Winning the Shrink Battle – How Independent Grocers Can Maximize Their Margins

Shrink levels vary widely by department, with perishable areas like produce, deli and bakery seeing reductions thanks to improved turnover and sales. Conversely, meat, seafood and floral experienced slight year-over-year increases, highlighting the ongoing challenge of managing shrink in these categories.

This underscores the importance of bottom-line optimization, especially when top-line growth is challenging. The goal isn’t to eliminate shrink but to strike the right balance between maintaining in-stock performance and minimizing losses. For the independent retailer, whose profit margins are razor-thin, addressing shrink isn’t just important – it’s essential for survival.

Taking Charge of Shrink

Step 1: Measuring Shrink – The Foundation of Control 

Whether you’re using a simple notepad or an advanced technology, consistency in tracking is key. Controlling shrink starts with accurate and consistent measurement. Tracking shrink is essential to identify root causes and implement effective solutions.

GOT Systems plays a vital role in addressing these challenges, offering both turnkey and SaaS-based solutions tailored for U.S. grocers. Its features include shrink and markdown tracking, product ordering and grind log management. Now fully integrated with FMS, GOT Systems equips grocers with the tools to streamline operations, reduce shrink and boost profitability.

Why Measuring Shrink Matters

Shrink comes from many sources – spoilage, theft, errors or mismanaged markdowns. Measuring it allows grocers to:

• Identify patterns: Address recurring issues like overordering or poor handling.
• Set priorities: Focus on high-shrink areas like produce or meat.
• Make data-driven decisions: Use insights to refine inventory, training and security.

Consistently tracking shrink gives retailers the data needed to reduce losses, improve operations and boost sales.

“FMS and GOT Systems have been game-changers for Roberts Company Inc. By streamlining processes like ordering, tagging and credits, GOT Systems has empowered our store teams to focus on what matters most – our customers. The improved backroom operations have led to greater efficiency and stronger bottom-line results for our company.”

– Eli Popicg, Roberts Company

How to Start Measuring Shrink

• Start simple: Begin by manually tracking losses in high-shrink areas like fresh departments and sharing results with associates to drive change.
• Leverage technology: Use tools such as GOT Systems to automate tracking and gain real-time insights into many shrink-causing issues.
• Train your team: Ensure employees understand how to record losses accurately and why it matters.
• Analyze reports: Regularly review data to identify trends and take corrective action.

The Payoff

“Before GOT Systems, we had no clear way of tracking where our shrink was happening. With their weekly reports, we’ve reduced shrink in our fresh departments by 20 percent and improved overall inventory management.”

– Brooks Davis, Brooks Grocery

Accurate measurement turns shrink into a manageable problem. With clear insights, grocers can refine ordering, improve inventory practices and train employees, making shrink reduction the foundation of a more profitable business.

[RELATED: Solving Shrink One Nickel At A Time]

Step 2: Master Inventory Control 

Shrink often results from overordering, overproduction or receiving errors. Frequent replenishment and precise ordering are key to minimizing waste. Stores with multiple deliveries should order smaller amounts more frequently to ensure freshness and improve inventory turns.

Best practices for receiving:

• Lock receiving doors when not in use.
• Keep the area organized to avoid errors.
• Process credits before checking items.
• Conduct random audits.
• Open and count every item in each box.
• Verify pricing and allowances.
• Limit receiving tasks to trained staff.
• Review vendor analytics to spot discrepancies.

Effective inventory control minimizes shrink, streamlines operations and boosts profitability.

Step 3: Optimize Front-End Operations 

Front-end shrink often goes unnoticed but can significantly impact profits. To prevent losses:

1. Train cashiers on best practices for scanning and handling transactions.
2. Implement clear policies for refunds and voids.
3. Conduct regular audits to monitor accuracy and compliance.
4. Use self-checkout monitoring tools to minimize unscanned items.
5. Review cashier analytics to detect sweethearting.
   

Technology Solutions: FMS Solutions’ GOT Systems

Do you know where your shrink is coming from? Without clear insights, reducing shrink feels like fighting an invisible enemy. FMS Solutions’ GOT Systems gives grocers the tools to identify, manage and reduce shrink effectively, turning invisible losses into actionable opportunities.

The GOT Profit Protection System provides daily and weekly reports to uncover the causes of shrink. Compare performance across stores, record losses directly into your financial system and empower your team with real-time data to take control of operations.

The GOT Markdown Program simplifies markdowns with easy-to-create labels and eye-catching stickers. Clear slow-moving or discontinued items while tracking reductions by day, week or department to improve efficiency and profitability.

The GOT Track-It! Program streamlines loss management by tracking known losses, department transfers, donations and store-use items. It even simplifies insurance claims with detailed, ready-to-use records.

Ready to reclaim your profits?

Don’t let shrink eat away at your profits. Hundreds of grocers trust GOT Systems to transform their operations and boost their margins. Schedule your preview today and take control of your bottom line.

About the author

Doug Haworth is the general manager of GOT Systems at FMS Solutions, where he leads the development and implementation of innovative shrink and inventory management solutions for independent grocers. With more than 35 years of experience in the grocery industry, Haworth brings a deep understanding of both store operations and the customer perspective, making him uniquely equipped to drive success for FMS and its clients.

Haworth began his career in the grocery business as a carry-out associate and worked his way up to VP of operations, gaining hands-on experience in every aspect of store management along the way. Since joining the FMS team in 2022, he has leveraged his extensive operational expertise to enhance the capabilities and effectiveness of GOT Systems, ensuring it meets the evolving needs of independent grocers.

Haworth’s unique blend of operational and customer-focused insights allows him to deliver practical, results-driven solutions that help grocers reduce shrink, optimize processes and improve profitability.