billions of dollars’ worth of food is dumped each year because of retailers’ inefficiency.
It is difficult to gauge quite how much waste—known as “shrink” in the industry’s jargon—there is. Oliver Wyman, a consulting firm, puts the figure at 8-10% of total “perishable” goods in America. The Food Marketing Institute, an industry body, says such sales totalled $196 billion in 2006. That means food worth nearly $20 billion was dumped by retailers. In a report published on May 14th, the United Nations estimated that retailers and consumers in America throw away food worth $48 billion each year, and called upon governments everywhere to halve food wastage by 2025.
Laudable though this is, it raises the question of why so much food is going to waste in the first place. After all, American supermarket chains have spent the past ten years or so installing inventory-management software, cold-storage systems and other supply-chain paraphernalia. Yet their shrink rates are still twice as big as those of European retailers.
One reason for this is structural, reckons Leigh Sparks of Stirling University in Britain. Food in America travels farther, increasing the risk it will rot in transit. Another reason is that American firms are less adept at capturing and using customer data to predict demand. And many American store managers believe high shrinkage is inevitable, given their enthusiasm for huge displays and the widest possible range of produce. “This feeds a vicious circle of more and more choice,” says Matthew Isotta of Oliver Wyman. And it can backfire if displays disguise rotten food or too much choice overwhelms customers.
– – from www.economist.com