Fewer choices for consumers at the grocery store means companies can focus on environmental goals, ultimately making it easier for everyone to make planet-smart decisions.
Director, Business Case Development, World Wildlife Fund
Over the past year, you may have noticed fewer varieties of your favorite products on grocery store shelves. Due to supply chain disruptions as a result of COVID-19, many brands reduced the diversity of product offerings — what we call stock keeping units, or SKUs. In 2020, consumers anxiously filling their pantries led to stockouts, and it became challenging for brands to forecast available supply of complex product lines.
While this reduction in diverse product offerings may mean fewer choices for consumers in the store or online, it can actually be a good thing. Streamlining SKUs can enable companies to reorient their strategies to meet environmental goals, and ultimately make it easier for everyone to make planet-smart decisions at the grocery store.
Challenges to growth
Hundreds of companies have made commitments over the past few decades to reduce environmental impacts and take deforestation and habitat conversion out of their supply chains. However, most have struggled to make significant progress toward those goals.
In recent years we’ve seen encouraging movement for some commodities like farmed salmon, where an industry group representing more than 50 percent of global production has committed to reaching 100 percent Aquaculture Stewardship Certification, and followed through with impressive progress. But other food commodities are proving much more challenging and slow to improve. A recent analysis from WWF and Global Canopy found that soy traders, for example, are not taking nearly enough action to make sure soy is produced in a socially and environmentally responsible way.
Such progress was complicated further by COVID-19. For companies with diverse brand portfolios and labyrinthine supply chains, reducing the number of SKUs can mean having fewer ingredients to trace back to their source. This can allow organizations to focus on ensuring their core product line supply chains have measures in place to mitigate environmental and social impacts such as deforestation, enabling companies to streamline their progress towards meeting these commitments.
In addition, fewer SKUs results in more efficient packaging requirements, and the opportunity to reduce plastic waste. By having fewer product packaging configurations, companies can focus their resources and solutions on redesigning packaging for core products. They will then be better poised to apply these innovative designs or methods to expanded product lines in the future.
It’s important for individuals to consider the environmental impacts of the products they buy, but we envision a future where all options at the grocery store are produced responsibly and without deforestation or habitat conversion. Consumers can help speed this transition by researching and supporting companies that are headed in the right direction. One good resource is the Science Based Targets Initiative, or SBTi. Individuals can easily see which companies have set scientifically-validated climate targets and view a company’s progress.
While the impacts of COVID-19 have devastated many parts of the food industry, streamlining SKUs represents an opportunity to use this time to build a more resilient and transparent food system. Many have said that the pandemic supply chain disruptions of 2020 are a rehearsal for what will come because of climate change. Now is the time for companies to assertively address the lessons learned.
Companies can take advantage of this challenging situation and home in on meeting environmental commitments by putting in place traceability and transparency mechanisms that help advance responsible supply chains. Then, as they add or reintroduce products moving forward, they can do so in a more sustainable and responsible way. By tackling product sourcing and putting in place measures to enable more robust ingredient tracing, companies will be better positioned to smooth the extremes of supply chain shocks in the future.