In Gulf Cooperation Council (GCC) countries, food waste — primarily generated by consumers, retailers, and food-service establishments — averages 150 kg per capita annually, which is 14% above the global average of 132 kg. While this figure remains below that of the United States, it is significantly higher than other developed economies. It is 38% above European Union (EU) levels and nearly double that of Japan. This issue significantly affects food security, the environment, and the economy as it further exacerbates the region's substantial dependence on imported food.

While retail food waste typically constitutes a smaller portion of total food waste — ranging from 5% to 15%, depending on the country — retail food waste in the GCC is notably 38% higher than the global average. This discrepancy suggests that the retail sector in the GCC presents a critical opportunity for improvement.

Although household and food service waste are undeniably important areas for examination, this article will specifically focus on retail waste. Addressing how it could be potentially low-hanging fruit for policymakers to tackle, leading to substantial reductions in overall waste.

The unique challenge of retail food waste in the GCC

The retail sector in the GCC wasted approximately 1.3 million tons of food in 2022. This corresponds to an annual loss of approximately $4-7 billion, which is enough to provide an iftar meal for 70% of all Muslims around the world throughout Ramadan.

The implications of food waste extend far beyond lost dollars; they encompass a critical environmental footprint that affects both current and future generations. This waste contributes significantly to greenhouse gas emissions and squanders valuable resources such as water, energy, and labor, all of which could be redirected to support those in need and to promote sustainability in the region.

This challenge arises at a time when the food retail market in the region is expanding rapidly. In 2023, the United Arab Emirates (UAE) food retail market reached $40 billion, growing at a five-year compound annual growth rate (CAGR) of 6.5%, while Saudi Arabia's food retail market, valued at $62 billion, has seen a 4.2% five-year CAGR.

Although retailers have the potential to play a significant role in reducing food waste, they face distinct challenges. Large hypermarkets and grocery chains in the region operate under a business model characterized by high sales volumes and low margins. This makes them vulnerable to pressures such as competition, rising costs, and shifting consumer preferences for a wider variety of foods, higher quality food, and attractive discounts.

Retailers are improving their value propositions to meet these changing consumer preferences. However, promotions designed to encourage bulk purchases can sometimes result in customers buying more perishable items than they can consume, leading to increased food waste. For example, offers like “buy three, pay for two” may appear attractive but can unintentionally exacerbate the issue of waste.

Other challenges include complex inventory management, a lack of transparency and control, and the need to adapt stocking practices quickly, resulting in the unnecessary disposal of edible food perceived as past its prime. Meanwhile, suppliers often contend with excess production and products returned from retailers.

While it is impossible for grocery retailers to eliminate food waste entirely, the current levels of waste in GCC grocery retail suggest a need for more effective strategies.

Four key factors contributing to food waste in the GCC

1. Fragmented supply chain dynamics

The supply chain for fruits and vegetables in the GCC differs significantly from that of many Western countries. In the West, distribution typically relies on centralized logistics and vertically integrated supply chains that streamline the process. In contrast, products in the GCC are usually delivered directly by suppliers to stores. While this approach limits the necessary capital expenditures (CAPEX) for retailers, it also leads to increased safety stock, meaning retailers and producers maintain extra inventory to prevent running out of products. Furthermore, this fragmented system results in decentralized quality control and places a heavy reliance on store employees to assess product quality.

2. The impact of presentation of abundance in supermarkets

Supermarkets in the region are typically well-stocked, often featuring fuller shelves than those in Western countries, as retailers believe that half-empty displays are unappealing. Historically, they have favored oversupply, often discarding unsold ultra-fresh products like berries, salads, bread and pastries at the end of the day rather than risking running out before closing. GCC countries also have conservative rules regarding expiry dates. For instance, products with a one-month expiry may only be offered for three weeks in Saudi Arabia.

3. Limited ownership and supplier contracts

Contracts between retailers and suppliers often require suppliers to reclaim any unsold products, leaving retailers with surplus that they cannot utilize. As a result, retailers have limited ownership over the reduction of food waste and tend to focus on maximizing sales. This dynamic increases overall costs, which are ultimately passed on to consumers. Additionally, the importer landscape lacks professionalism, limiting the options retailers have when sourcing high-quality food.

4. Manual forecasting in waste generation

Forecasting and inventory replenishment are often done manually, with limited technological support, focusing more on presentation than on actual demand and relying heavily on employee judgment. Meanwhile, large retailers in Europe and the US typically support store employees with order recommendations, leveraging machine learning to take complex consumption patterns into account (for example, those driven by promotions, seasonality, or holiday periods).

Food waste can be mitigated through changes in ways of working. Retailers are uniquely positioned to drive this change due to their direct connections with both suppliers and consumers.

In categories like fresh produce, retailers must balance availability and waste. While a full shelf of fresh items attracts customers, it can also lead to significant write-offs at the end of the day. Achieving the 'ideal' shrinkage is challenging. It requires operational excellence across the entire value chain, robust forecasting and replenishment systems, and effective information sharing between suppliers and retailers about quality, demand, and inventory.

