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How to Reduce Shrink

By: STCR Staff 

Grocers know that shrink, or the difference between projected and actual profits, is one of the largest sources of loss. Many might think that theft is the largest source of inconsistencies between the dollar value of inventory and the actual resulting profit, but according to research conducted by FMI and the Retail Control Group, only 36 percent of grocery store shrink can be attributed to theft, while 64 percent is the result of inadequate store operations and procedures. With the right strategic organizational measures, grocers can avoid being their own worst enemy and falling victim to inventory shrink.

Start small with new items

When a trendy new product hits the market, it can be tempting to stock up, anticipating that shoppers will be excited to try it. Even if the same item is selling quickly in other local stores, it’s hard to know if it will sell to your specific consumer base. The best practice is to order a small amount and gauge interest by how well the new items sell initially. Most suppliers are amendable to smaller orders of unique or new product offerings.

Offer samples of less popular inventory

Some consumers buy the same staple items every time they shop, while others are more prone to impulse buys. Most people, however, are somewhere in the middle, and can be convinced to buy new things if they are able to build familiarity with the product first. Free samples are a great way to get shoppers acquainted with an item and allow them to try before they buy. People may pass by a certain product on the shelf every time they are in the store, but offering a risk-free way to try it just may be the motivation they need to make the purchase.

Be smart about perishables

Ensuring the freshness of perishable goods is a delicate art, and haphazard ordering and transportation of produce can spell disaster for a grocery store’s profits. One of the key ways to ensure a profit from produce is always storing it at the right temperature. This seems like a no-brainer, but it doesn’t mean that produce should only be kept cold while in the store. Keeping produce at proper temperatures before and during delivery can make a big difference when it comes to shelf life. When the inevitable portion of your perishable inventory does become bruised, scuffed or overripe, there are still ways to utilize it. Recoup some of the costs with a sale or send the usable produce to the store’s deli, prepared food kitchen or bakery.

Offer detailed training for cashiers

Management knows that the difference between mass-produced iceberg lettuce and organic butter lettuce comes down to price and profitability. The average cashier, however, may not. When employees incorrectly charge for or identify produce, this can add up and reduce store revenue as well as generate faulty inventory data used for ordering. By offering training to cashiers, stores can be sure that their employees are well-versed in the nuances between product types and that inventory reports are correct.

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