How large food retailers can help solve the food waste crisis (HBR)
If you find yourself having to purge your refrigerator’s crisper bin every few weeks, imagine what goes on at a grocery store. The Institution of Mechanical Engineers estimates that annually between a third and a half of all food produced is wasted worldwide. According to the Guardian, approximately 45% of all fruits and vegetables, 35% of fish and seafood, 30% of cereals, and 20% of meat and dairy products are wasted by suppliers, retailers, and consumers every year.
This waste is growing alongside a growing world population. The United Nations reports that the world population is expected to grow from 7.6 billion to 9.8 billion people by 2050, which makes food security a more pressing issue. Growing food requires water, seeds, labor, machinery, energy, and fertilizer. Letting food go to waste, then, is a frivolous use of natural resources that drives up costs, inflates food prices, and weakens the food supply chain.
Large food retailers such as Kroger, Sainsbury’s, Tesco, Carrefour, and Wal-Mart stand in a unique position to address this global food issue. Because of their direct links with farmers, processors, and consumers, they have the power to influence every facet of the supply chain. And because the traditional supermarket industry is highly concentrated (for example, in the UK, the top seven food retailers account for 87% of the grocery market), retailers have considerable market power to make a change.
However, their high volume–low margin business model also makes them vulnerable to threats such as competition, increasing wholesale prices, and changing consumer demands. For example, super discounters such as Aldi, Lidl, and Amazon are further squeezing already thin food retail margins for large retailers. We propose a four-pronged strategy to help retailers reduce food waste as it occurs in food farming and food production, in the stores themselves, and during consumption. This strategy can also help retailers manage competitive and strategic challenges by strengthening retail partnerships with food suppliers and connecting with customers’ needs and wants in new ways.
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Dr. Mark Esposito teaches Global Economics and Business & Global Society on Hult’s MBA, EMBA, and Masters of International Business programs. He is also Research Lead on the subject of “Transforming Behavior.” He has taught at Harvard University and Grenoble Ecole de Management and is Research Fellow at the Judge Business School, University of Cambridge. He consults in the area of corporate sustainability, complexity and competitiveness worldwide, including advising to the United Nations Global Compact, national banks and governments, and NATO through various Executive Development Programs. He is the Founding Director of the Lab-Center for Competitiveness, affiliated with the MOC program at HBS, which is a think-tank that produces research on cluster and cluster policy. Mark holds a PhD in Business and Economics from the International School of Management.