Food retailers — supermarkets, neighborhood grocery stores and convenience stores — are the nexus of food production, distribution and consumption, bringing together the most pressing issues in our food system. They also have the most potential to drive changes for a more sustainable future. The food retail industry has remained behind in adapting to the realities of doing business in the era of climate change and rapidly changing consumer preferences. At the Ratio Institute, we’re dedicated to accelerating measurable sustainability and viability in food retail and have worked with more than 1,000 grocery stores and 20 grocery chains to create store-level and enterprise sustainability solutions that reduce costs, shift internal cultures and improve overall performance.
COVID-19 has revealed weaknesses in our food supply chain, made consumers more aware of issues in the supply chain and changed the way customers use grocery stores. The pandemic meant many consumers reportedly changed how they shopped for food in 2020: 40 percent shopped at fewer stores; 28 percent shopped more online; and a full 10 percent stopped going to stores altogether, according to data from the Food Industry Association. Food retail responded with accelerated innovation in parts of the business including online shopping and grocery delivery, the check-out process and product offerings. But the industry has been notoriously slow to innovate in response to other sustainability trends that affect its business. Below are five major trends that should compel food retailers to take more aggressive action to adapt to a shifting world.
1. Increasing public awareness and regulatory requirements regarding climate change
The public is savvy about the impact of climate change on our planet, and consumer buying habits are aligning with this increased awareness. In line with this trend, evolving regulatory requirements meant to mitigate the impact of operations on climate change directly impact food retail.
Primary to this regulatory drive are refrigerants. Traditional refrigerants including hydrofluorocarbons (HFCs) have been recognized for decades as contributing thousands of times more greenhouse gas emissions than carbon dioxide. Now, federal government regulations and 17 states have enacted or are enacting laws aimed at eliminating HFCs. Food retailers must get ahead of the regulatory curve and develop a strategy to phase out HFCs. Converting refrigeration systems to natural refrigerants including ammonia and carbon dioxide is a proven strategy to reduce the carbon footprint of retail refrigeration systems. The retail group ALDI Sud has converted to transcritical refrigeration systems in 1,496 stores across Europe, the U.S. and Australia, providing a roadmap for the rest of the industry to follow suit.
The food retail industry has been notoriously slow to innovate in response to other sustainability trends that affect its business.
While specific companies have invested in strategic energy efficiency or clean energy, the food retail industry has not had a wholesale reckoning with its climate change impact. Given the industry’s carbon footprint from energy consumption alone, there is ample opportunity to reduce energy usage and improve its bottom line.
2. Consumers want to know where their food comes from and how it is produced
It is not news to anyone that consumers are increasingly interested in sustainability-marketed foods such as organic, fair trade, sustainably harvested products such as seafood, and so-called “natural” foods. And recent research shows that shoppers are putting their money where their mouths are. This market segment grew from 14.3 percent to 16.6 percent of CPG dollar sales. Additionally, over half the growth in the CPG product category is attributed to sustainability-marketed products. Beyond this, consumers are more conscious of how their food is produced and the environmental and social impacts of producing it. The food retail sector can both satisfy its customers’ buying preferences and drive more sustainable food production in its supply chain by creating industry-wide product procurement guidelines and partnering with NGOs that focus on these issues.
3. Growing awareness of food retail’s role in creating (or preventing) food waste
Supermarkets produce 10 percent of food waste in the U.S., and the industry is just beginning to step up in response to tackling the issue. A 2019 report by the Center for Biological Diversity on U.S. supermarkets’ path to zero waste rated only three of the top 10 retailers an “A,” meaning they scored high on three metrics: commitment to zero waste; tracking and transparency; and waste prevention measures. Nonprofit organizations and programs are partnering with food retail to reduce its food waste, while others are implementing their own internal programs. The initiative 10X20X30 aims to cut food loss and waste in half by 2030 by working with 10 top retailers and their suppliers — Sodexo, Tesco and Walmart were among its founding partners. Kroger founded the Zero Hunger/Zero Waste Foundation, while retailers such as Walmart have worked to clarify expiration dates on labels and reduce spoilage from farm to shelf. Additionally, other retailers have taken advantage of ugly or imperfect produce (that previously would be thrown away) to sell it at a discount.
Why should retailers pay more attention to these programs? One, preventing food waste can reduce the burden of food production on land and water resources as well as help alleviate hunger in their immediate communities; two, to get ahead of increasing regulatory pressure to prevent large generators of food waste (read: supermarkets) from sending it to the landfill; and three, because it is good for the bottom line.
4. Growing awareness of the waste problem
Along with food waste, consumers are increasingly interested in the global waste problem and are asking questions about who the biggest culprits are. Weekly trips to the grocery store put plastic packaging and single-use bags at the forefront of public consciousness, highlighting the role that food retailers play in addressing waste each time they visit.
Following California’s example, eight states effectively ban either plastic or non-biodegradable single-use bags. In other states, counties and cities have taken the approach of imposing a charge for each plastic bag. While many countries have enacted plastic bag bans, the U.S. still has not moved to do so.
Weekly trips to the grocery store put plastic packaging and single-use bags at the forefront of public consciousness, highlighting the role that food retailers play in addressing waste each time they visit.
The grocery sector is also highly dependent on single-use plastic packaging, particularly in the case of consumer packaged goods (CPGs) sold in stores. Consumers are very concerned about the environmental impacts of plastic packaging, even as they prioritize convenience and quality. NGOs such as Break Free from Plastic are pressuring the industry to choose alternative packaging for prepared foods and in turn getting CPG manufacturers to do the same. The food retail sector can take a stronger stance by working directly with CPG manufacturers to use less plastic packaging on CPG products.
5. COVID-19 has magnified social inequities among frontline food system workers
The pandemic has exacerbated existing inequities along racial and income lines. Exposure and death rates have been especially high among communities of color compared with the overall population, partly because frontline workers disproportionately are people of color. These are the people who are the underpinnings of our food system, who work to harvest, process, distribute and yes, sell our food to us at the checkout counter in the grocery store.
Early on in the pandemic, grocery store workers did not receive the protections they needed, and since then, there has not been a universal move to treat them as frontline workers with all the protections this would entail. Some retailers, including Whole Foods and Walmart, began instituting mandatory mask requirements before states and the CDC issued guidelines for retail operations. Similar trends were seen in produce harvesting operations and meat processing plants. The industry can work with its suppliers to ensure that harvesters and processing plant workers are being protected where they work. The industry has ushered in advanced disinfection practices to protect workers and customers within the store environment, and this has created tension with its mandate to reduce the use of harmful chemicals in operations.
Job loss due to the pandemic also has had an outsize effect on workers in the service industry as restaurants, retail and service operations have closed, aggravating existing food access issues in communities where these workers live. Food retail can play a role in helping these communities by creating or expanding programs to improve access to healthy food in local communities.
Now what?
The good news is that people are thinking about how to move food retail toward being a leader in environmental and social stewardship. Grocery chains such as Wegmans, H-E-B and Metro are investing in innovative programs. Nonprofit organizations and coalitions, including the Consumer Goods Forum’s Coalition of Action on Food Waste and the Food Chain Workers Alliance, are also rising to meet the need to drive the industry forward. Organizations such as Ratio Institute, founded to drive sustainability and operational excellence in food retail, are valuable partners that can offer insight and tools for retailers to make the jump. Finally, individual consumers can have an impact by learning more about sustainability measures retailers are taking, and choosing retailers, brands and products that align with their personal values.
