned a two-year period. The store visits and initial round of open-ended interviews were concluded in 2022, while the second-round interviews, conducted via an assisted survey, was completed in 2023.

This report primarily summarizes and interprets data obtained from the second round of interviews. However, we also reference our conversations from the initial round interviews as necessary.

Before presenting our findings, it is helpful to first clarify our definitions of various terms.

Food surplus: Products that are near or past their expiration dates but still safe to consume, or excess food from overbuying, over forecasting, or overproduction. Retailers clear surplus inventory through markdowns, donation, recycling, landfill, etc. Thus, food surplus includes both written-off food as well as food sold through markdowns.

Food waste: The definition of food waste differs among retailers. Some consider only food going to landfills as waste, while others also include recycled or even donated food. Our study uncovers varying definitions adopted by retailers.

Short-coded products: They are items that are nearing their expiration date.

Produce: It refers to the product category that mainly includes fruits and vegetables.

Food recovery hierarchy: It serves as a visual aid depicting the prioritization of actions to prevent or divert food waste. We’ve observed versions of this hierarchy at different organizations. For example, refer to Figure 3 for the food recovery hierarchy outlined by the USA’s Environmental Protection Agency.

Markdown: It is the reduction in the price of a surplus item aimed at accelerating its sales. Different retailers may use different terms for markdowns, including reduction, discounts, coupons, or special offers, but this report uses the single term “markdown”.

Food repurposing: The practice of transforming unsold or surplus products within a store into new items for sale, such as preparing cut fruit from excess produce, slicing day-old bread, or making guacamole from ripe avocados, to reduce waste and maximize sales.

Donation: It specifically refers to food donated for human consumption, not animal feed. The report has separate sections for donation (for human consumption) and animal feed.

Food recycling: It involves the composting or anaerobic digestion of organic food to produce biogas or fertilizers.

Incineration: It is burning of food waste to generate energy.

2. Findings

2.1  Definition of Food Waste

We find that the definition of food waste varies across retailers. As seen in Figure 4, approximately half of the retailers do not consider food donated for human consumption or for animal feed as waste.

The vast majority of retailers categorize food recycled through anaerobic digestion or composting as food waste, although there are some exceptions. It is important to note here that recycling costs and opportunities vary considerably across different geographies, a topic we delve into further in Section 2.5.6. In our conversations with retailers, we discovered regions where anaerobic digestion is scarce or cost-prohibitive, while in others, its cost is on par with or even cheaper than landfill disposal. Consequently, retailers hold varying perspectives on the waste classification of recycled food.

One retailer outside of the US, EU, and UK stated that, as per a voluntary agreement concerning food waste in their country, the definition considers solely landfill and recycling disposal avenues. Echoing this, a European retailer expressed that generally the definition of food waste in the world encompasses only landfills and recycling. Conversely, another retailer outside of the US, EU, and UK expressed disappointment upon discovering that their European counterparts count recycled food as waste, because this retailer incurs substantial transportation and service costs to utilize the only recycling facility available in their region.

Few retailers consider marked down food as –’financial’ or ‘economical’- food waste, because “the food is not sold as intended”, and they track it separately. Similarly, few view food surplus given to store colleagues as food waste; however, it is worth noting that this practice is not widely followed by most retailers, as explained in Section 2.3.

The definition of food waste can also be fluid across time for the same retailer. For example, one retailer reported that in 2023 they will exclude food used for animal feed from their food waste definition. Another one reported that they are currently debating whether to incorporate animal feed within their definition of food waste.

The variation in food waste definitions poses a challenge when benchmarking retailers across different geographies and across time. This matters especially for policymakers, investors, and financiers which we touch upon further in Section 2.6.

2.2  Top Waste Items and Enablers for Success

We inquired about the top three waste items from retailers. While this question proved challenging to answer in the limited interview time, we gathered specific responses. Several retailers mentioned specific items such as salads, lettuce, berries, bananas, tomatoes, potatoes, mushrooms, watermelons, oranges, and onions. Two retailers added that the top items vary according to the season. One participant highlighted that, in terms of volume, bananas and berries were most common, while meat and berries held the highest monetary volume. Others reported broader categories like produce, bakery, meat, dairy, and seasonal items.

We also inquired about the factors enabling retailers to effectively manage their top waste items. Several retailers highlighted their markdown process. One mentioned utilizing a sophisticated algorithm supporting a three-stage daily markdown. Others emphasized strategies such as “dynamic markdowns”, “smart markdowns”, and “automated markdowns”. One said they sell certain short-coded items, such as salad, lettuce, and kale, through an online markdown platform that sells aged items in bundles. We provide broader information regarding markdown processes in Section 2.5.2.

Another retailer indicated that reducing product variety has aided their management of waste, for instance, opting for one type of margherita pizza instead of four.

Some retailers emphasized the value of repurposing. One mentioned utilizing food surplus in their kitchen, while another discussed creating specific recipes that utilize excess food and generating breadcrumbs from old bread to sell in stores. One retailer highlighted using excess rotisserie chicken in salads.

Others highlighted the value of employing smart forecasting technologies, with additional mention of technology aiding fresh meat production.

Some retailers praised their donation programs. One retailer detailed their journey from donating from only a few stores to now more than 500, emphasizing collaborations with nonprofit organizations that redistribute food to people in need or support animal shelters, retired animal farms, and street animals. Another retailer applauded their successful partnership program with the national food bank.

One retailer mentioned improvements in their donation process, citing a change where they now freeze meat for donation later, a practice that regulations prohibit in some other countries. Additionally, they recently discovered that the national food bank accepts dairy beyond its expiration date, which is valuable information for retailers.

Lastly, one retailer highlighted now utilizing bakery items for animal feed and initiating donations of specific surplus items to store employees.

2.3  Rules and Regulations 

We survey rules and regulations in our research as they influence retailers’ ability and inclination to divert food surplus from landfills. For this purpose, we explored disposal bans, disposal of food related to temperature control, expiration labeling types, and rules that regulate the sale of products beyond their expiry date. Note that this report does not aim to be a comprehensive resource detailing rules and regulations across various geographies. For that information, we refer the reader to the resources provided by regional regulatory bodies such as the European Commission’s Directorate-General for Health and Food Safety, the Food and Drug Administration and state governments in the USA. Here, our goal is to highlight the presence of variations in rules and regulations across geographies and underscore the potential of new regulations in the future.

Food waste disposal bans

Over half of the retailers confirmed the existence of regulations or bans regarding food waste disposal in their respective markets. For instance, certain states in the USA, like California, Massachusetts, and New York, have implemented food waste disposal bans. In specific regions of New York, retailers are required to donate edible food. In Germany and France as well, retailers must donate all food surplus to food banks. South Africa, Sweden, and Germany enforce full or partial (in select areas) disposal bans. Sweden introduced a new law in 2023 mandating retailers to segregate food waste for recycling. As part of a national waste management strategy, South Africa pursues a phased approach to disposal bans with 50% reduction of food waste going to landfills by 2023 and complete elimination by 2027. Several retailers anticipate new disposal bans in other regions, with one retailer expressing “We can hear the footsteps of regulations”. Countries in Eastern Europe, such as Romania and Slovakia, currently lack recycling infrastructure, unlike in Western Europe such as in Germany. This might impact future government subsidies aimed at developing recycling infrastructure and upcoming regulations regarding food waste disposal.

Disposal of food related to temperature control

Regulations also require retailers to maintain the cold chain. In cases of refrigeration failure, if food is exposed beyond a specified duration (e.g., 20 minutes, as mentioned by one retailer), disposal is mandatory. Refrigerated and hot foods have different temperature requirements, with hot foods having limited display times. As for rotisserie chicken, practices vary among retailers; most commonly, it’s displayed hot for four hours. Afterward, some retailers are allowed to chill it or incorporate it into salads for further sale opportunities, while others must dispose of it. Some retailers reported to set internal standards and quality processes for temperature control, tied to legislation, which involves routinely monitoring hot food temperatures throughout the day. Others stated that they adhere to food safety guidelines established by government agencies.

Expiration date labeling and types

All participants, excluding retailers from the USA and one retailer outside of the US, EU and UK reported having two types of expiry dates. These two types, such as ‘best before date’ versus ‘expiry date,’ generally denote quality versus safety, with stricter regulations typically governing the safety type, particularly for categories like fresh meat. The USA exhibits a variety of expiration date types (e.g., ‘Best if Used By’, ‘Sell By’, ‘Use By’, ‘Enjoy By’, ‘Expires On’, etc.). Similarly, the other country with multiple dates mentioned that “this gray area is one of the biggest barriers to food donation”.

The Grocery Manufacturers Association in the USA initiated efforts for food manufacturers to voluntarily standardize the expiry dates. This move aimed to address the significant impact date labeling on retailers’ ability to donate more of their food surplus; also, diverse expiration data labels caused confusion among store employees and presented challenges in establishing consistent inventory management rules at stores. However, this initiative appears to have faded over time. In 2023, the United States introduced the Food Date Labeling Act requiring manufacturers to use a dual-label system that distinguishes between quality versus safety.3

Selling products past their expiry date

Regarding fines that regulate selling products past their expiry date, many European and British retailers reported strict penalties for safety-type labeling (e.g., “Use by”), while the USA appears not to impose any penalties for such items. An American retailer raised concerns about lawsuits over selling expired dairy, despite the Bill Emerson Good Samaritan Food Donation Act providing federal protection from liability for donating food to those in need 4. One European retailer mentioned a fine of 1000 Euros per item per store, adding that they got fined before. Another European retailer noted no specific fines but highlighted the possibility of store closure if authorities persistently find expired items, which applies to both types of dates. Specifically, Slovakia, UK, Croatia, Germany, Greece, and Hungary are mentioned as countries that are strict about this issue. A British retailer reported that individuals like store managers can face imprisonment, noting having been fined in millions previously. A European retailer stated that fines vary across countries, with Eastern European countries being especially strict in this regard.

