Price-sensitive and sustainably-minded shoppers are demanding retailers address food waste and improve markdowns, according to the latest research from Retail Insight.

Original research of over 1,000 UK shoppers by the in-store execution software provider showed that 70% believe that, rather than addressing ‘mainstream’ sustainability efforts, such as recycling, retailers should focus their ESG efforts on food waste reduction.  A further 70% felt there wasn’t currently enough focus on food waste reduction in retailers’ sustainability goals, rising to 74% of Gen Z and Millennial consumers.  

The war on food waste continues to be a key challenge for retailers, many of whom are trying to prevent food which is sold through their networks ending up in landfill. Last month, for example, Tesco announced it would start to give away food items which are about to go out of date for free. It is currently trialing giving away yellow-stickered goods completely free of charge after 9.30pm in a small number of its Express convenience stores before rolling out nationally. Other retailers, including M&S, have turned to automation and AI to optimise their Reduce To Clear (RTC) operations to support food waste reduction goals.

More than seven in ten (72%) shoppers in Retail Insight’s poll felt that retailers and consumers need to work more collaboratively to shift the dial on climate change, rising to 80% of Millennials.  This call for collaboration highlights the key role food waste management plays; retailers want to waste less and sell more, and consumers want access to good value while being sustainability conscious. Three quarters (74%) of shoppers said they were also actively trying to cut down food bills, with two-fifths (38%) now only buying reduced-price groceries, rising to 55% of Millennials, underscoring the role markdowns can play in making consumers’ household budgets work harder.  

As well as exhibiting high price sensitivity and wanting to cut down on the cost of food, consumers also want to reduce the impact of food waste.  Over two-fifths (44%) are now motivated to buy marked-down goods to stop food from going to landfill, while a further half (47%) purposefully don’t overbuy groceries to prevent food waste.  

With shoppers wanting to waste less and purchase more marked down groceries, retailers can drive increased sales through RTC processes, creating additional revenue while preventing waste.  However, many retailers are currently missing out on this opportunity; 12% of retailers globally are not implementing any markdown processes within their stores, while in the UK, only 5% of markdowns are dynamic and data-driven.  

This, Retail Insight suggests, means many retailers are missing out on the opportunity to increase sell-through, recover revenue and reduce the amount of food wasted, as its CEO, Paul Boyle, explained:

“Strategic markdowns are not just a tool for clearing inventory; they are also hugely important in reducing food waste whilst maintaining healthy levels of profitability.  However, they remain an overlooked opportunity, with many retailers choosing to do nothing or simply relying on basic predefined values, usually set at 25%, 50% or 75%.  This leads to poorly timed, over-discounted markdowns, often taking no account of the volume to clear, that eat into margin and don’t then generate the sell-through needed to shift the stock.”

Paul Boyle, CEO, Retail Insight

“Retailers should instead look to harness their existing store data to create more effective dynamic pricing systems that consider historic sales, inventory volume and seasonality.  In doing so, they maximise the opportunity to drive sales and reduce waste, while offering value to customers,” Boyle concluded.