10 Tips to Control Shrink

07/01/2011 01:24:00 PM
Pamela Riemenschneider

Every penny counts during an economic downturn, and those pennies quickly add up to big dollars if you’re not careful.

Shrink rates can range from 5-10%, with most produce departments experiencing a rate of 6-8%, estimates Roberta Cook, cooperative extension marketing economist for the department of agricultural and resource economics at the University of California, Davis.

 

But if you ask a retailer, he’ll typically estimate his produce shrink rate at 2-3%, says Ronnie De La Cruz of New York-based De La Cruz Consulting and Training.

If your shrink is on the higher end of the scale, De La Cruz says you may be able to cut it in half by tweaking your produce operation just a bit and implementing practices such as these, culled from several industry professionals:

 

1. Order carefully

 “The No. 1 thing is the ordering,” says Mark Luchak, vice president of produce and floral for Rice Epicurean Markets, a group of five Houston-based stores. “You’ve got to order correctly.”

The company has a procedure that helps keep shrink in check. First, produce managers take inventory of what they have in the back room. “Then you write your order on the sales floor, looking at your displays, knowing  what you have in the back and having a record of what you’ve sold in the past,” Luchak says. “It helps cut down on any guessing.”

And consider ordering smaller pack sizes for products you find hard to sell, adds Kate Reeb, vice president of retail services for Coast Produce Co., Los Angeles. For example, Coast Produce will pack a 10-pound box of jalapeno peppers for stores that don’t need the traditional 40-pound wire-bound case.

 

2. Start with good quality

 “You have to rely on your supplier to make sure that the product is being purchased properly and the quality is where it’s supposed to be,” says Joe Pagano, director of produce for Inserra ShopRite Supermarkets Inc., a chain of 21 stores based in Mahwah, N.J.

If something does not meet his standards, Pagano says, “I would rather not have the product than for a consumer to take it home and in two days say we have bad produce.”

“One way to reduce shrink is to stay in your quality range, don’t drop out of it to save a buck,” adds Dick Spezzano, president of Spezzano Consulting Service Inc., Monrovia, Calif. You can offer shoppers a more aggressive price without cutting back on quality by ordering smaller sizes or by buying bulk rather than packaged product.


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Jeff Dugan    
Chicago  |  July, 06, 2011 at 07:51 AM

Those are all Great Best Practices for controlling Shrink, but the #1 Item and cure all for Shrink is Sales. the Produce Department has to be Fresh and Full and Properly Merchandised to Drive Sales.

Kellee Harris    
Canby, Oregon  |  July, 09, 2012 at 12:00 PM

In doing research regarding banana shrink, noticed the comments above re: sending ripe bananas to the bakery for bread, or reducing the entire banana category vs just the ripe fruit. We have another solution: Ripe Banana Tote Bags, made of certified compostable, FDA compliant paper. Check out our website, www.packagecontainers.com for more details. These bags reduce banana shrink 30%+, and are used by major grocers nationwide!

D    
October, 28, 2013 at 07:29 AM

Hi Pamela Great post! I especially liked the 10th point about "ensuring accountability" in your front line workers. You can take the necessary precautions regarding food safety standards, but if it is not met with accountability from the staff, those precautions will be difficult to maintain.Just to throw in my 2 cents on the matter, perhaps implementing an internal feedback program into a business can help promote further accountability. I know of a few companies that do this, but none do it as thoroughly and confidentially as SQM (http://goo.gl/Lr0MVY). They could be worth checking out! Cheers

siyabonga    
vryheid  |  May, 29, 2014 at 03:27 AM

I'm having trouble excessing those ten Tips of controlling shrinkage

javier ramirez    
Douglas az  |  September, 19, 2014 at 03:52 PM

I just accepted a produce manager position and will use this info to turn dept around.

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