A US-based retailer indicated internal auditing as the only form of oversight for such items. A retailer outside of the US, EU and UK that government officials could confiscate stock if expired items were found, and that the retailer could face fines. Another retailer noted the absence of rules regarding the quality type of expiration dates and added that they are not obligated to remove these items from the shelf. However, if the safety-type date passes, they cannot donate the item.

Retailers appear to maintain stricter internal guidelines, often more cautious than government regulations. A European retailer mentioned that they are allowed to freeze chicken and meat before or on the day of expiry for later donation; however, they find this practice risky and prefer to repurpose such items instead. They acknowledged the existence of fines but lacked specific knowledge as they hadn’t encountered them firsthand. Another European retailer pointed out that in Germany, the regulations strictly apply to eggs, and while uncertain about other products, they refrain from selling anything past its best-before date. A retailer outside of the US, EU and UK that they refrain from donating products past their quality-type expiration date, despite government regulations permitting their sales as long as there’s no taste or smell deterioration. Another retailer in the same category mentioned government employees’ confusion about different expiry date types; they can confiscate expired stock, even with quality-type dates. To avoid this, they perform daily date checks.

In summary, regulations governing expiry dates in Europe and the UK are notably stricter compared to the USA. While stringent regulations have advantages in certain aspects, such as in limiting expiry date types to two (for safety versus quality), they can impede retailers’ efforts to minimize food waste in other areas. For example, some countries prohibit freezing fresh meat (before its expiry) for later donation, missing donation opportunities. This practice is successful in the US and some regions in Europe, particularly helpful when collections by charities do not occur daily (as detailed in Section 2.5.3). Similarly, regulations need not be overly strict regarding the sale of items after their quality-type expiration or the repurposing of certain hot food items.

Grocery retailing is already complex with its day-to-day operations; additionally, retailers face the challenges of maintaining food safety, minimizing food waste, and adhering to regulations. Clearly defined processes and employee training are crucial in managing inventory concerning expiration dates. Retailers can also benefit from increased government support, including relaxation of certain regulations and education of consumers about food safety, related to different expiry dates.

2.4 Identification of Food Surplus and Waste

While exploring food surplus identification, we inquired about retailers’ motivations for checking expiry dates, the methods employed to identify short-coded items, frequency of date checking, and the specific reason codes they use when scanning products for write-offs.

Motivation for checking expiry dates

The majority of retailers stated that their primary reason for checking expiry dates is to a maintain freshness targets and identify items for discounting. For some, avoiding fines is the key motivation. A few stated that reclaiming value from the manufacturer, often observed in the USA for non-fresh products, is their primary motivation. See Figure 5 for a summary of responses.

Some retailers highlighted varying priorities in their multiple reasons for checking dates. For instance, one European retailer emphasized that compliance is their foremost concern. Conversely, a British retailer prioritized freshness above fines. Additionally, another retailer mentioned that maintaining quality and reducing waste were their primary considerations.

Interestingly, a retailer outside of the US, EU, and UK brought up the importance of accurate stock ledgers as a reason for checking dates, because it impacts replenishment, while still valuing freshness as the top priority.

Methods for identification and frequency of date checking

The methods employed to identify food surplus have a significant impact on labor costs, as checking expiry dates or assessing freshness for thousands of fresh products can be extremely laborious.

More than half of the retailers adhere to a fixed schedule for different product categories. Merely two retailers utilize 2D barcode technology, which provides data of inventory by its expiration dates, eliminating the need to manually checking expiry dates 5. One of these retailers added that they use the 2D barcode technology only for meat, bakery, and deli products. The majority of remaining retailers rely on in-house apps that direct staff to products with higher probability of expiration, which reduces labor costs. The focus is on soon-expiring items (e.g., today or the next day) as predicted by data analytics. Some opt for third-party applications serving the same purpose. Refer to Figure 6 for a summary of responses.

One retailer emphasized the superiority of their in-house system over third-party apps, emphasizing that third-party apps necessitate manual input of expiry dates, whereas their system retrieves date information from supply chain systems, through barcodes that show expiration dates often printed on pallets and, sometimes, cases. Another clarified that the third-party system does not provide inventory data by its age, but it knows the risk of expiration.

Nearly all retailers inspect the expiration dates of fresh products every day. A few retailers added that they follow a rotational calendar to inspect shelf-stable items. One retailer mentioned that they check dates three times daily following a set schedule throughout the day. This is consistent with what we observed during our store visits. Another retailer said while they inspect fresh items every day, they look at packaged items weekly.

Reason codes for write-offs

We inquired about reason codes because they impact retailers’ ability to accurately report about food waste and conduct effective root cause analysis for future remedies.

Overall, across retailers, the range of reason codes varies from 2 to 14 with an average of 6.75 and a median of 6. To offer further context on this matter, in Figure 7 we show the frequencies of different codes used across all participants. This chart is interesting because it reveals how food surplus is generally handled. For instance, only a few retailers track various types of damage. Moreover, product recalls related to product destruction are often not separately recorded. Similarly, other infrequent practices include donating to animal charities, repurposing surplus for making animal feed, reclaiming the value of waste from the manufacturer, and donating to store colleagues. The limited number of codes associated with discount selling implies that markdowns might not be consistently acknowledged as an official exit pathway or systematically monitored.

Waste data recording appears to be a common challenge among retailers, because the codes used for inventory write-offs can cover both the reason behind the write-off (e.g., damage, expiration, theft) and the destination of the discarded product (e.g., donation, garbage, recycling center). Consequently, the data may not be precisely captured; for instance, a product might be donated due to damage, but the system might require choosing a single code, forcing a decision between labeling it as damaged or donated.

Using two-dimensional codes can effectively tackle this precision issue, with one code dimension representing reasons and the other representing destinations, as illustrated in Table 1. Some retailers have adopted hierarchical coding, which aids in this process. For instance, one retailer mentioned a selection process where the colleague initially chooses between charity or disposal. If disposal is selected, the system then offers codes for various recycling centers (paper, plastic, biogas/compost, glass-containing food). Although this method captures the destination, it doesn’t cover the specific “reason”. Another retailer followed a similar approach, providing options between donation and destruction. Under donation, there are 43 charities, while the destruction category includes codes indicating reasons (e.g., spoiled, broken packaging) and destinations (e.g., animal charity, biogas, black soldier fly 6). Another retailer highlighted their ongoing initiative, which he called “hot topic of the year,” focused on developing a two-dimensional and two-step data capturing process. In this approach, the first step involves capturing the reason code, followed by the second step documenting the exit route.

Retailers commonly mentioned that if an item is scanned out for donation and the charity fails to pick it up, store colleagues typically don’t amend the data due to the labor-intensive nature of the task. We’ll delve into the quality of donation data in more detail in Section 2.5.3.

2.5  Food Surplus Exit Routes

Location of sorting and separation

Nearly all retailers reported that the sorting and separation process for different exit routes occurs at stores.

One European retailer mentioned currently piloting central waste collection in the warehouse. Another stated that practices vary between countries, for example, waste is collected at the warehouse level in the Netherlands but at the store level in Germany. This variation depends on logistical networks, food banks organization, and proximity to farmers. If farmers are close to a warehouse, they collect surplus from there for animal feed. Another European retailer specified that store-level collection takes place 95-97% of the time.

Two British retailers are using color-coded bags at stores for sorting (e.g., brown for dairy products going to pig farms, pink for bakery going to cow farms, etc.).  Donations for human consumption are managed at stores, while waste for animal feed and recycling are consolidated and routed to different suppliers at return centers. One retailer mentioned that stores would prefer donating directly to farms, but due to regulations, a third party must obtain accreditation. Therefore, warehouse-level consolidation offers better control, compliance, and risk management.

An American retailer explained that items to be reimbursed from the manufacturer (usually shelf-stable items) are collected at reclamation centers. Otherwise, separate bins for each destination are placed in each store’s backroom for pickups. During our store visits in the greater Boston area, we observed two collection methods for recycled food: one retailer had recycling companies collecting waste directly from stores, while another stored waste in backroom containers, returning it to a warehouse several times a week for recyclers’ pickup. Both retailers make charities directly pick up donated items from stores. During our visit to one store, they mentioned allowing pickups by nearby pig farms and explained that they don’t receive many donation requests from charities due to their location in an affluent neighborhood.

Exit routes

Figure 8 shows the number of retailers that use a given exit avenue for different product categories.

While the most commonly cited route involves the sequence of markdown, donation, and recycling, significant variation exists among retailers. For instance, concerning fresh meat, one retailer prioritizes donation over markdowns (they try to donate first; if they cannot, they mark down, and if it still does not sell, they repurpose, if possible), while another retailer’s approach begins with markdowns, followed by donations, without repurposing.  Next, we delve further into various food surplus exit avenues.

2.5.1. Repurposing 

Overall, we find that most retailers repurpose food surplus on a very limited scope (e.g., bread and rotisserie chicken) or limited scale (e.g., stores with kitchen).

Examples of repurposing

We asked retailers whether they have examples of giving products a second life through repurposing. Around one-third of the retailers responded with “no” (see Figure 9), while the rest were able to provide examples. Although some of these examples are very limited to one specific product only, like slicing day-old bread, chilling rotisserie chicken, or making banana bread, a few retailers demonstrated sophistication in their food repurposing efforts.

One retailer successfully upsells repurposed food in affluent areas. Three of their stores have chefs for this and also kitchens. Examples to special dishes created include apples and blackberry crumble with cinnamon ginger, chocolate tarts, sausage and chilly savory pastries, cheesecakes, and apple cider pork. Another retailer stated that they have small and large kitchens in more than 75% of their stores where they make breadcrumbs and garlic bread from old bread, cinnamon rolls, and pies with aged berries.

Some retailers noted to make ready-to-heat products from food surplus or use it in their salad bar. These retailers do not necessarily have hot food counters. They make packaged sandwiches, soups with cut deli, burgers, or the butcher makes other new products from aged meat. One US-based retailer has specific rework recipes for delis. They also roast vegetables and use ripe tomatoes to make relish. They have managers specials, extracting whatever is usable to make soup or prepare cut fruit bundles (e.g., from damaged watermelon). Another American retailer mentioned separating out individual good pieces (e.g., from a damaged tomato bag) to sell them loose. One retailer in Europe noted that their hot food counters do not use surplus products; however, one store with a special kitchen exclusively uses short-coded products to cook for employees.

