Shrinkage your sales
Steve Dresser
Founder of Grocery Insight & retail influencer
"The man supermarket CEO's turn to" - BBC"
Follow a good retail diet:
Where we have spoken before about the need to follow a good diet (in store) at least, around your processes to maintain great availability for customers.
It’s boring. But it means that you must do the right thing and scan your gaps, day in, day out, in order to stay on the right side of the track, so to speak.
Anything else?
Unthinkable.
Explain gap scanning and shrinkage to me, like I’m five.
When the store scans a gap, they may ‘zero’ notional inventory that sits on the system. Sometimes that stock doesn’t exist, for a myriad of reasons and it’s safe to assume that a gap on shelf, with a reported inventory of 2/3 is safe to be zeroed and that drives an order of that product in to the store.
Nonetheless.
Anything you remove from the system is added to the shrink total, so if an item is priced at £1 and you reduce by 3 to get to 0. £3 is added to your shrink number.
But to keep taking away..
The challenge for the stores (the bad diet) comes when stores are zeroing huge numbers / full cases (IE what the product is delivered in, whether that’s 6/12 units) without working their deliveries and excess stocks, as they should be.
That just sends yet more stock in, over the top of what the store has.
Can you reduce shrinkage?
You can, through good process.
Regularly counting your excess stock so the system knows the accurate state of play. Reducing theft using tags and other deterrents.
But of course – you can’t overstate what stock you have.
That is as bad as scanning the gaps when you’ve not worked the delivery. Plus it’s in all likelihood, illegal, in some form or another.
PS – If you don’t have the stock, however bad the loss is (IE big theft of batteries, now we need to tell the system we don’t have them), take the hit, take the medicine.
It’s the only way to sleep at night.
Shrinkage is…..
Theft, damages not scanned properly, products not arriving from the depots, more theft, staff theft, the list goes on and on.
To over focus on it, leading to availability issues by not zeroing inventory?
It’s a road to nowhere.
