High Shrink Store

[kevin]

What would you do with a store that had shrink this big?


I will post what our game plan is after I hear some replies. Our first focus is operational, just to let you guys know. These are the actual shrink numbers that I received from the store manager.



To: Kevin Seaton

Cc: **********

Shrink Chart for R-*** *** Mid-Atlantic Marketing Area

Shrink Level High
Total Shrink at Retail 4.76%

Grocery 2.98%
Bakery 7.50%
Meat 7.60%
Produce 7.20%
Dairy 1.02%
HBA 8.85%
Deli 6.20%
Beer / Wine 2.00%
Seafood 5.88%
Frozen Food 1.52%
Floral 2.40%
Other 3.00%


Here’s what you wanted Kevin, I’ll touch base with you later. Thanks and hopefully we can resolve this situation before it gets out of hand any more.

Sincerely,
***** *****

[fraudster]

Kevin,

Can you post numbers that would be considered normal for a store like the one you described?

I have no experience in the grocery business, and do not know where to begin with answering your question.

For example in the seafood department, theft is probably a problem on items like shrimp or lobsters, but I would imagine more is lost due to expiration of the product.

Same thing applies for area such as deli, meat, and produce.

One area I noticed that seems high is HBA. Now that is high for most retailers, but how does that compare to other stores in your region? What makes that store so different? Is this store in an area that may play a large factor in the losses both internally and externally, or are there major operational issues, which are contributing to these large losses.

[kevin]

Here are some numbers for our "average" grocery store.



Average
Total Shrink at Retail 1.03%

Grocery 0.20%
Bakery 2.02%
Meat 2.0%
Produce 2.00%
Dairy 0.25%
HBA 2.75%
Deli 1.11%
Beer / Wine 0.80%
Seafood 1.24%
Frozen Food 0.80%
Floral 1.25%
Other 1.00%


Now you can see why the previous store is a high shrink store.

[none that i can list publicly]

I just resolved an issue like this for a grocery chain. I focused on operations starting with Receiving. I increased audits of DSD merchandise and found several pricing errors, price/cost batches not received by the Receiving computer, and the biggest was a lack of follow up on merchandise credits from the main supplier. I worked with the IT Department to automatically apply batches to correct 2 of these issues. I also assigned vendor numbers to our main supplier just to process credits, a local charity that receives food donations, and a "waste sheet" for Expo buys.

My next step was to audit the perimeter departments for operational issues on their side. I obtained "waste sheets" for Bakery, Deli, Produce, Meat, Seafood and Floral for the prior 6 months. I found several items that the department managers had been over ordering and reduced the amounts of their shipments. Also found that department transfers were not being completed on a regular basis. We changed policy on this immediately to make a salaried member of management the only person who could authorize a department transfer.

I reviewed payments with Accounting and discovered some vendors supply merchandise to more than one department in the store. These payments would be debited from one department and not the other(s). We flagged these vendors for follow up by an AP person to ensure payments were processed correctly.

Lastly, I added a random weight check on Meat, Seafood and Recipe items on the audit.

I implemented one process at a time to guage the progress and have seen improvements over the last 3 months. The shrink numbers for every department in the stores has stabilized. We have reduced the amount of perishable merchandise being thrown away, the buyers have more information available for them before they make Expo buys, and we receive tax credits for donating merchandise to local charities.

[Joedogs]

Does Waldo visit this store? That would explain the big 2.00 in the Beer/Wine department.