Tips for Reducing Retail Shrink

Research conducted by the Food Marketing Institute (FMI) and The Retail Control Group shows that 64% of store shrink is directly caused by a breakdown in or the absence of effective store operating best practices. Organized, clean, and effective operating standards can have a significant impact on your business and is one of the easiest and most important ways to reduce your shrink.

If you sell perishables, you know it is important to receive them in a clean and organized manner, which will ensure you get them on the shelf faster and likely sell them before they go bad. As the business owner or manager, making sure every team member handling perishables has best practices ingrained in their routine will save you time and effort. A few good ways to go about this are by requiring the completion of process checklists as well as walking your back room and making sure team members have the necessary tools to complete tasks safely. For example, if you want possible excess produce kept in its boxes stacked on wire shelving and labeled with dates, make sure the shelving is maintained and markers are always available. Safe box cutters are always a requirement as well.

If you sell breakable items, ensuring there is a clean space to unload and prep the items for the sales floor is essential. However, this can be easily overlooked when things get busy and good organizational habits are ignored. A good practice is to set a reminder, so the space is prepped the day before an expected delivery.

According to the same survey referenced above, ordering standards are the cause of 22% of shrink. Make sure accurate records of sales are kept, so you can see how much product was sold during the same period in the previous year, month, or week. Having that important data will help you fine tune your ordering standards. Tracking how long it takes for products to be sold could also provide helpful information for your operations. The important thing to remember is that if you are not tracking things, you will not have the information you need to guide your decisions.  

Finally, while clean, organized, and effective operating standards should be required of all team members, they should also be required of vendors. Receiving one delivery at a time to ensure product is handled appropriately and organized right away without stacks of things building up can make a big difference. Vendor deliverers could use their own packaging or stacking techniques to confuse how much of a product is being delivered. Vendors can be held accountable for incorrect delivery information as long as it is in the vendor contract. This is becoming a more common practice.

As reducing shrink involves all operations, making sure all operation team members are aware of the processes and goals is key. Reminders, positive reinforcement, posting signs, and having your leaders lead by example are all ways to keep up the momentum and ensure operations run smoothly.