How Discontinued Items Lead To Expired Shrink
Shelf space can certainly be considered one of the most valuable assets a supermarket has. What you do with the space you have has long-term impacts on sales and profitability. It’s no wonder that assortment management is a hot topic in the industry, and a major function of this role is discontinuing slow-moving products.
However, what if I told you poorly managed discontinues can lead to future expired shrink?
In a perfect world, the department or category manager would have developed a plan to fill space left open from a discontinue. In reality, here is what usually happens:
- As discontinued inventory sells out on the shelf, product on either side is conveniently used to fill in the empty space.
- Due to spreading out existing inventory over a larger space, the product used to “false face” appears to be low stock.
- The manager orders enough inventory to fill up the shelf.
- Now having more facings than justified by movement, a slower shelf turn rate combined with a lack of rotation lead to expired shrink in the future.
Arguably, if a fast-mover were expanded in the above example, there likely wouldn’t be a problem at all. It’s when a slow-moving product expands that the largest opportunity for loss comes from.
In a recent store-visit with a supermarket owner, we witnessed this first hand. A yogurt item with 0.1 unit sales per day had its facings doubled to fill in after a discontinued product. At that movement, the item was likely already an expired challenge for the store. Now it was guaranteed to be.
So what can you do?
- Require shelf tags to be removed by management – as long as the shelf tag for discontinued items remains on the shelf, false facings are less likely to become permanent facings.
- Develop a plan prior to discontinuing an item – knowing what to do with the space left open is more important than getting rid of the slow mover. Either find a new product to bring in to replace it or pre-plan which item in the category should be moved and expanded in its place.