Instore - June 2018 - 41

than prevent it," he says. "Stop accepting
shrink loss as a cost of doing business!"

Fresh perimeter risks
Retailers who don't proactively address operationally caused shrink loss and sales and
profit erosion caused by competitive pressures will have their very survival threatened, Miller says. And the threat is most
acute in the fresh perimeter. "These categories are by their very nature 'perishable.'
Deli and bakery are particularly challenged
to have excellent variety, excellent customer service and interaction and controlled
shrink loss. Retailers must train their store
teams to first understand best business practices assorted with inventory productivity,
and second, to practice those operational
practices that mitigate shrink loss."
The failure to train store employees successfully is, with inventory control problems, the
top cause of operational shrink loss, Miller
says. One common error in battling shrink,
he says, is to think that high-tech solutions
are always the best ones. "It's perplexing to
me why retailers layer on technology - socalled BI (Business Intelligence), analytics,

graphs, charts, spreadsheets - thinking that
technology will solve shrink losses," he says.
"Certainly technology can help, but only if
it's used properly and consistently. Use it to
actually help managers to run better stores.
Too many of today's technologies and analytics are data rich and solution poor."

The failure to train store employees
successfully is, with inventory control
problems, the top cause of operational
shrink loss."
LARRY MILLER, SMART RETAIL SOLUTIONS

"Big data," CAO (Computer Assisted Ordering), BI analytics programs and other technology solutions have all evolved in recent
years and continue to change to fit customers' needs, Miller says. But they are not, in
themselves, solutions. They can create a
false sense of security if they aren't overseen by properly trained managers and implemented by well-trained employees. "I believe we must have a 'people first' culture,"
he says - a culture in which "excellent people are hired, then trained, then enabled and
finally held accountable."

OPERATIONAL
CAUSES OF

SHRINK
*
*
*
*
*
*
*
*
*
*
*

Ordering
Handling
Cashier errors
Rotation
Damage
Receiving
Accounting
Overproduction
Underproduction
Unsanitary production
Failure to accurately
plan or calculate
inventory levels

(Source: FMI/Retail Control Group)

Purvis agrees. There are excellent technologies available to help retailers and suppliers
reduce shrink - predictive analytics, for
example, which leverages AI and other technologies and has been "growing by leaps and
bounds" in recent years, he says. "It helps
retailers have a much more robust and realistic view of demand. Shrink is just a misunderstanding of demand."
But technology can't be the only solution,
Purvis says. Technology can't prevent the
warehouse from putting a carton of watermelon on top of a crate of tomatoes, rendering the latter unsaleable. "At the end of the
day it's still a very human business," he says.
"Technology can't solve everything."
To make sure all those humans are on the
same page, many retailers are now partnering with their suppliers on joint forecasts
and other measures to help ensure a seamless flow through the supply chain. Instead
of the defensive "protect yourself" mindset,
it's a collaborative approach to moving product faster and extending shelf life.
Supermarket shrink on average ranges from 2.6 to 3.2 percent of retail sales.
Photo: ©WavebreakMediaMicro - stock.adobe.com

"I'm excited to see how that trend develops,"
Purvis says.

commissary INSIDER * JUNE 2018 * 41

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