Your grocery store’s inventory is constantly shifting, but sometimes, you’ll see a dip in your inventory levels that isn’t reflected in your stock records.
Shrinkage is the culprit behind these discrepancies. Left unchecked, it can clear out your shelves, ruin your honest customers’ shopping experience, and slash your grocery store’s profits.
That’s why we’ve created this guide on how to reduce shrink in your grocery store. We’ll walk you through the three most common causes of grocery store shrinkage and share specific strategies to help you protect your inventory and bottom line.
Want to skip ahead? Jump straight to your grocery store’s biggest cause of shrink and learn how to:
Reducing Spoilage and Waste
First, let’s talk about one of the sneakiest causes of shrink in a grocery store: spoilage.
Spoilage occurs when perishable goods like produce, dairy, meat, and baked goods expire before you sell them. Every wilted vegetable or moldy muffin you throw away is money down the drain — which is why improving your inventory management approach and reducing waste should be your top priorities.
Let’s look at three ways to achieve this goal and ensure your customers can always count on you for fresh perishables.
1. Improve Your Inventory Management Approach
Adopting an effective perishable inventory management approach is the best way to reduce spoilage-related shrink in your grocery store.
Managing inventory is one of your toughest responsibilities as a grocer, but the right point of sale (POS) system makes it effortless. Here are a few ways your POS system can help you reduce waste:
- Real-time inventory tracking allows you to monitor your stock levels, identify items that are close to expiring, and take action to sell them before they spoil.
- Weight-based inventory management lets you track and sell costly perishable items like meat and cheese by the pound.
- Deli label printing helps you follow food safety regulations and makes it easier to spot near-expiry products in your butcher or deli departments.
- Shrink monitoring helps you track spoilage rates, identify patterns, and make a data-driven plan to reduce waste.
The right grocery store POS system should also go beyond simple inventory and shrink tracking to help you optimize your stocking strategy. Here are a few advanced features that can stop spoilage before it starts:
- Low-stock alerts help you avoid stockouts while making more informed inventory reordering decisions.
- Automated receiving prevents administrative errors and ensures new inventory is added to your stock records accurately.
- Sales reporting and analytics help you understand your customers’ shopping habits and tailor your stocking strategy to their unique wants and needs, ensuring you stock more of what they want and less of what they don’t.
In short, a grocery POS system with built-in inventory management features is a must-have for reducing spoilage.
Related read: Inventory Management for Grocery Stores: 8 Tips & Tools
2. Follow Food Safety Best Practices
While the right technology will do the heavy lifting when it comes to perishable inventory management, you and your team should also know and follow food safety guidelines.
Here are a few best practices that can help you eliminate waste and keep your customers safe:
- First in, first out (FIFO): Display and sell items in the order they were received so that your oldest products are sold before your newest ones.
- Proper storage: Invest in the right equipment, and keep perishable items at their recommended temperature and humidity level.
- Thorough labeling: Invest in label printers for your deli and butcher departments to ensure all items are labeled with their weight, price, package date, and sell by date.
Following these recommendations will prevent premature spoilage and help you sell items before their best by dates.
3. Use Markdowns To Increase Inventory Turnover
You’ve got a cooler full of dairy products with looming expiration dates. Based on your previous sales trends, there’s no way you’ll sell every gallon of milk or pint of half and half before they curdle.
How can you prevent these products from skyrocketing your grocery store’s shrink? The answer is to use strategic markdowns.
While your profits might take a slight hit, offering your products at a discount is better than throwing them away after they’ve expired.
In this example, you could offer a percentage-based discount on your entire dairy department or launch a bundle deal, encouraging customers to purchase multiple products for a discounted price.
This is also a great strategy for shelf-stable seasonal products, like Valentine’s Day candy or holiday baking essentials. Instead of wasting storage space or letting them turn into shrink, you can offer them at a discount toward the end of the season.
Deterring Shoplifters
Shoplifters pose a significant risk to your grocery store’s bottom line. Once they’ve identified your business as an easy target, they’ll come back again and again to steal from your shelves and slash your profits.
That’s why your shoplifting prevention strategy should focus on eliminating theft opportunities. Here are three ways to stop shoplifters in their tracks.
4. Install Security Cameras
Security cameras are a crucial aspect of your plan to reduce shrink in your grocery store. They show that you take security seriously, scare off criminals, and provide evidence against repeat shoplifters.
We recommend installing security cameras at your entrance and exit and in your parking lot to make your regular customers feel safe. You can also install a mixture of real and decoy security cameras throughout your store’s interior in your high-traffic departments.
5. Refresh Your Floor Plan
Shoplifters usually lurk in the dark, remote corners of your store, trying to escape the watchful eyes of your employees or security cameras.
That’s why we recommend theft-proofing your grocery store’s floor plan to increase visibility.
Start by investing in high-quality lighting for every area of your store, including each aisle, the perimeter, and even your entrance and parking lot. This bright lighting serves as a natural deterrent to potential shoplifters.
Next, rearrange your displays to put your most commonly stolen items near the front of your store. For example, place alcohol, batteries, coffee, and cosmetics in the aisles closest to your cash registers.
Thieves will hesitate to target these well lit, highly visible areas and be forced to leave your store empty handed.
6. Prioritize Self-Checkout Security
If you offer self-checkout, your grocery store is even more susceptible to shoplifters — which is why you need a more robust security strategy.
Your employees are your best defense against self-checkout-related shrink. Train them to spot common shoplifting behaviors, like sticker switching and skip scanning, and share techniques for interrupting suspected thieves.
Your team members’ safety should be your number-one concern, but above-and-beyond customer service is often enough to deter would-be shoplifters.
Related read: Self-Checkout Security 101: The What, Why, and How
Preventing Internal Theft
Unfortunately, theft doesn’t always come from outside your store.
Internal theft occurs when employees steal from your business — whether they’re taking inventory off your shelves, skimming money from your cash drawers, or committing fraud.
Internal theft might sound frightening, but fortunately, there are some simple steps you can take to be proactive and prevent this type of grocery store shrink.
7. Tighten Up Your Hiring Process
The best way to prevent internal theft is to hire employees you can trust.
Make sure to run a background check and verify a potential hire’s references before officially bringing them on board.
Once they’re hired, your onboarding training should make it clear that internal theft will not be tolerated and that you have precautions in place to spot suspicious behavior.
This robust hiring and onboarding process should help you attract honest employees with the right intentions.
8. Leverage Your POS System’s Security Features
You can’t keep an eye on your employees around the clock — but your POS system can!
That’s why our final tip to prevent internal theft is to take advantage of your POS system’s security features.
Your grocery POS system should allow you to create accounts for each employee and set unique permissions based on their role, ensuring they can only access the features and data they need. It should also track their activity within the software, helping you spot suspicious behavior or data discrepancies.
Reduce Shrink in Your Grocery Store With Markt POS
Upgrading your POS system is the simplest and most effective way to reduce shrink in your grocery store.
Markt POS, our all-in-one POS solution designed specifically for small grocery stores and specialty markets, includes all the features you need to track your stock levels, monitor your profits, and take action against shrinkage — including powerful inventory management, shrinkage reports, and employee security features.
See Markt POS in action by scheduling your personalized demo today.
