​5 Ways to Reduce Shrink in the Grocery Store

by Cody Sheehy | Oct 5, 2016 12:00:00 AM

Those who are in the grocery store industry know that shrink is one of the leading causes of profit loss. Shrink is the difference between profits that should have been made versus profits that were actually made. Many inexperienced grocery store owners or managers end up dealing with hefty profit losses because they are ordering the wrong amounts of inventory or the wrong products in general. 

There are, however, some key ways a grocery store can reduce the amount of shrink they experience. Here are five of the most effective strategies to reduce shrink:

1. Displaying products correctly

One of the main things a every grocery store needs is the right displays in each section. There are many ways a product can be displayed, and what’s going to work for one store may not work for the next. Several types of displays can be utilized in the same store over a period of time to find out which ones are going to work more successfully than others.

For example, some grocery store owners may find that unique items sell much faster if they are displayed in a designated area. By placing such selections in their own displays, it may create more of an attraction to that area and pique curiosity among shoppers. However, other store owners may find that blending alternative selections with more common selections can create opportunities for customers to come across products they otherwise might not have seen or even considered for purchase. The only way to find out what’s going to work best in a particular grocery store is to try different tactics.

2. Starting small with new items

If a grocery store is going to start selling something they haven’t in the past, they only need to order a small amount of that product to see how it sells initially. It wouldn’t be wise to order large amounts of an item that has never been sold in a store previously, even if that same product is selling quickly in other local stores. This allows a grocery store to get an idea of how that particular item is going to sell in their establishment without risking heavy profit losses due to shrink.

Most suppliers have no problem selling a smaller amount of a particular product, especially if it’s a unique item. Moreover, a grocery store can get in touch with their current suppliers to find out what types of selections they currently offer. Requesting something rare may cost a grocery store even more if the supplier has to locate an item that their supplier does not already have.

3. Ensuring perishables are always kept at appropriate temperatures

One of the main ways to reduce shrink in a grocery store is to ensure that perishable goods are always stored at the right temperature. This doesn’t just mean that items are kept cold in the store when they are on display; it also means ensuring that they are kept cold before and during delivery. Maintaining a proper cold chain is key.

4. Offering samples of items that aren’t selling fast

Another good idea for reducing shrink within a grocery store is to offer up items that are nearing their expiration dates as free samples. People may not want to buy certain items if they have never tried them or even heard of them before, but they may be more apt to give it a shot if they can first sample it. While the samples offered are free, it could very well entice a customer to buy that particular item during their visit or the next time it’s available in the store.

5. Reducing prices as a last resort

Cutting the price of items that aren’t selling as quickly as needed is another tactic used to reduce shrink. If it’s a week before a certain type of item is going to expire and only 20 percent of the current inventory has been sold, reducing the price of the item by 25 percent or even 50 percent may encourage sales that would have otherwise not been made. Selling the product and making any profit is better than wasting it a week later and not making any profit at all. However, this move should be exercised only after other steps towards reducing waste have been taken.

Taking advantage of these five steps can ultimately help grocery stores become more profitable through efforts to reduce overall product shrink.

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