Executive Summary

 

Shrink by Category Emerging Trends Shrink by Department Shrink Fast Facts Summary

 

The Winds of Change

Where's the Shrink? 64% Operational and 36% Theft-Related Shrink from Theft Shrink from Operations Research by FMI and The Retail Control Group into the causes and cures of retail supermarket shrink indicates that 64% of store shrink is directly caused by a breakdown in, or the absence of, effective store operating best practices, while 36% of store shrink is cause by theft and/or misdeeds.

 

With the evolving recognition of this condition, 47% of companies report a growing shift in the roll of loss / asset protection departments to expanded focus on operation-centric profit protection and realization, and a more collaborative partnership with store operations.

 

Fifty-four percent of responding companies said they do not have formal LP training for district managers, store managers, cashiers and/or employees. When loss prevention and shrink control budgets are examined, evidence suggests a disproportionate allocation of budget dollars when comparing company investments in technologies to catch theft versus budget dollars allocated to training of store personnel in effective store operating practices known to prevent shrink loss.

 

2.70% Shrink


Survey respondents reported overall store shrink at 2.70% of retail sales, with the low average of 1.76% of retail sales and the high average of 3.10% of retail sales.

 

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Three Emerging Trends

Technology

Certain technologies have become ubiquitous in stores today. Over 82% have automated DSD, POS monitoring and CCTV, yet shrink loss remains at 2.70% of retail sales. Emerging Technologies include store task management, advanced data mining systems and business intelligence analytics. Companies further report plans to slow technology investments in coming years.

Integration & Collaboration

Companies that report lower than average shrink utilize cross-functional training of loss prevention, audit and store operations personnel to implement coordinated profit improvement through traditional loss prevention combined with operational best practices. Throughout this survey evidence persists that consistent and on-going store manager and store team operational best practices and loss prevention training is the number-one factor in controlling store shrink. Operational controls and processes form the foundation for all sales and profit optimization efforts. 

Control Conditions

Extensive cross-tabbing and cause-and-effect correlation analysis revealed when certain operational conditions are present, they had an effect of systemically and significantly restraining shrink loss. Most evident among these control conditions are six influencers:

 

When teams are trained and held accountable to execute these six control conditions, the effect is a systemic reduction in store shrink up to 15%.

 

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Shrink by Category

Shrink from operations and shrink from theft can be detailed by category, as shown in the table below:

 

Where's the Shrink?

CATEGORY

SHRINK CONTRIBUTION

Ordering Inefficiencies 14%
Production Planning 11%
Product Handling Errors 9%
Employee / Cashier Errors 9%
Rotation Errors 8%
Receiving Errors 4%
Damaged / Unsalable Goods 4%
Scan File Errors 3%
Accounting Errors 2%
OPERATIONS 64%
Shoplifting 13%
Cashier Theft 11%
General Employee Theft 9%
Vendor Theft 3%
THEFT 36%

For more information on shrink by category, click here.

 

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Shrink by Department

Survey respondents reported overall store shrink at 2.70% of retail sales, with a low average of 1.76% of retail sales and a high average of 3.10% of retail sales. The following table provides details for sales and shrink by department.

 

DEPARTMENT

SHRINK CONTRIBUTION

SHRINK
(DOLLARS)

DEPARTMENT SHRINK

PERCENTAGE OF SALES

AVERAGE ANNUAL SALES

Meat
18% $93,414 4.1% 12% $2,278,390
Produce
16% $82,022 4.8% 9% $1,708,792
Deli
14% $74,048 7.8% 5% $949,329
Bakery
6% $30,379 8.0% 2% $379,732
Seafood
5% $23,543 6.2% 2% $379,732
Dairy
4% $19,936 1.5% 7% $1,329,061
Floral
2% $9,683 5.1% 1% $189,866

PERISHABLES

4.62%

65%

$333,025

38%

$7,214,901

Grocery
14% $71,010 1.1% 34% $6,455,438
GM
8% $41,011 2.7% 8% $1,518,926
RX
5% $25,062 2.2% 6% $1,139,195
HBA
3% $14,240 2.5% 3% $569,597
Frozen
2% $7,595 0.8% 5% $949,329
Beer/Wine/Liquor
2% $9,493 1.0% 5% $949,329
Video
1% $3,892 4.1% 1% $94,933

NON-PERISHABLES

1.48%

35%

$172,303

62%

$11,676,747

TOTAL

100%

$512,922

2.70%

100%

$18,986,581

 

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Shrink Fast Facts

 

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Summary

Significant in the survey findings for 2012 were four primary points:

 

 

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For additional questions regarding shrink research, operational best practices, or higher profit, email us at info@wheresmyshrink.com.


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