Most popular repurposed food are banana bread, bread crumbs, garlic bread, sliced bread, and rotisserie chicken chilled or used in salads. Others also mentioned guacamole, lettuce used in sandwiches, bread pudding, crostini from old baguettes. One European retailer uses an external company to make jam from surplus fruit, whereas another European retailer attempted a similar practice but discontinued it due to high handling and transportation costs.

In terms of geographical differences, the majority of American retailers, alongside one retailer outside of the US, EU, and UK appeared to be most active in repurposing. Additionally, an American retailer pointed out that repurposing performance can vary across stores.

Reasons for not repurposing 

Retailers who refrain from repurposing food surplus cited various reasons. These include incompatibility with their business model (e.g., discount retailers with limited product variety, no hot food counters), concerns regarding meat quality, insufficient space or lacking necessary equipment (e.g., for making bread crumbs) and skills, labor cost, a preference to prioritize waste prevention initiatives, donations, or using surplus for animal feed due to its greater cost-effectiveness. Additionally, one retailer in the UK mentioned discontinuing their limited repurposing practices post-Covid, because they stopped selling unpackaged bread, which they used to repurpose by slicing, and also discontinued their salad bar offering. This retailer and also two others in Europe stated that they do not have enough surplus volume to produce repurposed food.

Successes and limitations in repurposing

We inquired about effective versus unsuccessful practices in repurposing among retailers and, interestingly, found that most feedback revolved around unsuccessful attempts. Only one retailer, based in the US, praised a specific strategy: repurposing meat, cheese, and chicken (all higher-value items) into “second-chance products”, offering them for sale within a one-day window. They reported successful sell-through rates and noted that consumers were unaware of the repurposed nature of the items. However, the same retailer stated that repurposing is not worth the labor with some other products, like slicing cakes or using seafood in bistros, because they found it to be labor-intensive, consumers did not like them, and they could not donate the product in the end if it did not sell.

Others also mentioned cost inefficiencies in their attempted practices, like producing store-made juices and vacuum packaging and freezing fruit. One retailer in the US pointed out that using deli products to create hot prepared food was a waste of labor.

We received contrasting perspectives from British retailers on pricing strategies. One retailer mentioned moving away from hot food counters (which can aid in repurposing) due to profitability concerns, highlighting that the Whole Foods’ high pricing model wouldn’t be viable in the UK. Another British retailer echoed similar sentiments. Interestingly, the retailer that effectively upsells products in select stores also operates in the UK.

Overall, we find that labor cost and space constraints are the main limitations to repurposing. Outlined here are further useful points retailers emphasized regarding limitations, which mainly concern labor efficiency, pricing, consumer demand, shelf life, and quality of repurposed items:

• Markdowns or donation require less labor than finding repurposed food that attracts consumer demand.
• Support from the Headquarters Quality department is needed for establishing quality processes and scaling solutions across numerous stores. Otherwise, it can be difficult for stores to develop solutions on their own.
• Repurposing is most worthwhile when you can upsell the food through sophisticated recipes, often achievable in high-income locations. However, allocating store space for this purpose might be a risk given the current economic climate. Moreover, some stores may not have any available space.
• Regulatory hurdles exist in the US, barring the repurposing of certain items such as fried chicken, smaller proteins like popcorn chicken, and chicken tenders.
• The shelf life of the repurposed food depends on the procedure used, and this matters. Time is also an important consideration, directly influencing labor costs, as each additional ingredient increases food preparation time. Therefore, crafting the right process design is essential to extract the maximum value from the item.

Conclusion 

Repurposing appears to be an untapped opportunity for many retailers, yet there is no single easily attainable solution. Achieving success depends on commitment, careful planning of store or backroom space, investment in equipment and skill development, strategic recipe development, streamlined processes, and careful job design to reduce labor time, extend shelf life, and enhance product appeal. By identifying the suitable products and employing effective methods, retailers can achieve favorable outcomes for profits and waste reduction. Prioritizing solutions and implementing a multi-year phased approach, led by headquarters, may be the most pragmatic strategy.

2.5.2. Markdowns

We observed substantial variations in retailers’ capabilities, choices, and perspectives on retail food waste reduction via markdown management across continents. British retailers generally demonstrate a higher level of meticulousness in their markdown management practices compared to some American retailers, who appear to be in a more nascent stage in this aspect. Among American retailers, the primary concern regarding markdowns is often related to maintaining their image of freshness.

The survey revealed that the majority of retailers prioritize markdowns as the primary avenue for handling food surplus, preceding consideration of other disposal methods. Two European retailers reported refraining from markdown practices. One of them, operating as a wholesaler, stated that guaranteeing freshness is more important than cost recovery in their business. Among retailers favoring markdowns, the approach is selective. For instance, one American retailer mentioned never discounting individual produce. Contrarily, certain European retailers bundle individual produce and offer them at discounted prices within boxed sets. Another European retailer displays discounted produce in baskets individually. One American retailer limits discounts to fresh meat and some bakery items only, applying discounts only to excess, not aged or defective, produce. A retailer outside of the US, EU, and UK highlighted their strategy of avoiding discounts in their upscale brand. Additionally, a European retailer emphasized their pride in markdown practices, considering it part of their strategy rather than it being something that they conceal from consumers and added that they ask consumers to help them reduce food waste.

Timing of discounts

We inquired about the timing of markdowns with regards to expiration dates and received a range of very diverse responses. While many retailers commonly implement discounts on the same day or a day before expiration, several initiate discounts earlier (e.g., 3-4 days prior). Some retailers adopt varying approaches based on product categories, total shelf life, country, or store size. For instance, one retailer discounts all items on the day of expiry except for dairy, which begins three days beforehand. Another retailer distinguishes fresh meat by starting markdowns two days in advance, differing from most categories, which begin reductions a day before expiration. Among retailers that differentiate by product category, discounts on dairy products are frequently applied earlier than other categories. One retailer discounts milk eight days before expiration, while yogurt and cheese see discounts just one day prior. With one retailer, discounts start on the expiration day for smaller stores, and a day earlier for larger ones. Meanwhile, a European retailer mentioned varied discount strategies across the 31 countries they operate in. Another European retailer typically begins discounts two days prior to expiration (applying a deep 50% reduction right from the start).

One retailer indicated initiating markdowns a day or two before expiry, yet voiced concern that this timeframe is occasionally too late or, in some cases, not implemented due to their commitment to ensuring freshness for consumers.

Number of steps 

The majority of retailers employ a single-step markdown process, while some adopt a two-step approach: for instance, starting at a 30% discount and increasing it to 60-70% if the product remains unsold (see Figure 10). Only two retailers mentioned using a three-step discounting strategy. One of those expressed interest in simplifying this approach due to its impact on consumer behavior, as some customers wait for the third discount.

Some retailers vary the number of steps by product category. For instance, one retailer implements a single step for frozen and shelf-stable items, while utilizing a two-step process for other categories. Conversely, another retailer applies a single step for most products, except for meat, which undergoes two steps.

One retailer noted that since adopting dynamic pricing, they no longer require multiple steps. Conversely, another retailer plans to transition from a single-step process to a two-step dynamic markdown upon implementing 2D barcode technology.

A few retailers mentioned deviations from the suggested rules (for instance, while headquarters suggests two steps, some stores opt for more).

Barcoding and labels

Many retailers use mobile devices to print barcodes for discounted items, allowing easy tracking of their sales volumes. Retailers employing dynamic pricing typically scan the item, and the discount amount is determined by algorithms that consider factors like inventory levels.

European and British retailers seem to exhibit a more meticulous approach to this process. Conversely, several American retailers opt for preprinted stickers that indicate the discount amount often without incorporating a new barcode. One American retailer generates new SKU IDs by printing labels, except for bakery items, where discounts are often embedded into the original barcode automatically.

Among these practices, several retailers employ color-coded stickers (e.g., yellow for “use by” and orange for “best before”) to differentiate discount types.

Additionally, a European retailer utilizes electronic shelf labels. When not all products are on discount, the e-labels display the full price, while discounted items are marked with a sticker and a distinct barcode.

Discount levels and use of algorithms

Approximately half of the retailers use a fixed deduction (e.g., $1 off) or a specific percentage (e.g., 30% off), while the remainder utilize dynamic pricing algorithms that consider factors such as remaining shelf life and inventory levels (see Figure 11). One retailer employing algorithms specifies discounts based on product subcategories; for instance, meat products may sell remarkably well with a 50% discount, a strategy less effective for apples. A European retailer noted that nothing moves below 30%, allowing individual countries to determine higher discounts (e.g., 60-70%) within headquarters-set limits (e.g., 90% for meat). Interestingly, during our store visits across the US, UK, and Europe, a common discount level observed was 30%—both within our research and at ECR-led events. Another retailer conducted an experiment with discount levels, testing both 30% and 50% reductions. They discovered that while the 50% discount effectively reduced waste, it didn’t favor profits, prompting a return to the 30% markdown strategy.

One retailer currently not utilizing algorithms typically initiate discounts at 25-30% for the first step and often escalate to 50% or occasionally 60%, contingent on various factors such as country, competition, and customer price sensitivity, while the maximum discount limit is 70%. Another retailer mentioned varying discount levels by product category—30% for meat and dairy, 50% for bread. Unsold products then are offered in bundles at a 70% discount through a third-party discount platform. Additionally, one retailer expressed plans to experiment with dynamic programming in the near future.

In-store logistics

Approximately half of the retailers choose to place discounted items in a separate section within their stores (see Figure 12). Conversely, some deliberately retain these items in their original locations due to concerns about impact on labor hours, the possibility of attracting discount-focused shoppers, or a reluctance to actively promote these products as discounted or of secondary quality.

Some retailers selectively move discounted items to separate sections. One retailer mentioned moving items only if they have available store space. Another indicated that while the initial markdown occurs at the original space, subsequent markdowns involve relocating the items. Some retailers employ different strategies for distinct product categories; for instance, one retailer moves only grocery items, excluding fresh products. Another relocates bakery products while maintaining the original location for meat. Similarly, another retailer maintains the original position for meat and fish, designating discount corners in chilled areas, whereas bakery and produce are placed near their original locations.

