The increasing awareness of environmental issues has led to a shift in consumer behavior, with price-sensitive and sustainably-minded shoppers driving demand for retailers to address food waste and improve markdowns. Retailers are now facing a significant challenge in meeting the expectations of this growing demographic, with 70% of shoppers believing that food waste reduction should be a key focus of their ESG efforts. This sentiment is further emphasized by the fact that 74% of Gen Z and Millennial consumers feel that there isn’t currently enough focus on food waste reduction in retailers’ sustainability goals. To address this issue, retailers need to adopt a more holistic approach to food waste management. This includes not only reducing waste but also increasing the sale of marked-down goods, thereby creating additional revenue while preventing waste. A key strategy in achieving this goal is through the implementation of Reduce To Clear (RTC) processes, which can drive increased sales and reduce waste. Despite the importance of this strategy, many retailers are currently missing out on the opportunity to increase sell-through, recover revenue, and reduce waste. According to Retail Insight’s research, 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 highlights the need for retailers to adopt a more proactive approach to food waste management. Key to this approach is the creation of effective dynamic pricing systems that consider historic sales, inventory volume, and seasonality. By harnessing existing store data, retailers can maximize the opportunity to drive sales and reduce waste, while offering value to customers. As Paul Boyle, CEO of Retail Insight, comments: “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%.”
Retailers can no longer afford to rely on basic predefined values for markdowns. Instead, they need to adopt a more sophisticated approach that takes into account the volume to clear, the time of year, and the sales trends. By doing so, they can maximize the opportunity to drive sales and reduce waste, while offering value to customers. The benefits of adopting a strategic approach to markdowns are numerous. For example, retailers can increase sell-through, recover revenue, and reduce the amount of food wasted. By implementing effective dynamic pricing systems, retailers can also drive sales and increase customer loyalty. Additionally, a strategic approach to markdowns can help retailers to reduce their environmental impact, as they are able to minimize waste and maximize the use of their inventory. In conclusion, the demand for retailers to address food waste and improve markdowns is driven by the growing awareness of environmental issues and the increasing sensitivity of price-conscious consumers. By adopting a strategic approach to markdowns, retailers can drive increased sales, reduce waste, and offer value to customers.
- 70% of shoppers believe that food waste reduction should be a key focus of their ESG efforts
- 74% of Gen Z and Millennial consumers feel that there isn’t currently enough focus on food waste reduction in retailers’ sustainability goals
- 72% of shoppers feel that retailers and consumers need to work more collaboratively to shift the dial on climate change
| Key Metrics | Description |
|---|---|
| 12% of retailers globally are not implementing any markdown processes within their stores | This highlights the need for retailers to adopt a more proactive approach to food waste management |
| 5% of markdowns in the UK are dynamic and data-driven | This shows that there is still a significant opportunity for retailers to increase sell-through, recover revenue, and reduce waste |
“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,” emphasizes Paul Boyle, CEO of Retail Insight. “In doing so, they maximise the opportunity to drive sales and reduce waste, while offering value to customers.”
“Our customers are more aware than ever of the environmental impact of their purchasing decisions. They expect retailers to take action to reduce food waste and improve markdowns. Retailers that fail to do so will be at risk of losing customer loyalty and ultimately, sales.”
Retailers can drive increased sales through Reduce To Clear (RTC) processes, creating additional revenue while preventing waste. However, many retailers are currently missing out on this opportunity. According to Retail Insight’s research, 44% of shoppers are motivated to buy marked-down goods to stop food from going to landfill, while a further 47% purposefully don’t overbuy groceries to prevent food waste. By adopting a strategic approach to markdowns, retailers can not only drive increased sales but also reduce waste and offer value to customers. The benefits of this approach are numerous, and it is essential that retailers adopt this strategy to meet the growing demand for food waste reduction and markdowns. Key strategies for retailers to drive food waste reduction and increase sales through markdowns include:
• Implementing Reduce To Clear (RTC) processes
• Creating effective dynamic pricing systems that consider historic sales, inventory volume, and seasonality
• Offering value to customers through markdowns
• Collaborating with consumers to shift the dial on climate change
By adopting these strategies, retailers can drive increased sales, reduce waste, and offer value to customers, ultimately meeting the growing demand for food waste reduction and markdowns.
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