SHRINK

[veteran+]

https://www.cnn.com/2023/10/27/business ... index.html

This is being covered all over from Forbes to CNBC and beyond.

Surprised?

[storewanderer]

https://www.cnn.com/2023/10/27/business ... index.html

This is being covered all over from Forbes to CNBC and beyond.

Surprised?

I know this is going against what the article says.

The other problem with the shrink is the price increase of the products is causing the shrink to be a more eye popping number. For instance in early 2020 when someone shoplifted a few value packs of $14.99/lb Ribeye Steaks the store was seeing a ~$100 loss. Now that prices are up on this item 40% that is now a ~$140 loss. Multiply that $40 of extra dollars in shrink due to inflation ONE time a day times a couple hundred stores in a division or small regional chain times 364 days a year and have almost $3 million in extra shrink dollars over a year just from the inflation effect on shrink; you can see where regional loss prevention people are starting to see some eye popping numbers when it comes to shrink increases.

So is there more shoplifting occurring or is it the inflation effect?

Whatever the case may be this has turned into an issue.

Maybe some retailers have lost sales volume and can no longer absorb the shrink anymore. Like if you have a drugstore that used to do $50k a week in front end sales and could absorb its shrink; now it only does $35k a week in front end sales. Shrink is still the same as it was at $50k but with lower sales volume now that store cannot absorb the shrink anymore. That is obviously a problem with the chain drugstore industry and part of why the chains are closing hundreds/thousands of stores.

[veteran+]

Valid and germane points for sure!

But the retailers like to create the perfect scapegoat to mask their incompetence: External shrink, ORC, those pesky Homeless and government negligence.

And this is expertly supported by slanted visuals and sensational reporting.

Are there probelms? ABSOLUTELY!

They are so stupid that they think no one will notice that their financial reports do not reflect their bombast. Well it WAS noticed and all the financial trades are takling about it.

[storewanderer]

Valid and germane points for sure!

But the retailers like to create the perfect scapegoat to mask their incompetence: External shrink, ORC, those pesky Homeless and government negligence.

And this is expertly supported by slanted visuals and sensational reporting.

Are there probelms? ABSOLUTELY!

They are so stupid that they think no one will notice that their financial reports do not reflect their bombast. Well it WAS noticed and all the financial trades are takling about it.

Retailers and CPGs are going to have to make some hard decisions about certain products, what is carried in what store, etc. I think non food categories are the biggest problem for grocers when it comes to shrink $$$. Liquor and meat are problems also.

I really think Trader Joe's has it right as far as a format that very significantly deters external theft. And this is strictly due to their product mix. They still get shrink on spoilage/rotation issues/ordering issues...

[veteran+]

Yes, their waste numbers are VERY high.

[Alpha8472]

Costco said that shrink increased because they added self checkout. Perhaps then they should get rid of self checkout at Costco if it is such a problem. Self checkout is a pretty horrible experience with all of those huge items that you have to lift and drag over the scanner. Then you have to put it on the weight sensor. It is easier to just go to a regular cashier.

[jamcool]

Yet Sam’s Club has no.problem with their self checkouts. They move faster than the standard checkouts.

[ClownLoach]

I was going to post the article tonight but you beat me to it.

First, I just do not believe that retailers are more technologically disorganized or error prone today than a decade and more ago. Much more technology exists to track down transfers, shipments, etc. than ever before and all of that lowers shrink (that's the entire reason why they invest in it). DC automation and RFID are a couple of examples.

Second, most of the retail industry registers shrink on a cost basis. Cost goes up, retail price goes up probably even more, so the percentage of shrink vs sales stays flat or even moves negative. Where it's registered on a retail basis is a whole different story.

The punchline remains the same. So-called experts are debunking shrink by pulling up police reports and crime statistics including on a store by store basis. If the Police won't show up, won't do anything, and/or make it take such a preposterously long time to file a police report then nobody will report it. Most retailers explicitly forbid reporting to the Police simply because of the incredible paperwork aspect. And then they say "well, all they talk about behind office doors and on break room posters is internal theft!" Duh! Of course they need to post threatening propaganda to scare the employees into not stealing! The entire concept is perception of control - if the employee has LP pounded into their head repeatedly then they will not be able to shake that fear that someone is watching and therefore won't attempt to steal (most of the time).

I am really unsure why the news media has decided in the last year or so that retailers are all lying about theft and shoplifting losses... I'm not exactly sure what the agenda is about here but clearly there is one.

[veteran+]

"Second, most of the retail industry registers shrink on a cost basis. Cost goes up, retail price goes up probably even more, so the percentage of shrink vs sales stays flat or even moves negative. Where it's registered on a retail basis is a whole different story."

So is the above the main reason why their apocalyptic bombast about shrink NOT matching their own financial reports?

[mjhale]

Yet Sam’s Club has no.problem with their self checkouts. They move faster than the standard checkouts.

Could this be because the exit checker at Sam's Club has to scan actual items in your order to allow you to exit the store? They do this same procedure whether self checkout or staffed cash register. Last I was in Costco about a year ago, the exit checkers are still just doing a cursory check of the cart and not necessarily checking items in the cart versus what is on the receipt. I have to wonder if at Sam's Club the checks the employee at the door does are more thorough for self-checkout users. I never buy more than 4-5 items at a time at Sam's. But I have been behind more than one full cart where the exit scan triggered something that made the employee re-scan every item in the cart. The last time I saw this happen, the rescan turned up two items at the bottom of the cart that had not been scanned for purchase.