Use of third-party discount platforms

Most retailers utilize internal tools for executing markdowns, as shown in Figure 13. Two of these retailers praised their internal systems. One retailer has developed its own app to presell7 surplus items, cancelling orders if stock levels are insufficient.

Only five retailers we surveyed reported collaborating with platforms. Notably, these retailers do not presell items; instead, they prepare bags of surplus and later offer them for sale on these apps.

Two retailers indicated ongoing evaluations of specific discount platforms, while another is initiating discussions to test one of these platforms.

In contrast, two retailers voiced concerns about the expenses associated with these platforms, citing the commissions charged and the increased complexity in the process.

Furthermore, two other retailers reported preferring donation over discount platforms. One is currently assessing a donation platform, while the other mentioned an unsuccessful pilot with a discount platform, citing ineffectiveness in waste reduction.

Concerns about markdowns

We asked retailers about their concerns regarding markdowns, finding that the foremost worry is the labor hours required, followed by erosion of margins and cannibalizing the sales of full-price items, as summarized in Figure 14. Other concerns include the impact on freshness image or promise, training the consumer (to wait for discounts), optimality of the discount level, and employee fraud (this retailers’ couponing process has problems and they are currently trying to fix it).

One retailer described the markdown model as complex but highlighted that the benefits outweigh the drawbacks. Another expressed overall contentment with the practice but mentioned their intention to reduce the steps from three to two to improve financial returns. Additionally, a different retailer emphasized the importance of smart markdowns that factor in inventory, remaining shelf life, and demand rates for margin protection. They also stressed the necessity of implementing threshold limits for discount levels to safeguard margins.

Additionally, we sought advice for retailers who have concerns about markdowns; there wasn’t a singular dominant response. In Figure 15, we’ve categorized the varied responses thematically. Below, we summarize the benefits and caveats highlighted by the respondents, along with select quotes for clarity.

Benefits:

1. Reduces waste

“Waste aversion method so you have no backend dealing with waste”. 

2. Provides financial benefit

“If you are gonna waste anyways, you get something for it”.

“Still earning some revenue”.

3. Offers value to the customer

“Lately it works due to economy / inflation. Heard people only buying these items”.

”Provide options to the consumer: less expensive products for shorter shelf life and more expensive products for longer shelf life”.

Caveats:

1. Communicate with the customer

“Need marketing support. Use slogans in store signs, catalogs, fliers, social media. Present it in the sustainability report”.

“Educate the customer that this is a means to reduce food waste. Approach it with an ethical perspective”. 

2. Determine the right process / technology

“Automate the process with AI, which reduces 50% of labor cost because it recommends which products to be checked everyday”.

“Experiment different things. Bakery sells more when it is in one place. Give a different item number so it is tracked separately”.

3. Customize

“There is no consumer perception impact on prepackaged items. Repurposing helps with quality perception”.

“Need different strategies for high-end and low-end markets”.

Conclusion

We find divergent views and practices concerning markdown procedures, related to timing, steps involved, discount levels, placement of items, as well as the use of technology and data analytics, and collaborations with third-party discounting platforms. Overall, retailers express concerns mainly regarding the labor intensity of markdowns and their negative impact on profit margins. Markdown management is the primary focus of retailers’ current initiatives, a topic we will explore in greater detail in Section 2.6. It is unclear whether this signifies ongoing challenges or if this is a newly initiated area of attention.

2.5.3. Donation to Humans

The availability and capabilities of charity networks vary significantly across countries. For instance, a European retailer highlighted the absence of food banks in Russia and the challenge in Eastern Europe due to the lack of organized food banks, donation partners, and volunteers to assist.

In the US, a national hunger relief organization, acting as an umbrella organization for a network of food banks, facilitates the connection between retail stores and charities. These charities encompass various organizations like food pantries (usually physically located within churches), shelters, and youth organizations. Volunteers from these charities often use their own vehicles to collect donated food. This insight was shared by our collaborator, a food rescue organization based in Boston that helps bridge the logistics gap between food donors and recipients. It’s worth noting that such organizations are not plentiful across the US. Often, food banks lack the logistical capacity to facilitate direct deliveries from individual stores to charities; they usually prioritize their vehicles to manage bulk donations, such as those from farms, manufacturing plants, or distribution centers.

In the UK, retailers collaborate with both nonprofit and for-profit organizations to redistribute food. According to our research participants, they enlist charities and volunteers, often referred to as “waste heroes”. One British retailer noted that volunteers are not always reliable, highlighting that their for-profit partner maintains a compliance rate of 82%, while the nonprofit partner’s rate stands at 70%.

Donation networks and food rescue opportunities 

Most retailers indicated extensive coverage by charities for collecting donated food at their stores. As depicted in Figure 16, almost half of the retailers reported to have 95 to 100% of their stores covered by charities. However, this extensive coverage doesn’t always translate directly to a high percentage of donatable food being donated. For instance, one European retailer mentioned that despite having 90% of their stores covered by charities in their primary operating country, only 5% of the donatable food is actually donated. One reason for this low percentage is that their assigned charity is already saturated with donations from the retailer’s competitors, leaving no additional space for their contributions. Nevertheless, this retailer considers increasing food donations the most direct route to achieving its food waste reduction targets.

Despite a store being covered by charities, frequent pick-ups may not be a common practice. Only five retailers reported daily pick-ups at their stores (see Figure 17). This infrequency poses a challenge as donated food often has an extremely limited remaining shelf life. As depicted in Figure 18, an overwhelming majority of retailers donate food on the same day of expiry. Further, most retailers do not have backup charity options in case the initial charity scheduled for pickup fails to arrive, as Figure 19 shows. In cases where legislation prohibits preserving food (e.g., through freezing, as American retailers do) for later donation, retailers are compelled to discard food surplus on days when no charity visits are scheduled. Some survey participants further clarified that the frequency of visits depends on the agency or the store’s size (small stores may only be visited once a week or sometimes not at all).

Furthermore, even in stores that receive daily charity visits, not all departments may participate in donation efforts. During our local store visits, we observed that each store’s participation in donations can vary by department. For instance, one store might solely donate dairy products, while another within the same retail chain donates only bakery items. Without detailed product category-level donation data reported by the retailer chain, the headquarters may lack the visibility needed to recognize its full potential for surplus donation. We further discuss issues related to reporting in Section 2.6.

Despite the availability of food surplus for donation, sometimes charities refuse products. According to a European retailer, charities do not want bakery products because there is too much of it. Similarly, during a store visit, we noticed an abundance of plant-based protein at one store’s backroom left for donation. The food rescuer couldn’t take most of it, as charities prefer a balanced variety of products—such as meat, bread, milk, and produce — resembling what consumers usually buy. We later had a chance to talk to one of the corporate representatives of this store (one of our research participants) and found that this situation most likely stems from corporate efforts to promote plant-based products, but the warehouse’s failure to proactively distribute surplus stock. Thus, a well-intentioned product positioning for environmental benefits can have unintended consequences without proper operational support.

Donation process

The donation process of retailers varies from country to country, influenced by local charity networks and the organizational and incentive structures of the retailers. Here, we will provide brief highlights of regional practices.

Our research participants in the USA collaborate with a national hunger relief nonprofit that connects individual stores with charities and handles the vetting process for these charities. Charities specify how frequently they will visit the store and report donated food data back to the hunger relief organization. The tax deduction process relies on this data. One American retailer mentioned that they vet the charity by having them sign an indemnity agreement, which is executed every time they pick up goods.

In contrast to what we have observed with some British and European retailers, American retailers do not seem to employ apps or other technology for communication with the national organization or the charities they collaborate with. Furthermore, during our day spent observing the food rescue process, we noticed that donation data is recorded manually on paper, which is later entered into their computer system at the end of the day. Donation data is measured by weight and product category, with the assistance of a scale in the truck. Store visits occur throughout the morning at predetermined schedules. Donated food is left in the backroom, often stored in boxes or shopping carts, by store employees who have already gone through the culling process early in the morning before the store opens to the public. When donated food requires refrigeration or freezing, such as meat or eggs, the food rescuer retrieved it with the assistance of a store employee.

British retailers appear to be more technologically advanced in their donation processes, utilizing apps and text messaging for communication. They often utilize the messaging technology provided by a foreign nonprofit that focus on food redistribution. However, they primarily work with a national hunger relief nonprofit for redistribution of their surplus.

Additionally, one retailer has reported working with a for-profit organization due to their two-step donation process. In this process, the nonprofit connects retailers to charities, while the for-profit organization connects them to individual volunteers. The entire process is automated; the handheld device even shows the name of the person who will collect the goods. Every store has one or two collection slots. The goods are first offered to the nonprofit and, next, to the for-profit. If there is no response within 30 minutes from the first charity, messages are sent to all other charities within a 10km radius offering the food on a first-come, first-serve basis. The stores have a preplanned schedule for every rolling seven days. Based on the information captured through the markdown process, they estimate how much food is available for donation at the subgroup level every night at 7:30 pm, which is shared with the charity. Food is scanned out at 8:15 pm, and collection occurs between 8:30 pm and 9:30 pm. Products with use-by dates come with freezing instructions. Some stores do morning donations with the same process, but charities come only for products with best-before dates (as they are not allowed to donate items past their use-by dates). This retailer recently introduced a new criterion to help employees decide which undated products to remove from shelves: “Would I eat it?” This approach differs from the “Would I buy it?” criterion used for discounting items and, according to the retailer, has resulted in more food being directed toward donation.

Another British retailer reported having a very similar process, which involves forecasting surplus for donation (two hours before the trade ends), reporting it to the charity beforehand, evening donation, and partner donation if the initially assigned charity cannot collect the goods.

It is worth noting that all their partners, including nonprofits, all charge retailers for their services, and the overall cost may not necessarily be cheaper than disposal expenses. One retailer reported that nonprofit’s service fee is even higher than the for-profit’s. Charities have the discretion to select only the items they want, and certain product categories, such as alcohol and baby milk with less than six months of remaining shelf life, are prohibited from donation.