Practical steps for GCC retailers to reduce food waste

While grocery retailers in the GCC have much work to do, the issue of food waste cannot rest solely on their shoulders. Governments must play a vital role in establishing a framework for reducing food waste. In 2015, all six GCC governments committed to the Sustainable Development Goals (SDGs), which include a pledge to halve per capita global food loss and waste by 2030.

As we approach the ambitious goals set for waste reduction, it is crucial for retailers to implement effective strategies that ensure sustainable practices across the food retail sector.

Forecasting and replenishment: Define minimum shelf quantities, driven by shelf-life information and expected volatility of demand. Support store employees with order recommendations based on accurate forecasts that consider all relevant factors, and include the option to switch to automated ordering where appropriate. Ensure that stocking and optimal presentation times align with customer peaks to minimize the time products spend on shelves.

End-to-end supply chain optimization: Minimize the time a product spends moving from field to shelf by creating transparency across the entire supply chain regarding food waste, quality, inventory, and demand. Retailers should collaborate with suppliers to reduce safety stocks and make reducing waste a common target, sharing the benefits through reduced purchasing prices. Advanced retailers should consider centralizing their supply chains for fresh products to improve efficiency and explore vertical integration by establishing sourcing platforms in the countries from which they import. This strategy could help them better manage their supply chains, reduce waste, and lower costs through greater control over sourcing and distribution.

Training and upskilling the workforce: Establish training programs to improve the workforce’s understanding of how to treat perishable products to maximize shelf-life, correctly identify good and bad quality products, and place accurate orders. Support these efforts with AI-enabled tools wherever possible.

How governments can support retailers with food waste management

Governments have a multifaceted role in mitigating food waste at the retail level. By implementing a combination of regulatory measures, economic incentives, public awareness campaigns, and partnerships, they can create an environment that encourages retailers to adopt more sustainable practices. The following levers outline key opportunities for government intervention:

Regulations for responsible food management

Governments can establish regulations that promote responsible food management practices among retailers. This includes:

• Prohibiting retailers from compelling suppliers to take back unsold products. This practice, which is common in several European countries but has yet to be implemented in the GCC, effectively helps mitigate waste at the supplier level.
• Mandatory reporting. Implementing requirements for retailers to report food waste data can help identify trends and areas for improvement.
• Expiration date standards. Setting clear guidelines for expiration dates and labeling can reduce consumer confusion and prevent premature disposal of products.
• Donation mandates. Enforcing rules that require retailers to donate unsold but still edible food to charities or food banks redirects surplus food to those in need.

Economic incentives for waste reduction

Financial incentives can motivate retailers to adopt waste-reducing practices. Key strategies include:

• Financial incentives: Offering tax deductions or discounts on government fees for retailers in the GCC that donate surplus food or invest in waste reduction technologies can create financial advantages that promote the reduction of food waste
• Grants for innovation: Providing grants or subsidies to support the development of technologies and processes that enhance inventory management and reduce spoilage, such as advanced forecasting tools and food storage, quality monitoring and inventory tracking systems

Public awareness and education on food waste

Raising awareness about food waste and its environmental impact is essential. Governments can play a crucial role in this effort via:

• Campaigns and initiatives. Launch public campaigns that educate consumers about food waste and encourage retailers to engage in responsible practices, such as promoting “ugly” produce that may not meet aesthetic standards but is perfectly edible.
• Training programs. Develop training programs for retailers on best practices for inventory management, food storage, and waste reduction strategies to empower staff and management.

Partnerships and collaboration for waste reduction

Collaboration between various stakeholders can lead to innovative solutions. Governments can facilitate:

• Public-private partnerships. Encouraging collaboration between retailers, food producers, and waste management companies to create comprehensive waste reduction strategies that benefit all parties
• Research and development. Supporting research initiatives aimed at identifying new methods for reducing food waste in the retail sector, fostering innovation that can be shared across the industry

Infrastructure development to support waste reduction

Investing in infrastructure that supports waste reduction can have a significant impact. This includes:

• Waste management systems. Developing efficient waste management systems that include composting and recycling programs tailored to the retail sector, minimizing the amount of food waste sent to landfills
• Import platforms. An import platform for various products would involve establishing an entity that consolidates volumes from major producing countries, leveraging strong relationships with local producers to plan production and monitor harvest progress. Additionally, this approach would enhance diplomatic relationships and secure preferred access to products from exporting countries.
• Technology platforms. Creating digital platforms that connect retailers with food recovery organizations, enabling seamless donations and redistributions of surplus food, good examples include Flashfood and TooGoodToGo, which allow restaurants and retailers to market products nearing expiration at significant discounts.

Effectively addressing the food waste challenge requires retailers and governments to implement integrated and collaborative steps, such as those above, in order to foster a more sustainable food system across the GCC.