BY THE OPTIMIST DAILY EDITORIAL TEAM
Millions of people in the United States suffer from food insecurity, with more than 40 percent of food lost throughout the production chain. Major merchants such as Kroger, Walmart, and Costco are stepping up to address this issue by donating expired food, which aids those in need while also increasing the stores’ profits. In 2022 alone, supermarkets and businesses contributed about two billion pounds of food, worth approximately $3.5 billion. These donations are increasingly acknowledged as a sound economic decision that also provides much-needed food to communities.
The expanding role of supermarkets in food donation
Retailers have traditionally contributed to food banks, helping to address the needs of the nearly 50 million Americans who are food insecure. In 2022, more than 200 food banks affiliated with Feeding America received about two billion pounds of food from supermarkets, accounting for approximately 30 percent of all food supplied by these groups. Supermarkets now provide more food to food banks than federal initiatives such as the USDA’s Emergency Food Assistance Program.
According to Feeding America, supermarkets and other large merchants play an important role in supplying food banks with perishable foods that are still safe to consume but are no longer eligible for retail sale due to minor quality issues. For many merchants, this act of generosity is more than just a nice gesture; it is a financially savvy option with significant advantages.
Donating food: a win-win strategy
The financial benefits of giving away expired food are twofold. First, supermarkets can claim tax breaks for their donations, lowering operational costs. Second, research suggests that by removing expired commodities and donating them to food banks, retailers free up precious shelf space for fresher, more attractive products, which can lead to greater sales and profit margins.
John Lowrey, Assistant Professor of Supply Chain and Health Sciences at Northeastern University, teamed up with economists and supply chain experts to study sales data from two retail chains in a big Midwestern metropolitan area. The data found that retailers who frequently removed expired/expiring items and gave them to food banks reported an increase in sales due to fresher inventory. By improving the overall quality of food on display, retailers can enhance their brand image and drive more revenue. This “preemptive removal” strategy of handling expiring goods benefits both consumers and retailers.
Why discounting isn’t the best option
While donating food that is about to reach its best-before date has obvious benefits, many retailers continue to reduce products nearing their expiration date. On the surface, this strategy looks to recuperate some of the product’s value by attracting people to buy food at a lower cost. However, reduced items occupy valuable shelf space that could be better allocated for new inventory. Furthermore, exhibiting food that is obviously close to expiration, such as blemished fruits or dairy products approaching their sell-by date, might harm a store’s image in the eyes of customers.
According to Lowrey, the quality of the food on display influences customers’ perceptions of the store. When consumers see overly discounted, aging items, they may question the freshness and overall quality of other products. By donating expired foods, shops improve the appearance and freshness of the food they serve, resulting in increased customer satisfaction and sales.
The advantages of “preemptive removal”
The technique of “preemptive removal,” which entails removing nearly expired commodities and sending them to food banks, has been shown to considerably boost a store’s profit margins. According to the same study, this strategy resulted in a one percent rise in average food costs and a 33 percent gain in profit margins—a significant boost for supermarkets, which generally operate with margins of under three percent.
This technique not only benefits the stores but also ensures that more food reaches those in need. Every pound of food donated to food banks saves a pound of landfill space and contributes to the reduction of food waste. By boosting donations, stores may lessen their environmental effect while also aiding food banks in their fight against hunger.
Solutions to reduce food waste and address food insecurity
Despite the numerous benefits of donating food, several retailers struggle to establish consistent processes for storing expired food. The difficulties of transporting and distributing perishable products might cause logistical problems that lead to food waste. For example, some retailers only donate during certain seasons or focus on select categories, such as meat or baked goods, leaving other perishables to go to waste.
Nonetheless, giving food is still one of the most effective strategies to combat food insecurity and reduce waste. As the number of food donations grows, more individuals in need will have access to nutritious food. Retailers gain from higher sales and better reputations as socially responsible firms.
The path forward
As the fight against food insecurity continues, supermarkets and large retailers play a critical role. By donating expired/expiring food rather than discounting or disposing of it, they can benefit both their earnings and the community. More frequent food donation practices, supported by smart collaborations with food banks, can help to expedite the process.
Finally, retailers who adopt this method can increase profits, minimize waste, and make significant contributions to addressing one of the country’s most important issues: hunger. With millions of Americans facing food insecurity, now is the time for more retailers to adopt this solution-focused approach that benefits everyone.
Source study: Manufacturing and Service Operations Management—Food donations, retail operations, and retail pricing