One British retailer follows a very different process and utilizes the community fridges located at community centers. Volunteers come at night to freeze the food at these fridges. People in need can take the food home themselves and unfreeze it.

A European retailer operating in a single country collaborates with a nationwide food bank. Store visits occur on a predetermined schedule and frequency. This retailer donated seven cars to a food bank to support their food collection efforts. They do not perceive a clear business case for such donation; while it reduces disposal costs, the return on investment is not evident. Our local collaborator, a food rescue organization, also reported that a national retailer chain donated several vans and small trucks to them. They actively seek similar donations from other retailers, emphasizing how such contributions can help retailers reduce disposal costs. However, they mentioned that retailers are often hesitant to embrace this idea.

Another European retailer mentioned that they have a solidarity department in their headquarters dedicated to centrally facilitating partnerships between charities and individual stores. Furthermore, they’ve developed an internal tool, accessible to each store, which helps identify nearby charities.

One European retailer that operates in multiple countries explained that they have different processes depending on the country and the charity they work with. For example, the Red Cross checks the list of donated items and selects what to take, as they may have excess food in certain categories without the storage capability, requiring the retailer to adjust their data accordingly. In Germany, on the other hand, the single food bank accepts all donated items and receives a donation delivery note or an invoice in return. This retailer emphasized that legislation is not harmonized across different European countries. Although contracts with charities are in place, they are not always executed as it is not a priority for the store manager.

One retailer outside of the US, EU, and UK mentioned that charities interested in working with them must complete an application process. A similar procedure was reported by a US-based retailer for donations to animal farms.

Issues with donation data

Capturing accurate donation data presents challenges. While most retailers reported that it is not labor-intensive to collect this information (see Figure 20), the reliability of the data remains a concern. Many retailers rated their donation data as less than highly reliable, as seen on Figure 21.

Half of the retailers rely on charities to provide donation data. However, this data is usually not provided at a sufficiently granular level (see Figure 22). At best, charities provide data by weight and category per store, but this is often not the norm, and some retailers lack visibility into product category-level donation data.

Several other retailers have mature processes. Half of the respondents indicated that they capture the donation data at the item level themselves, using “donation” as a reason code when scanning the product off the shelf. One retailer emphasized that their data is independently audited and accredited by Deloitte. While one retailer indicated that, if the volunteer does not take the donated item, it is rescanned to capture the accurate exit route, another one noted that items do not get rescanned if not picked up by charities. For one multinational retailer, donation is not always included in the reason codes across different countries. Another respondent noted that their data reliability would improve to a rank close to 9 with an upgrade to a new system.

Barriers to donation

We find that the leading barrier to donation is the inadequate distribution opportunities. The most frequently cited issues were insufficient pickups or insufficient networks, followed by restrictive government regulations (see Figure 23).  Among other barriers, some retailers cited store-level execution and employees’ unwillingness to sort food. Others mentioned a lack of volunteers or their unreliability, space limitations at charities, and food bank’s preference for fresher products.

Tax incentives

Although one third of the survey participants stated they did not have specific knowledge about tax incentives, another third confirmed that governments provide tax incentives for donated   food in their primary markets. Two American retailers mentioned that the value of their donated food well exceeds the cap for tax deduction, reaching the cap within the first quarter. Another participant also noted that while tax benefits exist, they come with limits. One multinational retailer specifically cited France, Germany, Poland, Czech Republic, Spain, and Portugal as countries that offer tax incentives.

For specific information regarding tax incentives for food donation in various countries, we refer readers to the respective governmental resources of each country.

Donation to employees

Donations to employees are not yet a common practice. Only three retailers reported having a specific donation program for employees, with one currently piloting this program.

One retailer described a sophisticated process where items eligible for employee donation are scanned out for the “employee shop” stored in the backroom and barcoded with a zero retail price, also making these products unscannable at the regular registry. To take these products, employees must scan them using their employee shopping card. This record helps track the exit route of the surplus product and allows the company to identify unusual or excessive “shopping” by employees. In addition, this retailer utilizes random spot checks and generates reports to detect possible fraud, which they stated has not been a problem. Further, they have restricted the times of the day when employees can “shop” these items, which has reduced usage.

This retailer is a strong proponent of their employee donation program. When asked what they would say to retailers concerned about such programs encouraging wrong behavior, the participant simply answered, “Why not help employees?” Further, they believe that it discourages cash theft and is the most cost-effective way to eliminate food waste because they incur expenses for all other exit routes (e.g., commission to the donation matching platform, hauling for animal feed, and disposal for anaerobic digestion). To prevent abuse, they suggest implementing solid processes, policies, and parameters. The participant, in their final words, said  “This is a fantastic way of reducing food waste. It brings costs and waste disposal down.”

Conclusion

How much donatable food is actually donated? While this research doesn’t answer this question systematically, based on conversations with retailers and observations from store visits, we stipulate that the amount varies significantly across countries due to insufficient donation networks and can even vary across different stores within the same chain due to a lack of data visibility. Even where donation networks exist, donatable food is not always donated due to issues such as store execution or lack of priority. British retailers appear to be the most effective at channeling food surplus to donation routes. For many retailers in other regions, increasing donation seems to be the low-hanging fruit.

2.5.4. Sales or Donation for Animal Feed

We find that for many retailers, the sales or donation of food for animal feed has not been a high priority and has been pursued in a limited scope and scale.

As summarized in Figure 24, most retailers only donate when a nearby animal farm, zoo, or shelter reaches out for direct pickup; otherwise, retailers do not actively seek these opportunities. One retailer mentioned that such initiatives are not directed at the corporate level and are typically store-led, occurring only if the recipient is nearby and it is convenient for the store. Similarly, another retailer noted that it happens only at 5-10 stores where there are nearby farms.

One retailer stated that legislation makes it more challenging in Germany and that it was easier 10 years ago, as farms are now not allowed to take retailers’ surplus. However, they added that they actively search for farms in Romania.

As a successful example, one local European retailer set up a corporate arrangement with a large pig farm, involving participation from 30% of their stores, where the farm directly picks up surplus from the stores, and the retailer accrues some revenue from this. As another example, two British retailers haul waste back to a dedicated collection facility or one of their distribution centers. One of these retailers cover their entire store network, channeling surplus to various animal feed routes and gaining some revenue back, while the other reported to cover 25% of their stores.

Some retailers reported donations on limited scopes. Several mentioned a no-zoo policy, while another mentioned a pig farm-only policy administered via food donation champions at every store. One American retailer successfully set up a partnership with several dog food manufacturers to sell meat trimmings and fats, not expired or aged meat. In this initiative, 90% of their stores participate, with manufacturers directly picking up the meat from the stores.

One retailer stated that supporting certain charities, such as donating apples and carrots to retired horses, is primarily a corporate social responsibility effort for them rather than a waste reduction effort, with participation from only two stores.

A model of excellence

A British retailer follows a sophisticated process involving placing food surplus in different colored bags for various destinations (e.g., dairy products in brown bags for pig farms and bakery items in pink bags for cow farms) at stores and hauling them to a central collection facility. At stores, handheld devices automatically show the bag color when a product is scanned for the animal feed route, making the sorting process efficient for employees.

The central collection facility, run by a third-party company, depackages and mixes the items before selling them to various farms. The retailer pays for hauling the surplus to this facility and for the third-party company’s processing services, which are determined by weight for different product categories. The retailer in return receives some revenue back after the third-party firm sells the processed items. Additionally, the retailer utilizes the same third-party company to convert meat waste into black soldier flies for animal feed, an innovative circular solution to the waste problem.

The retailer noted that despite being able to partially recover their costs, the animal feed route is still more expensive than anaerobic digestion. However, they believe it is the right thing to do and that their customers expect such high standards from them.

This retailer sets a successful model for other retailers to follow.

Logistics, challenges, and impediments 

We identified two logistics models for redistributing food surplus for animal feed: direct pickup by farms or feed makers from stores, and retailers hauling the surplus to a central location for redistribution. The latter method is less common. Retailers that use central consolidation can redirect higher volumes of surplus for animal feed to various channels, but this comes at the expense of additional logistics and handling costs.

We found that pig farms are by far the most popular destination. Produce and bakery items are the most frequently redistributed categories for food surplus. Additionally, pet food makers predominantly receive meat, while donations to animal shelters are rare. See Table 2 for complete data.

As for major challenges associated with donating or selling food for animal feed, retailers most frequently mentioned handling cost followed by infrequent pickups, contamination, and backhauling cost. One British retailer mentioned the necessity to keep meat and fish in the cold chain. A European retailer finds it hard to find organizations who have good quality standards. Another stated added complexity arising from coordinating the timing of pickups as a major challenge. An American retailer cited store associates’ execution as an issue. A retailer from a developing country answered “nothing” as a major challenge, which likely indicates their commitment for channeling food surplus for animal feed.

To those retailers that do not donate or sell food for animal feed, we asked what is limiting them. We did not find a dominating answer. The reasons included farms only taking certain types of food (e.g., fruits and vegetables), insufficient farms, zoos, or shelters in the proximity of stores, lack of organizations or a network to facilitate rescue efforts, and the high costs making the efforts worthwhile. One British retailer cited legislation as an impediment, stating that it limits what animals can be fed with certain types of feed. For example, black soldier flies can only be used as feed in their dried form, and there are specific restrictions regarding their use (e.g., specific to chicken feed or pet food only). Another British retailer stated that they plan to expand in stages the amount of food channeled for the animal feed route. One American retailer mentioned that there is little volume left after donation to humans, making their efforts unworthy, while another American retailer reported that this exit route has not yet been explored. One European retailer highlighted the varying capabilities across different countries they operate. A retailer in a developing country stated that they have no issues with demand, as they receive many requests from pig farms, similar to charities for human donations.

Can retailers profit from the animal feed route?

We asked retailers whether they sell food surplus for animal feed, rather than donating it. While the majority indicated that selling is not a high priority, 38% of respondents do engage in this practice, representing a significant portion (see Figure 25).

