University of Portsmouth experts found unsold and surplus food costs can wipe out retailer profits, a new report reveals.
A new report published today by ECR Retail Loss reveals that the ‘hidden costs’ to retailers associated with managing unsold and surplus food amounts to €90bn a year.
If retailers could simply halve these costs buried inside their profit and loss statements (P&Ls), most could grow their profits by more than 20 per cent.
Exploring the True Cost of Unsold Food in Retail, led by Professor Lisa Jack and her team at the University of Portsmouth, found that the additional costs of dealing with unsold food, such as staff time, markdowns, redistribution, and disposal, can be as much as 1.8 per cent of sales revenue.
Separate analysis by ECR Retail Loss estimates the global fresh produce market at more than €5 trillion+ per annum. Suggesting the total global hidden costs of managing surplus and unsold food are €90bn+ every year.
For many retailers, this extra 1.8 per cent of hidden costs could be the difference between profit and loss, where profits can sometimes be 1-2 per cent.
“Retailers often assume they’ve already accounted for waste, but our model shows many are missing critical hidden costs,” says Professor Jack, Professor of Accounting from the Faculty of Business and Law at the University of Portsmouth. “Most only track the obvious, like markdowns or checking expiry dates, but the real picture includes staff time, costs of exit schemes, theft, and unrecorded losses. The true costs are higher than many retailers assume.”
Retailers often assume they’ve already accounted for waste, but our model shows many are missing critical hidden costs.
Shining a light on the hidden costs of food waste
The data, based on detailed case studies with four UK and EU retailers, was used to create an interactive model. The model uses European figures, but the principles apply globally.
Retailers who would like access to the model should contact ECR Retail Loss directly.
The study modelled:
- Exit routes for unsold food, including markdowns, staff shops, donations, animal feed, and incineration
- Cost breakdowns for 1,000 SKUs, incorporating staff time, consumables, transport, and fees
- Multiple retail scenarios – from best-case to worst-case
The model showed that while most supermarkets successfully sell more than 97 per cent of their food inventory, it’s the complex and costly processes behind the final 3 per cent that are often overlooked.
Retailers face a tough balancing act to minimise waste while maintaining on-shelf availability.
The report calls for a shift in mindset - to treat food waste as a core financial challenge rather than a sustainability issue alone.
By integrating loss prevention strategies with supply chain and pricing decisions, supermarkets can reduce waste without sacrificing profitability.
“Even with redistribution schemes in place, handling unsold food takes time, money and management focus,” explains Professor Jack. “And ironically, doing the right thing like donating to charity or recycling for animal feed sometimes carries more cost than landfill.”
The report warns that siloed reporting, poor data integration, and incentives not to record losses all mask the real cost of food waste. It also raises concerns about the risks of greenwashing, with major variations in how food waste is defined and reported across the industry.
A new mindset: food waste as a margin risk
Professor Jack calls for a shift from seeing food waste as purely a sustainability issue, to treating it as a core financial risk. The report sets out practical ways for retailers to act:
- Cross-functional collaboration: breaking down silos between CSR, finance, buying, and store ops
- Smarter markdowns: using AI-driven pricing to minimise waste and protect margin
- Improved tracking systems: to reduce unexplained losses and ensure tax compliance
- Clearer performance indicators: aligning waste KPIs with profit goals
John Fonteijn, Chair of ECR Retail Loss, says: “Retailers need to understand that food waste is not just an ethical or environmental issue - it’s a significant financial drain.
“Supermarkets all around the world need to pay much more attention to the quantifiable extra costs associated with managing food waste effectively.
“This report provides the tools to measure the impact and make better decisions that benefit both business and sustainability.
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