A ‘take five’ reflection of the June ECR Retail Loss group ‘Sell more, Waste Less’ 2-day virtual event given by Simon Futcher, an experienced Shrink Specialist and Loss Prevention Senior Manager.
In times like the ones we now live in, it could be said that the pandemic could bring two strangely different problems for retailers and suppliers; Silo working where a Retailer is only worried about solving their own problems on their own – the backs against the wall mentality; and secondly, significant growing issues with Waste and Shrink – where feast and famine cause sleepless nights for Key Performance Indicator owners.
However, this was not the case at the ECR Retail Loss Group’s latest two-day event on ‘sell more, waste less’, which for the first time was hosted virtually due to the restrictions that come with the pandemic. I was fortunate enough to be a guest as part of the event to hear a number of excellent, thought provoking, one-hour sessions over the two days. Led by academia and retail process practitioners from around the world, the aim of each of the six hour-long sessions was to share continuing research, trial findings and best practice – collaboratively working to show benefits, or not as the case may be.
For me, as an experienced Retail Process Practitioner on Shrink and Waste, I probably thought the event would not show me much new – a couple of days sat in front of my computer, sat on the sofa and drinking lots of tea. Far from it – and there were lots of points I took away from the sessions I attended and continue to reflect on now.
For the purposes of this article, I wanted to share my thoughts on five of those key learnings in no particular order or priority – partly to help me process ideas, but also to allow others who are in, or who maybe touch, the retail world to think about waste. I’ve embedded some hyperlinks in the article to some of the articles for ease of finding/reading): –
1. The Curse of Grabbing Part 1 – Gosh, this was one of those that hits you straight between the eyes, because you do not naturally think about waste creation in the way Professor Rob Broekmeulen has researched and presented his findings to the ECR, introducing the new term of ‘grabbing’. A lot of customers, increasingly so during the pandemic, want to come and buy the longest dated product on display, as you see them reach to the back of the fresh food displays and grab that latest dated product (I am as guilty as anyone for this when I do the weekly shop). However, the retailers and their systems work mostly on systems and processes that want to sell and expect to sell the shortest product on display to the customer first. How do retailers go about getting around this quandary? Artificial Intelligence is in its infancy to think like a human in its algorithms. RFID barcode technology for date codes is a very expensive concept and probably will not totally solve the problem anyway. Replenishment to ‘just in time’ based on codes will have labour method teams having kittens. What is the answer – well, perhaps that will come from the next part of the research?
2. The Curse of Grabbing Part 2 – Just when you think it’s safe to go back in the chiller…. One of the retailers suggested at the end of Professor Broekmeulen’s presentation that retailers are not helping themselves with waste and markdowns when you take the concept of ‘Grabbing’ in conjunction with on-line shopping. Again, not something I’d thought about thoroughly before the session. Retailers set the rules on minimum freshness of product that will be delivered to customers – which probably causes waste down the line because the on-line shoppers are ‘grabbing’ product to meet those requirements, no matter what the shortest date on display is. I remember when On-line shopping started over 20 years ago something like ‘grabbing’ was never in consideration – the online shopper picked what was there at the front, the customer was pleasantly surprised to get the correct item. Is this about retailers looking at their rule sets for on-line shopping (with tensions from other parts of the business) or is it about training and coaching for on-line store shoppers to ‘grab’ as efficiently as possible?
3. What do you REALLY include in a model that looks at the True Cost of Waste – This is one to really get you thinking – and personally it has done for me over the past 5 years more and more in my previous roles. Now that partially comes from working with a very good labour methods team who used to ‘sit on my desk’ when I wanted to review process who would quote me to the penny how much additional labour for additional process costs (God bless them!) and that was that. But when you consider all the things that Professor Lisa Jack has in her extensive research, you start to think more closely about how you can eliminate as much food waste as possible because it’s not just the value of the markdown or disposal of product that hits your P&L, but all the on-costs. If you are struggling to do any Return on Investment modelling for waste, then this presentation may stimulate your thinking.
4. Optimising Markdowns – One of the main concerns for any retailer selling product with date stamps on them is to stop significant margin erosion when clearing expiring codes, especially if you get to a point of selling it at a significant loss. I’m sure some of you have experienced the wrath of the trading teams getting significantly frustrated when they drill down on the margin numbers of SKU’s to store level and see the impact of those final clearances and blame poor retail process. But add into that tension that there are a number of expensive on-costs of not clearing product on first time of reduction – or not at all. Significant extra labour handling to either dispose of product or transfer to charities (remembering £9 per hour per trading day for 1,000 stores equals a conservative £3.2m a year), the on-costs of waste disposal and some country’s (like the UK) government land fill taxes, or the risk to brand of non-ethical waste all are some of the on costs of expired product with no sales. With all the above in mind, it was good to see and hear the two short presentations of Waitrose and analytics supplier RI (who are partnering with the Co-Op), both focused on getting the most effiecient price, to stop the on-costs of waste and protect margin. In the case of Waitrose it was refreshing to hear that its very much work in progress, including on the labour front – as from my view it’s also mature thinking to consider total profitability of a trial. That probably nicely links in well with my previous thought on the true cost of waste that Professor Jack presented.
5. Production Planning – seeing and hearing what ASDA are doing was refreshing – and in short, it’s really important to have a good, robust, intelligent system across the store ranges that considers Forecasting, Ordering, Code Control, Production planning and markdown/waste management for optimum sales and waste. I know ASDA are looking at this closely and I’m aware from my own research of another system used widely in North America that offers a similar capability (feel free to contact me for more information on that). But it’s clear that a clever, learning computer will make better decisions than a human who is predicting and doesn’t have the time or information to make production decisions – and is a key investment in the battle against waste and profitable sales. The days of someone saying to you ‘… but I can order better than a computer’ are probably now long gone with the technologies available.
In summary, this key work on waste management, led and sponsored by the ECR retail loss group, is now into its fifth year. An area that is not just about preventing loss but is also about encouraging profitable sales– that has to be positive news to think about for anyone in a current, tough trading climate trying to add value to a business through their role. It is clear that working in silo or just letting loss and waste happen is no longer acceptable to any of the retailers who attended. It also is very refreshing to attend an event that is as much about sharing ideas of “we’re doing this” and “this is what the output is”, as much as it is about the excellent academia research which was presented. Collaborative working on the subject of waste, that the ECR’s Retail Loss Group facilitate, is and has to be seen as essential work to be involved with – learning as a peer group together, whilst remaining confidential about numbers.
If you couldn’t make any of the sessions and just want to read more on the papers or see the presented power points, then jump over to the dedicated event website page where all the papers have been helpfully hyperlinked so you can view them at a click. For me its a must of reading and continuous development for any Loss Prevention/Profit Protection, Supply chain or Retail Operations leader.
Personally, I look forward to the next sessions on the subject in November to hear how the research and trials continue – all from the comfort of my sofa and office again. If you have not been to any of the ECR’s Retail Loss Group’s ‘Sell More, Waste Less’ sessions yet, then maybe think about contacting Colin Peacock at the ECR (He’s also a member of LinkedIn so feel free to message him here) to join the next sessions in November and engage in something that will help your critical thinking on the subject.
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