Inventory Shrinkage

Understanding how to calculate shrinkage in retail is important. However, understanding why it is important to control these results and how we can impact company profitability by both improving sales and controlling retail shrinkage is the key to success.

Too often, there is a failure to acknowledge achievements during the audit process, which as a result tends to emphasize a negative undertone. This tendency can and will influence the entire process.

“We all know what we have to do together to reduce food waste, but it’s not happening.”

Between the physical and online space, ever-diminishing timelines, and the possibilities of pinpointing stock on its return journey (the so-called reverse logistics model), you have all the ingredients for a parallel universe where nothing is quite what it seems.

As the industry transitions from bricks and mortar to “bricks and clicks,” the capabilities of existing systems are being stretched thin, and many retailers have not fully integrated the new technology required to manage loss and reduce shrinkage effectively in an omni-channel world.

Over the course of the past half year, we have been working closely with The Kroger Co. and the asset protection team utilizing analytics...

You are driving to work as a supermarket supply-chain manager. The hot weekend weather has continued, it’s a lovely Monday morning, yet you’re surprised when your boss calls so early. Agitated, he shares how he just discovered from the CEO that all stores were reporting a massive sales loss because they had sold out of strawberries.

Can ignoring the causes of shrinkage and refocusing strictly on sales solve our inventory issues?

The three major causes that contribute to inventory shrink in any retail operation are internal theft, external theft, and operational compliance. An effective loss prevention program must focus on all three of these areas.

At a time when store margins are under intense competitive pressure, retail shrink can make or break a retailer's bottom line. But retail shrink numbers are vulnerable to blind spots and imprecise metrics.