The logistics model—central consolidation versus direct pickup from the store—and the handling of food depackaging significantly impact costs and, consequently, profits. For most retailers, recipients handle the depackaging (see Figure 26). One European retailer noted that most of the food surplus is unwrapped, suggesting it primarily consists of loose produce. A UK-based retailer reported using a third-party firm to depackage food at a central collection facility, for which they pay and share the revenues from sales. However, this retailer emphasized that the revenue-sharing model does not always recoup the inbound logistics and handling costs, which they pointed out as a challenge. In contrast, a few other retailers that appear to generate profits typically have direct arrangements with a single buyer who picks up food surplus from stores (e.g., a pet food maker purchasing meat), reducing complexity and lowering costs. This suggests a trade-off between overall volume rescued and profit margins, as central collection allows for higher volumes but incurs greater logistics costs.

It is a challenge (and perhaps an opportunity) for retailers to find efficient means to maximize the overall volume of food directed toward the animal feed channel. The lack of alignment among retailers on what constitutes food waste (see Section 4) likely creates additional challenges in their food rescue prioritization efforts. Approximately half of our survey respondents consider food channeled for animal feed as food waste, meaning they may not be motivated to prioritize redirecting food surplus from anaerobic digestion (AD) or landfills toward this channel. Additionally, the fact that food banks themselves can waste food during redistribution8 highlights the need to take a holistic view of the supply chain. Prioritizing different avenues for food surplus—whether it’s animal feed, food banks, or other uses—ideally should consider not just the immediate goals of waste reduction, but also the broader environmental impact across the supply chain and inefficiencies throughout the redistribution process, both in donation for humans and the animal feed route.

2.5.5. Recycling and Disposal at Landfill 

In Figure 27, we illustrate the extent to which different retailers have recycling capability across their store networks. Figure 28 displays the distribution of retailers that utilize third-party versus in-house recycling services. As shown in these figures, most retailers recycle food waste, predominantly working with third-party recyclers. Note that we use the term “recycling” to refer specifically to anerobic digestion (AD) or composting, although most retailers use AD9 exclusively.

Internal capabilities

Very few retailers reported having direct involvement in recycling operations. For example, an American retailer owns an anaerobic digestion (AD) facility, but it is operated by a third-party company. This retailer transports food waste from nearby stores to the facility, which supplies a significant portion of the energy needs for one of its warehouses. Similarly, a European retailer’s holding company, which owns two supermarket brands, also owns a recycling company that manages waste for both supermarkets. Comparable arrangements exist throughout the broader food industry. For instance, Unilever, Starbucks, and Dairy Farmers of America recently founded Vanguard Renewables10, a Massachusetts-based venture that operates several digesters capable of processing both food waste and manure to generate renewable energy. These examples illustrate that investing in AD through various types of partnerships is an effective strategy for retailers to address waste disposal, meet energy needs, and demonstrate a commitment to environmental sustainability.

A Central European retailer mentioned that their large stores use composting machines, likely due to insufficient AD infrastructure in the regions where they operate. However, they are exploring alternatives, such as partnering with a third-party firm, though no clear plan has been established yet.

During our local store visits, the food rescuer pointed out that a national retailer they collect donated food from has grind-to-energy solutions11 at some of its stores. A department manager at this chain confirmed this, adding that these grinders help offset their energy costs. However, the food rescuer noted that their organization competes with these grinders, as store employees often find it easier to feed the grinders rather than sorting the food for donation. This highlights a potential issue: while having a recycling solution conveniently located in the backroom can help with waste management, it may shift a retailer’s priorities in a way that negatively impacts the local community by diverting food surplus away from donation channels.

Logistics, handling, and incentives

Approximately half of our respondents reported that AD companies pick up waste directly from their stores, while another third indicated they transport waste to consolidation locations for AD pickup (see Figure 29). These locations are primarily retailers’ distribution centers (e.g., all distribution centers or only fresh food warehouses) or, in some cases, the return centers of AD partners. Some retailers reported using both types of logistics models, depending on the vendor and location.

While the majority of retailers rely on recycling partners for depackaging food, it is not uncommon for retailers to handle depackaging themselves, a labor-consuming process that is generally not preferred by retailers (see Figure 30). Machines capable of separating food from its packaging without labor involvement exist, but these are typically used by recyclers to process waste in bulk, as they are not suited for retailers’ backroom operations. One retailer noted that there are no regulations governing the amount of plastic allowed in the feedstock for anaerobic digestion, raising concerns about potential contamination. As a result, the digestate from AD is likely more suitable for non-edible products, such as flowers, ornamental plants, or bioenergy crops.

For the majority of retailers, waste management costs are covered by headquarters which may potentially reduce the incentive for stores to prioritize donation over recycling or landfill.

When asked about the impediments to recycling, most retailers cited the unavailability of recycling infrastructure, followed by the costs associated with it (see Figure 31). One European retailer noted the lack of regulations in some countries as a contributing factor. A Northern European retailer stated that they are in the process of complying with new regulations but find depackaging challenging, as they must handle it themselves, due to the labor-intensive nature of the task. An American retailer noted that the rollout of their recycling program is slow, as they are implementing it distribution center by distribution center, which serve as waste collection points.

Recycling fees, government policies, and recycling markets

We were able to gather information on recycling versus landfill fees from a few retailers, and this is noteworthy to report as it plays a significant role in shaping retailers’ disposal method decisions. For example, in the UK, anaerobic digestion (AD) is significantly cheaper than landfilling, likely due to government policies that keep landfill fees high to encourage innovation in waste minimization. As a result, AD is the only economically viable disposal option for UK retailers.

During our local store visits, an American retailer mentioned that in Massachusetts, landfill and recycling fees are comparable. However, due to the state’s food waste disposal ban12, recycling is the only legal option for many retailers, and this comes without incurring additional costs. Similarly, a retailer from a developing country noted that in metropolitan areas, landfill and recycling fees are also comparable, which prompts their stores to opt for recycling. In contrast, in rural areas, recycling fees are significantly higher, making this option financially unfeasible in remote regions.

Another retailer from a different developing country noted that there is only one AD facility in the entire nation, leading to substantial hauling costs to transport waste to this facility. In their country, landfill fees are relatively negligible. This retailer is proud to be recycling and expressed disappointment upon learning that many European retailers include recycled waste in their food waste reporting, which they do not. It is rare and commendable that this retailer recycles despite the high costs and lack of regulation. Other retailers we spoke to appear to choose recycling when it is economically viable or to comply with regulations. This retailer, however, expects changes to government policies stating that “we can hear the footsteps of regulation”.

Food waste bans likely reduce recycling fees as recycling companies can achieve economies of scale when pick-up points are closer and more numerous, leading to lower operational costs. Also, that is likely the reason why recycling fees differ across regions with varying population density, being more economical in populous regions. An American retailer stated that most of the cost of recycling comes from hauling costs. Thus, alliances across different retailers, such as by combining their store networks to optimize waste collection and jointly investing in AD, can reduce costs and make recycling economically feasible.

2.6. Outlook

Goals and aspirations 

All retailers indicated that they have publicly announced goals for reducing food waste. The overwhelming majority of these goals take the form of a 50% reduction by a specific year, most commonly 2025 or 2030, compared to a benchmark year, most commonly 2018 (see Figures 32 & 33).

One retailer mentioned that their targets are moving targets; for example, the target year was initially 2025, but it has now shifted to 2030. They noted that while there was strong focus on this goal for 5-6 years, momentum has been lost recently, with their current focus shifting to selling marked-down items.

Similarly, another retailer reported that they recently missed their zero-waste-to-landfill target, acknowledging that it was overly ambitious and unachievable. They stated that they need a more realistic target, which has not yet been set.

To assess retailers’ commitment to reducing environmental impact, we asked about their food surplus management strategy. For the majority of retailers, surplus management is integrated into their sustainability strategy, and they follow a food recovery hierarchy wherever possible. Surprisingly, a significant portion of retailers claimed to strictly adhere to this hierarchy, even when it increases their costs. A smaller group of retailers, however, currently view surplus management primarily as a matter of cost management (see Figure 34).

We also inquired about the drivers of their actions. They overwhelmingly responded as sustainability goals being the primary driver, followed by cost recovery/minimization, laws and regulations, and consumer expectations (see Figure 35).

Metrics 

All retailers, except for one, indicated that they have a dashboard or scorecard specific to food waste management performance. We found that these dashboards vary in terms of content and granularity. As shown in Figure 36, tracking trends that show progress, comparing performance to peer stores, setting targets for various measures, and tracking recycled versus donated food are common features. However, reporting performance by product category, measuring the amount of marked-down food, and tracking thrown-away food are less common.

Those that track performance by product category report data at varying levels of granularity. Only two retailers reported tracking hundreds or thousands of subcategories. One retailer mentioned that they only report on “interesting” categories, such as produce and beverages. A few others noted that they track only short-dated products, such as bakery, produce, and dairy. One retailer indicated that they track donated meat and bakery separately but aggregate waste data for all other categories. Another retailer mentioned that while granular category data is used for overall waste measurement, donation data is reported in aggregate across all product categories.

One retailer stated to rely on data reported by the national food bank for donated food, which is common practice in the U.S. It’s important to note that, as discussed in Section 2.5.3. (see Figure 22), tracking donation data at the category level is important for identifying which store departments are participating in donation programs. Additionally, one retailer mentioned that they rely on their composting vendor to track recycled waste data, while another stated that recycled waste is reported only for board-level discussions.

Incentives and barriers

Recognizing that incentives play a critical role in driving employee behavior, we explored accountability structures and compensation models, such as salary and bonus-based incentives.

We asked retailers who in their organization holds primary accountability for food waste metrics and scorecards. While one-third of respondents indicated that store employees are responsible, responses diverged for half of the retailers. In the “other” category (see Figure 37), answers included teams focused on sustainability, environment, health, sanitation, and corporate social responsibility. Some retailers also pointed to corporate-level project teams, district managers, and buyers (specifically for excess food).

Additionally, we inquired whether retailers had employees dedicated to food waste reduction efforts. While all retailers answered “yes,” we found that food waste management is not the primary responsibility for some of these individuals. Titles for such roles included Replenishment Director, Senior Supply Chain Analyst, Shrinkage and Security Manager, and Facility Manager.

