Instore - June 2018 - 38
by Andy Nelson
hrink" (the noun, not the verb) is the
shorthand way of describing the gap
between the amount of merchandise a business thinks it has and the amount it actually
In the retail food business, shrink has many
causes. According to research conducted by
the Food Marketing Institute and the Retail
Control Group, about 36 percent of shrink is
caused by theft and other "misdeeds."
That means a clear majority of shrink is
due to what the industry calls "operational"
causes. That's the kind of shrink grocery
retailers and their suppliers have some control over. Larry Miller, president of Scottsdale, Arizona-based Smart Retail Solutions,
whose job is to help companies establish
operational best practices to limit shrink,
puts it this way: "My focus isn't on catching
thieves, but on training store teams, implementing smart technologies and on profit
Operational causes of shrink include ordering, handling, cashier errors, rotation, damage, receiving, accounting, overproduction,
underproduction, unsanitary production and
failure to accurately plan or calculate inventory levels, according to FMI and the Retail
Control Group. Inefficiences and/or errors
in production planning alone account for 17
percent of all operational-caused shrink and
11 percent of all shrink.
"Store shrink loss has always been a big
problem that robs retailers of the very
blood that keeps their stores alive. And
today, the problem is more threatening
than ever before - and it's growing."
LARRY MILLER, SMART RETAIL SOLUTIONS
Companies using formal production planning processes reported 6 percent lower
perishable shrink than companies that don't.
Further shrink reduction - up to 14 percent
- is realized by companies who reported
using formal production planning methods
combined with formal "known loss" recording practices.
Innoseal's tamper-evident bag-closing system helps keep product fresh and deters people from
opening bags, both of which reduce shrink. Photo: Innoseal Systems
38 * JUNE 2018 * commissary INSIDER
On average, supermarket shrink loss ranges
from 2.6 to 3.2 percent of retail sales, Miller
says. Those numbers are "simply unacceptable" in today's competitive markets, he
adds. If stores can't get their shrink losses