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

REDUCING FOOD WASTE AT THE CO-OPERATIVE GROUP

Introduction to Co-op Food The Co-operative Group was founded in 1844. Its food retailing division, Co-op Food, is currently the UK’s largest convenience retailer. 2,600 £7.5bn £283m 70k 2019 6 years Stores Food sales Food profit Colleagues Grocer of the Year LFL growth It’s important to Co-op members that their business is run in an ethical and sustainable manner and Co- op 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’.

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.

Pilot To understand the financial results and compliance at store, a pilot was established with the following objectives and started within 8 weeks of data receipt: Reduce waste as a % of sales. • Cash waste reduction per store per day. • No increased disposals. •

Rapid scaled deployment 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

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

Simple execution via an API

Delivered a reporting suite and deep dives SecondMarkdownScore FirstMarkdownScore StraightInTheBinLOR MarkdownOverride First Markdown SUN MON TUE StraightInTheBin DoubleClicking 2,926 4,857 5,897 5,468 Year Week DivisionID SUN MON TUE 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 8,787 10,561 14,709 10,188 79.3% NULL 9.2% 2.9% 6.7% £17,576.22 12,150 16,192 14,326 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 5,877 7,800 7,404 7,591 2,647 2,886 3,087 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 17,664 26,653 20,632 69.3% 69.5% 6.6% 0.6% 12.6% £97,651.44 9,090 10,474 10,916 10,133 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 26,166 39,499 46,564 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 1,839 2,222 2,563 2,386 53.5% 61.1% 5.3% 1.4% 11.7% £34,680.86 2,499 4,175 2,073 62.4% 51.9% 10.6% 3.7% 18.7% £13,968.32 Markdown volumes by day 70.5% 68.7% 5.7% 1.1% 15.5% £19,769,089.34 by Dept. Wow view . Internal Report : By trading group ITB volumes by day , wow Action to traders and supply compliance ,sell thorough ,cash & %. Plus override Trading Depts .performance ITB performance YOY

Direct Benefits Cash £ Savings Reduction in waste as % sales Store Compliance We successfully met and Overall improvement with exceeded the year 1 savings markdown process timing and target. markdown overrides.