Supermarkets could potentially boost their revenue by tapping into the market for soon-to-expire food products that are often overlooked. Rather than manually searching for and discounting short-dated items, Too Good To Go, a Danish company specializing in reducing food waste, is introducing an AI-powered solution for grocery stores. This innovative tool, set to launch globally with SPAR, helps streamline the process of managing expiration dates, a significant challenge in the retail sector’s battle against food waste.
According to Mette Lykke, the CEO of Too Good To Go, the current practice of manually inspecting products for expiration dates is inefficient and error-prone. Often, products nearing their expiry are identified too late, leading to missed revenue opportunities. By leveraging AI technology that considers various factors like customer behavior and seasonal trends, the software predicts product sellability and recommends appropriate discount rates as items near their expiration. This approach minimizes manual checks to only 1% to 7% of products, streamlining operations significantly.
Furthermore, the software facilitates the identification of items suitable for donation or steep discounts through Too Good To Go’s mobile app. By optimizing discount strategies based on regional preferences and seasonal demands, supermarkets can better align their promotions with consumer trends, as demonstrated by a French supermarket chain that adjusted its discounting practices for cheeses based on location and time of year.
The rising demand for discounted short-dated products, fueled by inflation, has prompted supermarkets to focus on minimizing food waste while enhancing profitability through strategic promotions. Jorgen Dejgaard Jensen, a food waste economy expert at the University of Copenhagen, emphasizes the financial benefits for supermarkets in efficiently managing near-expiration products. However, the risk of consumers discarding expired food at home remains a concern.
Food waste poses significant environmental challenges, with the United Nations estimating that 30% of globally produced food is wasted, contributing to substantial greenhouse gas emissions. Supermarkets incur notable losses due to discarded food, amounting to approximately 1.6% of net sales on average, impacting their already slim profit margins.
Too Good To Go’s initiative extends beyond supermarkets, addressing food waste across various sectors through its app, which connects users with surplus food from restaurants, bakeries, and now grocers. By offering discounted “surprise bags” from renowned brands like Starbucks and Carrefour, the app has gained popularity among 85 million users across multiple countries. The company has also introduced “magic parcels” directly from manufacturers like Unilever, expanding its reach in combating food waste.
While commercial efforts play a crucial role in reducing food waste, a significant portion occurs at the household level in regions like the US and Europe. Misinterpretation of expiry labels, particularly confusing use-by and best-before dates, contributes to unnecessary discards. Too Good To Go’s CEO emphasizes the need for clearer labeling standards to educate consumers and minimize food wastage resulting from label misconceptions.
