How to reduce supermarket shrinkage by 0.3%

Waste, an increasing problem for supermarkets

In the endless dance of profits and losses in the supermarket world, shrinkage is often a silent malefactor. In its annual retail survey, the US National Retail Federation indicates that US retailers will lose 1.6% of their sales due to shrink by 2022. (www.retaildive.com) This percentage is different in each country but it is clear that retail loss amounts to many billions annually.

Supermarket challenges

Supermarket shrink includes all losses of products that can occur due to various reasons such as damage, theft, expiration of the expiration date and clerical errors. It is a significant challenge for supermarkets because it directly affects profitability. Here are some of the key challenges related to spoilage:

• Spoilage
  Certain food products have a limited shelf life. Managing inventory such that these products are sold before they spoil requires careful planning and efficient logistics.
• Theft
  Theft by customers or even staff can contribute significantly to overall spoilage.
• Damage
  Products can be damaged in transit, in the warehouse, or on the store floor, sometimes rendering them unsaleable.
• Pricing and administrative errors
  Pricing or checkout errors can lead to unintended losses.

The approach to prevent shrinkage

Addressing the above challenges requires a combination of technology, good personnel management and strategic planning. Fortunately, there are several methods for reducing shrinkage and getting store security in order.

• Staff training
  Provide comprehensive staff training to make them aware of shrinkage and how to prevent it.
• Efficient checkout management.
  Conduct regular checkout audits to identify and address incorrect pricing, checkout errors and theft at the cash register. Also ensure that checkout clerks are trained in accurate scanning of products and checking prices.
• Customer-focused approach
  Make eye contact with customers, letting them know they are welcome and that they have been seen by staff. Customers who know they have been noticed are less likely to shoplift.
• Technological solutions
  Invest in advanced security systems such as camera surveillance, theft alarm systems and electronic article security (EAS) to discourage customer and staff theft.

Losses reduced and profits optimized

With the use of the aforementioned methods, your shrinkage can be significantly reduced. Just reducing it by a single percentage point has a huge effect on supermarket profitability.

Suppose the turnover is €250,000 per week. This is an annual turnover of €13,000,000. A loss of 1.2% means €156,000 worth of products are lost or stolen each year. If we succeed in reducing shrinkage by 0.3%, profitability increases by €46,800.

Preventing loss in retail

The aforementioned calculation example shows that significant results can be achieved with the right strategies and measures. Through a combination of staff training, customer-focused approaches and technological solutions such as the Rocateq Check Out Security system, for example, supermarkets manage to reduce their losses by up to 65%.