​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:

  1. As discontinued inventory sells out on the shelf, product on either side is conveniently used to fill in the empty space.
  2. Due to spreading out existing inventory over a larger space, the product used to “false face” appears to be low stock.
  3. The manager orders enough inventory to fill up the shelf.
  4. 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.

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