REDUCING FOOD WASTE AT THE CO-OPERATIVE GROUP Introduction to Co-op - - PowerPoint PPT Presentation

REDUCING FOOD WASTE AT THE CO-OPERATIVE GROUP

The Co-operative Group was founded in 1844. Its food retailing division, Co-op Food, is currently the UK’s largest convenience retailer. It’s important to Co-op members that their business is run in an ethical and sustainable manner and Co-

• p is committed to stopping the growth of food waste. It has a long history of taking the lead on the

issues that matter most to members, from climate change to ‘Fairtrade’.

Introduction to Co-op Food 2,600

Stores

£7.5bn

Food sales

£283m

Food profit

70k

Colleagues

2019

Grocer of the Year

6 years

LFL growth

What was the challenge?

Waste (reduced 80% and destroyed 20% product) was too high, primarily driven by fresh foods. Co-op Food had an existing waste solution, but there were significant limitations.

Factors that determined the markdown percentage were static. Highly variable store compliance to actioning markdowns. Stores often marked down regularly overrode the markdown price. Incomplete analysis – no consideration of day of week, product or store type. IT managed the algorithm separate from the business.

Project “Follow the Gun”

Co-op integrated its existing handheld application with Retail Insight’s Waste & Markdown system using RI’s API. The solution objectives were to:

Maximise sales Ensure sell-through Minimise waste Release colleague time Improve compliance Keep capital and costs flat

Strategy

Leverage ML modelling to identify optimal markdown based on agreed targets on waste, sales, labour hours…etc. The algorithm should consider variables that drive a higher or lower markdown:

Type of store and pattern of trade Type of product Stockholding / PI Time of day and day of week Days to expiry and markdown iteration Product price elasticity

The system produced +200 million potential markdown values from the unique combination of variables.

To understand the financial results and compliance at store, a pilot was established with the following

• bjectives and started within 8 weeks of data receipt:
• Reduce waste as a % of sales.
• Cash waste reduction per store per day.
• No increased disposals.

Pilot

Based on the initial success of the pilot, Co-op immediately planned the roll-out to all 2,600 stores, over a three-week period, just four months from the pilot starting.

• Co-op had complete confidence that the algorithm worked.
• The Co-op’s mantra was to “follow the gun”.
• Store colleagues found markdowns easier to accept – they trusted the proposed markdown.
• A dedicated RI analyst was deployed as an extension to The Co-op’s Profitable Sales Team.
• Following Co-op’s success, many regional co-ops* have rolled out or are scheduled to roll out

this year.

*separate legal entities

Rapid scaled deployment

It’s really easy to just follow the gun Easy for my team to understand Great final reductions - thanks for sorting it Far better reductions than before Final reductions much better Reductions are selling through and I get less in the bin

Feedback from store colleagues

Simple execution via an API

Delivered a reporting suite and deep dives

Year Week DivisionID FirstMarkdownScore SecondMarkdownScore MarkdownOverride DoubleClicking StraightInTheBin StraightInTheBinLOR 77.2% 76.5% 5.8% 0.6% 9.6% £64,599.77 73.7% 84.9% 6.0% 1.1% 10.2% £1,135.09 79.3% NULL 9.2% 2.9% 6.7% £17,576.22 86.2% 81.1% 3.6% 1.1% 9.9% £60,429.88 72.7% 78.6% 3.9% 0.8% 22.3% £124,038.11 61.6% 69.7% 5.9% 1.2% 8.7% £31,107.79 64.5% 49.1% 8.5% 2.3% 15.0% £10,246.44 75.0% 75.0% 5.4% 1.1% 11.8% £309,133.30 69.3% 69.5% 6.6% 0.6% 12.6% £97,651.44 69.1% 71.4% 5.8% 1.7% 14.0% £1,020.52 80.8% NULL 10.2% 2.4% 11.2% £26,129.54 84.1% 74.8% 3.8% 1.1% 12.3% £80,040.93 68.7% 73.0% 4.1% 0.9% 27.4% £19,515,597.73 53.5% 61.1% 5.3% 1.4% 11.7% £34,680.86 62.4% 51.9% 10.6% 3.7% 18.7% £13,968.32 70.5% 68.7% 5.7% 1.1% 15.5% £19,769,089.34

Internal Report : By trading group compliance ,sell thorough ,cash & %. Plus override

SUN MON TUE 12,150 16,192 14,326 2,647 2,886 3,087 17,664 26,653 20,632 26,166 39,499 46,564 2,499 4,175 2,073

First Markdown

Markdown volumes by day by Dept. Wow view . Action to traders and supply

SUN MON TUE 2,926 4,857 5,897 5,468 8,787 10,561 14,709 10,188 5,877 7,800 7,404 7,591 9,090 10,474 10,916 10,133 1,839 2,222 2,563 2,386

ITB volumes by day , wow Trading Depts .performance ITB performance YOY

Cash £ Savings We successfully met and exceeded the year 1 savings target.

Direct Benefits

Reduction in waste as % sales Store Compliance Overall improvement with markdown process timing and markdown overrides.