How Supermarkets Can Reduce Fresh Food Shrink

In a typical supermarket, the fresh categories are integral to the storewide assortment, comprising of various perishable products across several categories, including produce, meat and poultry, seafood, dairy products, and bakery items. The fresh categories in grocery—produce, as well as meat, seafood, dairy, baked items, and even floral—fulfill an increasing demand for fresh products and provide an extensive assortment of choices. 

When grocers address loss prevention strategies to fight shrink, it is usually in the context of preventing theft. Spoilage and other losses are also part of this discussion. However, in many cases, shrink caused by unexpected, unusual, or unforeseen events such as weather or other disasters that cause supply chain disruptions is overlooked.

Stockouts

Weather-related incidents and seasonality are pivotal in managing shrink in fresh categories. Fluctuations in weather conditions across seasons have a significant impact on the availability of specific products, often resulting in stockouts.

For example, during the summer, there is typically high demand for fresh produce, such as berries and watermelons. If a sudden heatwave or other weather event damages crops or disrupts transportation, it can result in limited supplies and stockouts. Similarly, during winter, specific fresh items like certain fruits or vegetables may be more challenging to source due to weather conditions or limited growing seasons.

Understanding these seasonal patterns and their potential influence on stockouts is essential for supermarkets to effectively manage their inventory. By anticipating the demand fluctuations associated with different seasons and adjusting their procurement and supply chain strategies accordingly, retailers can minimize the risk of stockouts and reduce shrinkage.

It is important to note that while weather events are a factor in stockouts, other factors like consumer behavior and market trends also play a role.

Overstocks

Overstocks in supermarkets can occur for various reasons. One common factor is when supermarkets overestimate the demand for certain products, leading to excessive inventory. This can happen due to inaccurate sales projections, faulty forecasting methods, or a misjudgment of customer preferences.

Another contributing factor is the presence of limited-time seasonal items, such as holiday-specific goods. These products have a specific sales window, and if supermarkets miscalculate the demand or are left with unsold stock after the season ends, it can result in overstocks.

In addition, shifts in consumer preferences or trends can catch supermarkets off guard, leading to excess inventory. Rapid changes in popular products or emerging trends may leave supermarkets with more stock than they can sell. 

Overstocking other items, and under-functioning inventory controls can negatively impact shrink rates in grocery retail. To effectively manage inventory and minimize overstocks, supermarkets should improve demand forecasting accuracy, closely monitor market trends, and adapt their procurement strategies accordingly. By staying responsive to customer preferences and making informed inventory management decisions, supermarkets can reduce overstocks and optimize their operations.

Reducing Shrink and Improving Store Margins

Access to analytics is crucial for retailers today for numerous reasons, with none more critical than the fact that data accessibility leads to enhanced decision-making. When it comes to mitigating shrinkage caused by supply chain disruptions, predictive analytics utilizes historical data and statistical models to forecast future events or trends. On the other hand, prescriptive analytics leverage the insights derived from predictive analytics to recommend specific actions that can be taken to achieve desired outcomes.

By implementing flexible and user-friendly inventory management solutions that adhere to the principles of prescriptive analytics and follow best practices, retailers can promptly adapt to changes and events while maintaining a real-time understanding of their impact on the supply chain. Consequently, addressing stockouts and overstocks in fresh categories promptly and effectively becomes pivotal in minimizing potential shrinkage in a grocery store. Not only does this alleviate a significant burden from in-store personnel, but it also significantly improves shrink rates.

As Senior Vice President of Product Management, Joe Smirlies is recognized as one of the world’s foremost experts in sustainable fresh-native technology solutions. With over thirty years of experience in the grocery technology sector, Joe brings the depth and breadth of expertise to service fresh food retailers with innovative technologies to shape the future of fresh food retailing. Co-creator of Invafresh’s portfolio of solutions, Joe partners with leading global grocery retailers to understand their challenges and deliver technologies to optimize sales, operational processes, and food waste initiatives.