How Grocers Can Use Artificial Intelligence to Reduce Food Waste

An estimated $2 billion in financial benefits is left on the table for the nation's grocery retail sector every year, according to a study from the Pacific Coast Food Waste Commitment (PCFWC).

The organization examined the use of technology to track and reduce food waste. 

"While some waste in supermarkets will always be unavoidable, one underutilized solution can make significant progress in reducing supermarket-level fresh food waste right now – artificial intelligence," the study noted. "To the untrained eye, supermarkets may already seem optimized in terms of stocking rates and waste reduction. This is far from reality. In practice, more than 30 percent of fresh produce becomes surplus."

In order to fully grasp the impact of AI on operations in these stores,  two national grocery retailers utilized Shelf Engine and Afresh for a predetermined period of time - 18 months for one retailer and eight weeks for the second. More than 1,300 stores across the United States - mainly on the West Coast - managed operations with one of the technologies. Workers focused efforts on the produce department, although some stores also examined the deli department.

PCFWC found that about 907,372 tons can be prevented annually with the implementation of artificial intelligence, about 13.3 million metric tons of CO2 emissions.

"Technology solutions to date for grocery retail have worked well for packaged goods with long shelf lives but not as well for fresh goods with different stocking needs and shelf lives," the organization said. "The result is overall high waste and inefficiency for fresh goods, leading to increased costs for supermarkets and higher greenhouse gas emissions due to the amount of food waste that ends up in landfills,"

Smaller retailers also can benefit from the use of technology. Participating stores saw increased food waste prevention, reduced shrink, increased sales, higher margins and greater labor efficiency as early as eight weeks into the pilot, according to the study.

While experienced workers often handle inventory ordering, human error and inherent bias contribute greatly to surplus food. With AI, stores were able to better track back room inventory, real-time sales data and trends to determine demand for certain products.

"This in turn positions stores to have the right products in stock at the right time, higher sales, and less frequent out-of-stock goods," the study noted.  By right-sizing what is actually brought to a store based on more accurate demand anticipation, stores can lower their waste and increase food waste prevention."

AI implementation isn't met without challenges. PCFWC said that organizational buy-in, traditional retail mindsets and seasonality contribute to the ability of retailers to reduce food waste.