The majority of retailers (65%) do not link employee compensation (salaries or bonuses) to food waste scorecards. Among those that do, one retailer explained that while food waste metrics don’t affect bonuses, they do impact annual pay raises. A few others have established more specific links. For instance, one retailer shared that 5-10% of their employees’ incentive bonuses are tied to waste (as a percentage of sales) for 90% of their workforce. Another mentioned that 25% of employee pay is tied to 15 corporate social responsibility indexes, with food waste being one of them.

We also asked whose roles are most impacted if food waste targets are missed. Five respondents said store managers and employees, while four cited various corporate teams. One retailer responded, “nobody and everybody”, adding that this is an area they are exploring further. Another retailer noted that it’s not tied to a single department but involves operations, commerce, and supply chain, adding that “that is the magic”. Two European retailers brought up financial incentives at the firm level, stating that significant bank loans are tied to achieving these targets and key performance indicators.

We asked retailers about the barriers they face in achieving their food waste reduction goals. While no single dominant answer emerged, most respondents pointed to issues related to store execution and compliance with internal practices, such as employee training and noncompliance that hinder donation efforts. Several retailers mentioned that food waste is not prioritized for various reasons, including the constant need to manage and restock new inventory daily. Some respondents also highlighted legal and regulatory hurdles, such as laws related to black soldier flies and a lack of government support. A few retailers mentioned logistics costs, such as backhauling waste for animal feed. Others expressed concerns about the insufficient number of food banks or the reliability of donation partners. Additional reasons, which we categorized under “other” (see Figure 38), included challenges like insufficient anaerobic digestion (AD) facilities, difficulty setting realistic targets, consumer expectations, shipment delays that age inventory, and inaccuracies in inventory records.

One retailer noted that they had already addressed all the “low-hanging fruit”, making further improvements much more difficult.

Current initiatives and future developments 

Interestingly, we find that an overwhelming majority of retailers are currently working on projects related to markdown management (see Figure 39). These projects include initiatives such as dynamic pricing (e.g., in-house development, through changing vendors), piloting or expanding the rollout of markdown platforms, reducing the number of steps in the markdown process, selling marked-down items online through internal platforms, and offering mixed bags of fruits and vegetables.

The second most frequently cited initiative was related to circularity. Several retailers mentioned working with black soldier flies, such as expanding pilot programs or exploring the construction of a plant to dry the flies. One American retailer is collaborating with a startup that converts their food waste into animal feed, which is then sent to chicken farmers. The chickens and eggs produced are eventually sold back to the retailer. Meanwhile, a retailer in a developing country is consolidating cooking oil and food waste collection to produce biodiesel for their fleet. They are also utilizing the compost they generate within their value chain by supporting food gardens, selling the compost in their stores, or giving it to their produce vendors.

During our first round of interviews, one retailer expressed interest in learning what other retailers are working on through this research. Thus, to be most useful to our audience, we have compiled a comprehensive list of specific initiatives shared by participants, using the categories in Figure 39 (excluding the “markdowns” and “circularity” categories, which were discussed earlier):

• Ordering: AI or algorithms to optimize replenishment.
• Process improvement: Develop training for sorting and donation guidelines.
• Technology: RFID, electronic shelf labels, 2D barcoding, or date checking tools.
• Repurposing: Reuse bread in sausage and cookies, collaborate with startups that upcycles surplus into products (e.g., soup) for sale in stores.
• Donation: Accurately capture surplus exit routes to improve the precision of donation data, streamline multi-step donation process, find charities for every store, implement corporate-wide food donation program.
• Animal feed: Backhaul waste to central locations to divert waste from recycling to animal feed.
• Recycling: Switch to a recycling vendor with better technology to relieve store employees from depackaging, find better functioning compost machines.
• Collaboration with producers: Extend product shelf lives, eliminate best-before dates for products like candy or possibly for rice and pasta, source imperfect produce to sell at a discount, help growers create markets for second grade apples (e.g., for juice, cakes, chips, or dried apples).
• Other: Optimize space for hot food counters, start initiatives to reduce packaging waste (e.g., encourage customers to bring their own containers to use at dispensers, return machines for plastics and cans).

3. Maturity Model for Benchmarking: Where is Your Business?

We found that our research participants display varying levels of maturity across the different areas we explored in this study.

Based on these findings, we inductively developed a model with three levels of maturity (developing, established, leading) across seven dimensions, as presented in Table 3. This inductive approach is grounded in data collected through open-ended and structured survey-based interviews, as well as store visits, which provided rich insights into participants’ practices and approaches.

By synthesizing these insights with our expertise and familiarity with retail operations, we were able to identify patterns and envision actionable steps for participants to advance along the maturity ladder.

For clarification, we further elaborate on these dimensions and the differences across varying levels of maturity:

Identification of food surplus: The key differences between maturity levels lie in the frequency of date checking and the efficient use of labor. Retailers at the “established” level check dates far more frequently than those at the “developing” level. In contrast, “leading” retailers leverage technology and algorithms to enhance labor productivity by identifying items with a high probability of expiration and directing labor accordingly.

Repurposing: The “established” retailer has taken advantage of all low-hanging fruit; however, these efforts are not yet systematically supported by a headquarters team. In contrast, the “leading” retailer receives robust support from a headquarters team to develop successful recipes, optimize processes, acquire necessary tools, and build partnerships with third-party upcyclers. Additionally, product- and store-level reporting incentivizes stores to improve their performance.

Markdowns: The key difference between “developing” and “established” retailers lies in their data tracking capabilities and the extent to which markdowns are applied across categories. “Developing” retailers tend to use markdowns in limited categories (e.g., high-value items such as meat), likely due to concerns about their impact on brand perception and the retailer’s freshness image. The “leading” retailer distinguishes itself from the “established” retailer through its use of technology and algorithms: while “established” retailers rely on fixed discount percentages or amounts, “leading” retailers dynamically determine discounts based on factors such as product category, inventory levels, demand, and other factors.

Notably, our interviews revealed that no retailer has fully resolved the markdown challenge. Even the most advanced retailers continue to experiment with various strategies to simultaneously optimize sell-through rates and margins. Thus, “leading” retailers, as defined in our model, remain in a state of continuous improvement in their markdown processes.

Donation: Retailers at the “developing” level lack visibility into department participation due to store-level tracking, have poor-quality and non-granular donation data, and donate only a limited amount of surplus. “Established” retailers have addressed data challenges and assigned charities to most stores. However, this does not necessarily result in higher donation volumes, as issues like infrequent pickups or limited capacity of the charities persist. “Leading” retailers donate the majority of their unsold but edible food, demonstrating advanced competencies in processes, data quality, and utilizing multiple channels to maximize donations.

Animal feed: At the “developing” level, retailers only respond to requests from nearby farms. “Established” retailers are more proactive, with support from headquarters; however, pickups still occur at the store level, meaning store participation happens only when it is convenient and cost-effective for the recipient. The key difference between “established” and “leading” retailers lies in the amount of food diverted to the animal feed channel. “Leading” retailers implement central collection, ensuring that stores not conveniently located near recipients can still divert their surplus to the animal feed channel.

Recycling: When determining maturity levels for the recycling dimension, we considered retailer efforts in relation to the rules and infrastructure in their respective regions. For example, in Massachusetts, which bans the disposal of food waste in landfills for large companies, or in the UK, where recycling is cheaper than landfill disposal, a retailer that simply complies with the rules or takes the economically advantageous route of recycling surplus would likely be placed at the “established” level. By contrast, a “leading” retailer would demonstrate additional efforts—such as incurring extra costs or engaging in industry collaborations to support recycling networks—particularly in regions with less developed infrastructure. In this context, a retailer in a developing country might be ranked as “leading” based on the challenges they overcome to implement recycling.

Goals / Organization / Incentives: At the “developing” retailer, food waste reduction is not yet recognized as a key mission, and no dedicated roles are assigned to address it. The “established” retailer has corporate roles specifically focused on food waste reduction, and food waste prevention and surplus management are included in onboarding training for new store employees. The “leading” retailer takes it a step further by aligning employee incentives with corporate food waste reduction goals through appropriate bonus structures.

Utilizing the maturity model

Retailers can leverage the maturity model to conduct self-assessments. By evaluating their current practices against the model and drawing inspiration from higher maturity levels, they can identify areas for improvement, set goals, and determine actions. Accordingly, they can prioritize investment decisions and develop a roadmap to enhance their food surplus management practices over time. Additionally, periodic assessments can be conducted to benchmark progress against the initial state and track ongoing improvements.

The maturity model can also serve as a tool for internal alignment. Different groups within the organization—such as store managers, district managers, category managers, buyers, merchants, logistics teams, supply chain teams, and other relevant headquarters departments—can conduct separate assessments. Following these evaluations, retailers can analyze differing opinions to uncover knowledge gaps and address them. By building consensus with input from all stakeholders, they can collectively set priorities and develop an action plan that outlines specific steps and responsibilities for each team. Ultimately, this exercise can foster stronger employee engagement and motivate them to work collaboratively toward achieving the organization’s goals.

Another significant benefit of the model, as noted by some retailers, is that it provides reassurance and supports discussions with the board or CEO, showing that the retailer’s capabilities align with those of the majority of the market.

Finally, the model can be used in the development of a retailer’s broader sustainability strategy.

Current state of retailers

We solicited input from ECR Retail Loss members to assess their current state through both an online and an in-person meeting. During these sessions, we presented the model and asked retailers to complete a self-assessment survey. Additionally, we presented the model during an online meeting led by the World Wildlife Fund, attended by food sector signatories of the US Food Waste Pact13, where we collected additional responses using the same survey.

The survey consists of seven questions, each corresponding to one of the seven dimensions in the model. Respondents rated their maturity on a scale from 1 to 5: 1) Developing, 2) Between Developing and Established, 3) Established, 4) Between Established and Leading, and 5) Leading. For each dimension, retailers were asked to select the score that best represents their organization’s maturity.

