Grocery stores constantly experience inventory shrinkage, or shrink, and produce shrink in particular is one of the most vexing problems operators regularly deal with. Produce shrink occurs when store inventory is wasted and cannot be sold, thus costing the store profits. While some level of waste is expected, a good grocery operator should always be looking for ways to minimize shrink and increase profitability.
Below are three key areas that grocers should monitor to stay ahead of produce shrink:
1. Storage and Handling
Most produce requires suitable temperatures to maintain freshness and avoid wilting. Abnormal refrigeration conditions will raise the chances of shrink. Overstocking produce can also lead to unnecessary shrink as crowded shelves lead to dropped, crushed, or otherwise damaged items. Likewise, rough handling of sensitive produce can easily cause bruising and damage to the product. Tossing boxes of product on carts and the floor or rough handling while stocking it onto displays is a component of shrink.
Perfecting the storage processes of both you and your shipper will reduce waste by increasing the shelf-life of produce items. Keep produce chilled throughout the store and ensure a flawless cold chain throughout the shipping process to lengthen shelf-life.
Even in ideal conditions, produce doesn’t last forever. Over time, fruits and vegetables will develop spots and blemishes as they ripen. If the product is still marketable, Produce Managers can also recoup some costs rather than throwing overripe or damaged produce away by running a sale or sending any usable produce to the store’s deli, prepared food kitchen, or bakery.
2. Cashier Training
PLU Entry Red and yellow peppers cost more than green peppers, while vine tomatoes cost more than plum tomatoes. Similarly, prices are different for organic versus regular produce. Cashiers often confuse PLU numbers for produce items that are similar to each other, particularly when they are in a rush. Proper aging of these items and cashier awareness are essential to preventing unnecessary losses.
Cashiers must also know if a particular item should be entered by quantity or by weight. Apples, for example, should be weighed and navel oranges should be counted. Furthermore, managers must train cashiers to enter the proper quantity each time so that four navel oranges in a bag aren’t entered as one orange.
Cashiers are trained to be fast, but there is such a thing as being too fast. In an effort to move their line along, cashiers often remove items from the scale at the same time they press “enter” on the keypad, meaning that the item’s full weight is not on the scale when the POS system calculates the cost. While this usually happens unknowingly, it does happen quite often and the resulting losses can be dramatic.
Managers can incorporate mandatory produce tests each week/month, asking employees to identify PLU’s for various fruits and vegetables. This needn’t take a lot of time and can focus on the most commonly confused items. Typically, six items per test is sufficient. In addition to checking for PLU accuracy, incorporate weighing vs. counting items into weekly/monthly tests.
Make employees aware of these possibilities so that they can monitor both themselves and customers with a knowing eye. Show cashiers firsthand that items can register at varying prices depending on whether or not the item is placed in the center of the scale and depending upon timing when removing an item from the scale. During weekly/monthly tests, have the CSM process an order to get an accurate total and then ask each cashier to process the order as they normally would. Direct observation and video data can then be used to discover flaws when the two totals do not match.
3. Dishonest Behavior
Roughly 35% of retail grocery store shrink occurs due to theft, fraud, or other dishonest behaviors performed by a customer or an employee. Luckily, there are steps that grocery operators can take to dissuade theft and fraud before it happens, and quickly identify it when it does happen.
To reduce inventory shrinkage at your grocery store due to shoplifting, the first thing you need to do is identify the high-risk areas. A proactive grocery store manager strives to deter potential shoplifters in aisles with higher documented theft rates. Managers position shelf-stocking employees in those aisles during varied store operating hours, a practice designed to discourage shoplifters from pilfering merchandise with an employee nearby.
Self-checkouts often rely on the honor system. Without proper monitoring, customers can easily take advantage of the service either by mistake or with malicious intent. Either way, this costs stores money.
Just because a customer places an item on the scale does not mean they are paying their fair share. Customers will often place an item off to the side, leaving only a portion of the item to register on the scale. Whether intentional or not, self-checkout station managers must always be aware of this practice and ensure that customers place items in the center of the scale.
One of the most common forms of self-checkout fraud occurs when a customer intentionally enters the wrong PLU number for a given item. For example, the PLU numbers for bananas and pinto beans are commonly entered when purchasing other, more expensive items like meat and seafood. Don’t get stuck selling items from the olive bar at pinto bean prices.
Make sure that someone with solid multitasking abilities is manning the self-checkout post. These employees need to oversee multiple registers simultaneously while keeping an eye on both physical and on-screen activity, so the ability to multitask is essential.
In a world of increasing technological complexity, both new threats and new solutions arise regularly. Grocers who consistently train their employees and monitor their stores, employees, and customers will reveal new patterns of shrink and will be the ones to benefit from, and despite of, these ongoing changes.
The Agilence & Date Check Pro teams have teamed up to author our new eBook, “Reinventing Grocery: The Timeline to the New Normal” which examines the current situation and future expectations across the grocery industry post-COVID 19. Download this resource now to learn more about keeping inventory on shelves, the new shopper profile, emerging competitors from other industries and more.