EXCLUSIVE: Here's how Big Lots diverts food products from landfills
Big Lots is redirecting food items from landfills for sale and donation.
In a recent exclusive conversation with Chain Store Age, Megan Mellquist, VP, food merchandising at Big Lots, discussed the discount retailer’s pallet recovery program which salvages pallets of diverted or overflow food items across its supply chain. These pallets are assessed and sorted at the nearest Big Lots distribution center to recover food items eligible for sale and donation.
What made Big Lots decide to implement the pallet recovery program?
Big Lots is always looking for new and creative ways to provide extreme value to our customers and improve our sustainability efforts. We recognized a need to help suppliers recover damaged pallets since manufacturers lacked a straightforward solution.
Before this program, manufacturers were disposing of entire damaged pallets instead of recovering units that could be donated or sold. We created this program to assist manufacturers with resources to help salvage these pallets, which in turn helped provide lower prices to our customers while reducing landfill waste. It's a true win-win.
How does Big Lots identify products for price reduction?
We work with each manufacturer to set up tailored program parameters specific to their needs. The effort primarily includes helping to create a discounted pricing list for their products, and rules around which products can be sold depending on brand standards for damaged packaging.
This model is then applied to the manufacturer’s entire product portfolio since any item could be on a damaged pallet. It creates an incredibly efficient process since we don’t have to pick and choose recovered products and then determine pricing; it’s all part of the manufacturer’s process within our system.
How does Big Lots perform and track markdowns of products from recovered pallets?
These products aren’t tracked as traditional markdowns. We issue a blanket purchase order for recovered pallets and build the receipts from the ground up. This includes tracking how many units were saleable, how many went to food banks, and how many went to the landfill because of the damage level.
What have results of the program been?
Through this program, Big Lots donated just over $6 million worth of products in fiscal year 2023. In our headquarters city of Columbus, Ohio alone, this program donated more than 600,000 meals to the Mid-Ohio Food Bank.
Are there any future plans for pallet recovery?
We’re always looking to add manufacturers to the program and have the capacity to support them. Big Lots is currently in talks with two additional CPG companies to add to the program.
One of our biggest efforts underway right now is educating the vendor community on this program’s many benefits. Big Lots is also excited to continue partnering with more food banks across our supply chain in several different states.
Headquartered in Columbus, Ohio, Big Lots operates more than 1,300 stores in 48 states.