We obtained a total of 57 responses. In cases where multiple participants from the same retailer attended the meetings, we aggregated their responses by averaging the scores. Interestingly, different employees from the same company did not always align in their assessments of their company’s practices, which may partly be attributed to knowledge gaps among them.

Our final sample consists of 31 retailers: 14 from Europe (including Norway but excluding the UK), 8 from the UK, 6 from the US, and 3 from other regions, which we categorized as “other.” While there were some

49FOOD SURPLUS MANAGEMENT IN RETAILING: A GLOBAL PERSPECTIVE

differences between retailers in the US, UK, and Europe, these differences were not statistically significant, partly due to the limited sample size outside of Europe. The “other” category includes retailers from diverse geographies (South Africa, New Zealand and United Arab Emirates), making it less meaningful to report their aggregate scores. Lastly, while there was overlap between survey participants and research participants, additional retailers completed the maturity model survey.

Figure 40 presents the results in a box plot format, illustrating the average and median scores (indicated with an X and a red line, respectively) across the seven dimensions, along with the dispersion of those scores.

Note: The box represents the interquartile range (IQR), which contains the middle 50% of the data, spanning from the first quartile (Q1) to the third quartile (Q3). The line inside the box indicates the median (the middle value), while the X represents the mean (average value). The whiskers extend to the smallest and largest values within 1.5 times the IQR. Points outside the whiskers are considered outliers.

As shown in the figure, retailers exhibit the highest levels of maturity on average in the identification of food surplus, donation practices, and in setting goals, organizational structures, and incentives, followed by markdowns. In contrast, the animal feed dimension has the lowest level of maturity on average.

It is also important to consider the variation in responses. Responses show lower dispersion in the identification of food surplus, donation, and recycling. In contrast, animal feed again exhibits the highest variation in maturity across retailers. Repurposing, markdowns, and goals/organization/incentives display relatively moderate levels of variation.

We summarize the survey results in an alternative format in Table 4 below.

In summary, animal feed is the weakest dimension among retailers, with capabilities varying widely. Identification and donation are, overall, the strongest areas for the participants.

4. Concluding Remarks 

This report represents the first comprehensive study outlining the current state of major grocery retailers in relation to their food surplus management practices. It highlights both retailers’ competencies and the challenges concerning regulations, infrastructure, and operations across different regions.

We believe this study is valuable not only for retailers but also for policymakers, service providers, food suppliers, venture capitalists, and academics who aim to make a positive impact in the food industry.

Retailers can use this study to assess their standing relative to competitors or companies operating in different geographies, where varying regulations, infrastructure, and consumer cultures may influence practices. Identifying similarities can provide reassurance, while noting differences can inform ideas for new initiatives. The maturity model presented in Section 3 offers a framework for guiding roadmaps and investments. While this study focuses primarily on large retailers subject to significant public and investor pressures—likely biasing their practices toward more mature levels—mid-sized and smaller retailers can learn from their experiences and practices.

Policymakers can utilize these findings to craft legislation that supports retailers’ efforts to reduce food waste. For example, by examining markets with fewer restrictions on the use of food surplus (e.g., related to donation, animal feed, or black soldier fly usage), they may consider relaxing regulations, where appropriate, to help retailers maximize food reuse. Conversely, certain restrictions could benefit retailers and also reduce food waste. For instance, our findings indicate that the USA is the only region among those examined that continues to use multiple types of food date labels, a known contributor to food waste. Therefore, the recently passed Food Date Labeling Act of 2023, while restrictive, is expected to reduce food waste in retail. Additionally, food waste bans can help form recycling markets, reduceani collection costs, and lower disposal fees for retailers. Retailers can also benefit from support in developing cost-effective networks for food donations and animal feed.

Service providers, such as consultants, technology compes, and recyclers, can use insights from our study to tailor their solutions to address retailers’ most pressing challenges. Food manufacturers could invest in solutions to extend product shelf life or upcycle food surplus. Manufacturers can also learn from retailers, who face far greater complexities by managing tens of thousands of SKUs, and apply these lessons to reduce food waste within their own operations. Venture capitalists may find investment opportunities in recycling or upcycling solutions. Finally, academics can direct their research toward addressing the most critical challenges retailers face in managing food surplus and waste.

Disclaimer

The research for this report was supported by the ECR Retail Loss.  This report is intended for general information only; it is based upon a review of the available literature together with primary research undertaken with retail organisations in Europe. Individuals or companies are advised to take professional advice regarding their specific needs and requirements prior to taking any actions resulting from anything contained in this report. Any such actions taken by individuals or companies are entirely at their own risk.  Companies are also responsible for assuring themselves that they comply with all relevant laws and regulations, including those relating to intellectual property rights, data protection and competition laws or regulations. The images used in this document do not necessarily reflect the companies taking part in this research.

© December 2024, all rights reserved.

About the Author 

Dr Arzum Akkas is an Associate Professor at the Isenberg School of Management, University of Massachusetts Amherst. She holds a Ph.D. in Engineering Systems and a master’s degree in Supply Chain Management from the Massachusetts Institute of Technology (MIT), as well as a bachelor’s degree in Industrial Engineering from Istanbul Technical University. Before joining the University of Massachusetts, Dr. Akkas taught at Boston University and MIT.

Before her academic career, Dr. Akkas spent eight years in industry, holding roles such as management consultant at Archstone Consulting (now part of the Hackett Group), operations manager at PepsiCo, and business systems consultant for Manugistics (now Blue Yonder).

Dr. Akkas’ research focuses on food supply chains, with an emphasis on sustainability and retail food waste. She has investigated the root causes of food waste in supply chains and developed tools for waste control through shelf space management, employee incentives, and inventory management. She collaborates with major retailers and manufacturers in the U.S. and Europe to enhance operational efficiency and achieve sustainability goals.

In addition to her research, Dr. Akkas teaches graduate courses in Operations Management and Supply Chain Management. She also offers a Sustainable Supply Chains course, available to both graduate and undergraduate students.

Acknowledgements (from the author)

I would like to express my sincere gratitude to all the research participants for their valuable time and contributions to this study. Special thanks to Colin Peacock, ECR’s Group Strategic Coordinator, for commissioning this research, providing insightful feedback and ideas throughout the research process. Lastly, I would like to extend my thanks to my long-term research collaborator, Professor Dorothee Honhon from the University of Texas at Dallas, for her invaluable feedback on this report.

About ECR Retail Loss 

ECR Retail Loss is part of the ECR Community, a voluntary and collaborative retailer-manufacturer platform with a mission to ‘fulfil consumer wishes better, faster and at less cost’. Over the last 25 years, the group has acted as an independent think tank focused on creating imaginative new ways to better manage the problems of loss and on-shelf availability across the retail industry. Championing the idea of Sell More and Lose Less, the group is open to any retailer and manufacturer to join. Its work is supported by research funding provided by Checkpoint Systems, Genetec, Retail Insight, RGIS and NCR.

For further information: ecrloss.com.

End Notes

1  Akkas, A., Gaur, V. and Simchi-Levi, D., 2019. Drivers of product expiration in consumer-packaged goods retailing. Management Science, 65(5), pp.2179-2195.

Luo, N., Olsen, T.L. and Liu, Y., 2021. A conceptual framework to analyze food loss and waste within food supply chains: An operations management perspective. Sustainability, 13(2), p.927.

Teller, C., Holweg, C., Reiner, G. and Kotzab, H., 2018. Retail store operations and food waste. Journal of Cleaner Production, 185, pp.981-997.

2 This organization is the largest food rescue agency in the New England region of the USA. It serves 67 cities and towns in Greater Boston, MetroWest, Worcester County, and Hampden County, and works with 90+ vendors and over 200 nonprofit partners. It aims to increase awareness on topics related to wasted food and hunger, as well as empower people in the communities it serves to feed themselves and their families.

3 This bill establishes requirements for the format of quality date and discard date labels on food packaging. Specifically, the bill requires the quality date on a food label (i.e., the date after which the quality of the item may deteriorate) to include the phrase BEST If Used By or the abbreviation BB. Similarly, the discard date on a food label (i.e., the date after which the item should not be consumed) must include the phrase USE By or the abbreviation UB. Abbreviations may only be used if the full phrase does not fit on the label.

https://www.congress.gov/bill/118th-congress/house-bill/3159#:~:text=This%20bill%20establishes%20requirements%20for,By%20or%20the%20abbreviation%20BB.

4 https://www.usda.gov/sites/default/files/documents/usda-good-samaritan-faqs.pdf
There are Good Samaritan Laws in various other countries as well.
https://en.wikipedia.org/wiki/Good_Samaritan_law

5 While conventional single dimension barcodes typically only store the Universal Product Code (UPC),  two-dimensional (2D) barcodes can store both the Universal Product Code (UPC) and the expiry date of products, allowing retailers to track inventory by age.
https://www.gs1.org/standards/barcodes/2d

6 Black soldier flies are farmed to convert organic waste into protein-rich biomass, which is then used as animal feed and fertilizer.

7 Preselling refers to the practice of selling products or services before they are available. It involves generating sales or securing orders for goods before they are physically ready in stock.

8 F. Zou, L. Sharma, P. Pekgün and S. Ahire. (2024) “Reducing Food Waste in U.S. Food Banks: The Role of Distribution Strategies,” Working paper.

9 According to the Environmental Protection Agency’s Food Recovery Hierarchy, anaerobic digestion is a superior alternative to composting for environmental impact. https://19january2017snapshot.epa.gov/sustainable-management-food/food-recovery-hierarchy_.html

10 https://www.vanguardrenewables.com/farm-powered-strategic-alliance#

11 Grind-to-energy solutions convert food waste into a slurry that is transported to anaerobic digestion facilities, where it is transformed into renewable energy and nutrient-rich fertilizer.

12 MassDEP regulations ban disposal of food and other organic wastes from businesses and institutions that generate more than one-half ton of these materials per week.
https://www.mass.gov/guides/commercial-food-material-disposal-ban

13 https://www.worldwildlife.org/press-releases/u-s-food-waste-pact-engages-businesses-across-the-country-to-target-measure-and-act-to-reduce-food-waste

 

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