Instore - June 2018 - 40

OPERATIONS

tor for Innoseal Systems, whose InnoSeal
Professional Sealer is a tamper-evident bagclosing system that uses a resealable tape
and paper combination to seal products for
a variety of industries, including instore
bakery.
The InnoSeal system can help retailers cut
those losses in many ways, Frank says. For
one, Innoseal closures create a tight seal,
helping to prolong the shelf life of instore
bakery products. Innoseal seals are along
tamper-evident - there's no chance of
someone taking a cookie out of a bag, resealing it and no one finding out, she says.

Intense competitive pressure at the retail level makes it more important than ever to keep
shrink rates as low as possible. Photo: ©JRJfin - stock.adobe.com

under 2 percent, they need to undergo a
profit improvement strategy that combines
technology and best practice training to
drive sales and shrink loss.
Still, shrink can be relative, says Jake Purvis, a principal in the Retail and Consumer
Goods Practice division of management
consultancy Oliver Wyman. Consider, for instance, a store that's heavy on instore deli,
bakery and prepared foods. By its very nature, that store is going to have higher shrink
rates than a store that doesn't have strong
instore departments. In some cases, the
shrink rate might even hit double digits. But
Purvis says that's not necessarily a problem.
"If you have top-of-the-line bakery, deli and
prepared - the Wegmans of the world -
you're going to accept higher shrink rates
because you can more than make up for it
with higher margins," Purvis says.
That said, there are still too many grocery
retailers out there who can't sustain their
shrink percentages, regardless of what the
particular number is, Purvis says. When
shrink gets too high, Miller says, retailers
have to price higher to achieve their margins. That makes it even harder to compete
in an already ultra-competitive environment.

40 * JUNE 2018 * commissary INSIDER

"Store shrink loss has always been a big
problem that robs retailers of the very blood
that keeps their stores alive," Miller says.
"And today, the problem is more threatening
than ever before - and it's growing."

Too often, retailers and their suppliers
have a good understanding of one or a
few links in the supply chain, but not the
entire chain.
PURVIS, OLIVER WYMAN

A big reason for that can be traced to what
Miller calls the "Amazon Effect." As grocery
shoppers gravitate more to online shopping,
they feel more comfortable buying perishables without making a trip to a brick-andmortar store. That forces many retailers to
adjust their inventories in ways they haven't
before. "As product movement slows, spoilage is a natural result if it's not purposefully
abated," Miller says. "All retailers will face
the growing challenge of controlling shrink
loss without hurting/controlling sales."

Packaging solutions
Shrink is a significant problem for instore
bakeries, says Jolene Frank, sales direc-

The system is also effective at reducing
shrink in less expected ways. Putting twist
ties on bags manually at the instore level,
for instance, takes a lot of time. Also timeconsuming, instore bakery operators tell
Frank, is the process of checking product
throughout the day to make sure manuallytied closures are still properly tied. If they're
not, product must be discarded. With the Innoseal system, product stays tied and significant time is saved throughout the process.
"One manager told me that after switching to
our seals, she and her employees were able
to spend a lot more time on the floor with
customers," instead of sealing and checking
bags, Frank says. And that in itself helps prevent shrink: if employees are spending more
time on the floor, there are fewer opportunities for customers to steal or tamper with
product.
Shrink can occur at any of the main points
along the supply chain, Purvis says. Is the
equipment in the distribution center up to
snuff? Have the DC workers been properly
trained? Are trucks keeping product at the
right temperature en route to the retailer?
"You always have to look at all of the points
of decision along the supply chain," Purvis
says. And after you look at all those points,
you need a single strategy that ties them all
together, or as Purvis phrases it, "a single
source of truth to guide all the steps." Too
often, retailers and their suppliers have a
good understanding of one or a few links in
the supply chain, but not the entire chain.
For many retailers, Miller says, the first step
in reducing shrink is understanding that
there's actually something you can do about
it. "Too many companies report shrink more

Table of Contents for the Digital Edition of Instore - June 2018