How to Reduce Shrink in a Grocery Store

    Apr 06 2021

    Topics: Retail - Grocery

    Shrink is the leading cause of profit loss in the grocery industry, hovering at or above 3%. Considering most grocery stores operate on razor-thin profit margins, this amount of loss can be quite damaging to your profitability. Shrink can come in various forms, such as operational cash losses, human error, inventory loss, employee theft, and shoplifting. 

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    Often, procedural changes, additional protocols, and an investment in technology can help prevent the majority of shrink and provide long-term shrink savings. Here’s how to reduce shrink in a grocery store.

    Identify the Problem

    While all grocers will experience shrink, not all stores will experience the same type or degree of loss. For this reason, there is no one-size-fits-all solution. Therefore, the first step to eradicating shrinkage in your store is to identify the problem you’re facing first. 

    After all, if you’re experiencing significant losses due to shoplifting, you’ll need to come up with different solutions than if you were facing losses due to human error in the cash handling process. 

    Take some time to assess your risks to determine where you should focus your loss prevention efforts. Spend time in the store, on the floor, in your distribution centers, and in your finance department. Spend time reviewing your cash management protocols and your cashiers’ cash handling procedures. Review your security protocols as well. These observations will be able to help you pinpoint where exactly your store’s shrinkage is coming from, so you can take the right steps to eliminate it.

    Invest in Technology

    You cannot measure your losses without access to relevant, accurate, real-time data. Without the right data, you may try to solve the wrong problem or create a piecemeal loss prevention initiative that has little effect on your shrink percentage.

    Investing in the right technology can provide the insights you need to make informed loss prevention decisions. For example, an inventory management program can provide information about produce and product wastage. Cash management software can give you insight into your employees’ cash handling activities. Your financial management system can also give you answers in terms of bad check losses, general liability and workers’ compensation expenses.

    With this accurate information at your fingertips thanks to technology, you can ensure you’re targeting the right losses and benchmark your loss prevention efforts over time as well.

    What’s more, an investment in technology can also be a way to prevent shrink. The right technology will be able to automatically monitor activities to deter dishonest behavior while also tracking trends, which can help you put a stop to human error and poor procedures that are contributing to your shrinkage rate.

    Training Can Go a Long Way

    Your employees are one of your strongest assets, and they can help you combat shrink. Training your staff can go a long way to your loss prevention efforts. You can train floor employees to deter potential shoplifters in aisles with higher theft rates. Managers and cashiers can be trained on proper cash handling and cash management procedures to reduce human error and cash discrepancies. Employees can also be trained to rotate inventory to reduce inventory shrink and to monitor the self-checkout aisle to flag fraudulent purchases and catch discrepancies.

    Take a proactive approach to loss prevention in your grocery store with these tips to reduce shrink and enjoy higher profits.

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    Andrea Lombardi

    Andrea Lombardi

    Andrea joined the CashTech team upon its inception in 2003. Learning the business from the ground up, she now utilizes her expertise in account management, planning, and negotiation while managing the daily operations of CashTech’s sales, marketing, and logistics departments. Andrea holds a bachelor’s degree from the University of Western Ontario. She enjoys travelling and has a passion for personal fitness, including obtaining her kettlebell certification. Andrea lives in Toronto with her husband and two young sons.

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