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Smart Technology Reveals Perishable Profit Loss
According to the 2014 National Supermarket Shrink Survey, perishables account for
more 64 percent of total store shrink. Companies need to ensure that store managers
and loss prevention specialists are trained in the best practices of perishable shrink
control. Proper use of expert BI technology will reveal profit loss patterns and trends.
Here are three examples of perishable shrink:
Example #1
Meat Discount Coupons Cause Profit Erosion
At one major grocery chain, ProfitTrax revealed that meat discount coupons were
contributing to unaccounted for gross margin erosion of up to 1.5% of sales and
were the cause of prices being increased to cover the missing gross margin. Misuse of
discount stickers also masks over production of fresh meat items. (While not a factor
in these cases, discount coupons are also known to be a contributing factor in theft/
discounting and theft at the POS.)
CASE VALUE:
Loss of 1.4% of Meat Gross Margin
Example #2
Inefficient Known Loss Tracking
Most companies use a Known Loss tracking programs. Research reveals that Known
Loss control is the #1 most inconsistently executed program in most perishable
departments with only 65% of actual Known Loss being recorded. When properly
tracked and causal conditions mitigated by consistent best practice implementation,
true Known Loss can often be reduced by 18-22% in a matter of just a few weeks,
resulting in a significant profit improvement and potentially leading to competitive
pricing advantage.
CASE VALUE:
Profit Improvement of .88%
Example #3
Smart Ordering and Cooler Management
For years we have been talking about code dating coolers for proper FIFO rotation.
This is one reason but it misses the real value proposition. Consistent implementation
of Cooler Management Best Practices leads to a systemic profit optimization culture
and training environment.
CASE VALUE:
22% Shrink Loss Reduction
Inefficient Ordering Practices
“On one of my recent
perishable department audits,
we determined that a produce
manager was consistently
ordering 60% more product
than required to accommodate
anticipated sales. As we installed
improved discipline, inventory-on-
hand was reduced by 35%, and
sales increased.”
Improper Space Allocation
“When I started working in
stores in 1968, my first perishable
lessons involved ‘pile it high and
watch it fly!’ Space allocation
meant little. But today, we
know that maximizing sales
and freshness control require
a more disciplined operational
strategy. Today, it’s too easy to
project daily sales requirements
accurately and display to
accommodate those sales.
Strategic space allocation is
a must!”
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ALABAMA GROCER |