Many supermarkets and grocery stores implement loss prevention tools to combat internal and external theft. There is still one ongoing problem that still needs a solution, out-of-stock inventory. Dealing with out-of-stock items impacts many areas of the business from:
- Over or under ordering
- Customer dissatisfaction
- Loss of profits
- Standing capital
This is where loss prevention solutions have increased their efforts to provide supermarkets and grocers with solutions to help with:
- Reducing sale losses
- Providing improved processes for controlling inventories
- Improving inventory counts
Shrink Reduction for Out-of-Stock Items
Incorrect stock information is a growing concern for supermarkets and grocery stores. When store purchasers can’t trust their inventory numbers, it leads to inaccurate product ordering. Most purchasers try to avoid extra inventory (and standing capital), so they will order less than needed.
Product system registers are often used to combat incorrect inventory numbers. When these registers are in place, the store is responsible for:
- Creating clear rules for insertion
- Determining guidelines for inactivating or excluding products no longer needed
- Taking into consideration the store’s regional and customer profile
- Writing rules for seasonal items
Once the above rules are determined, and inventory purchases are made, the product system register will need to take action. The action could be:
- Delete or inactivate in the register
- Place a new order for the item
Physical Inventory Monitoring
Another option to combat incorrect stock items is to monitor inventory items physically. This can be done by:
- Guaranteeing all items that arrive at the store are stocked on the shelves
- Following up on items that did not sell that week
The Importance of Accurate Inventory Counts
When inventory counts are regularly incorrect, many areas of the business will suffer consequences.
1. Financial Loss
The products aren’t ordered correctly, leading to less inventory on hand, resulting in fewer sales.
2. Disruption of Average Sales Information
Inaccurate inventory counts misrepresent the actual item’s average sale per day. When that happens, the purchaser will buy fewer items than the demand.
3. The Customer Shops Elsewhere
When customers can’t find the items they need, they will shop at other locations, which reduces the overall sales for the store.
Stock Loss Prevention Techniques
So how can loss prevention help to reduce out-of-stock items? Supermarket’s commercial, logistics, and purchaser departments are responsible for the daily operations and loss prevention audits of those day-to-day operations.
The loss prevention department reports back to the others with current information, which could include:
- Shelf audits
- Internal inventory movements
- Rotating inventory
- High-risk inventory items
The loss prevention team can review this data and indicate any potential or future losses.
Combining All Your Resources
When the above techniques using inventory systems and physically monitoring items are combined with the inventory loss prevention controls, you can expect improved inventory results.
- Reliable stock information
- Accurately showing the level of efficiency of loss in operations
- Key indicators for internal and external losses
- Inventory coverage
- Internal consumption
- Product exchanges
Leading Causes of Loss: U.S. vs. Brazil Markets
It’s always interesting to see how the U.S. compares to other areas regarding inventory losses. Here’s a brief comparison of the U.S. and Brazil markets regarding loss for the retail sector.
U.S.: Reasons for Loss
- Internal: 30%
- External: 36.5%
- Other Losses
- Supplier’s failures: 5.4%
- Administrative errors: 21.3%
- Other: 6.8%
Source: 2017 National Retail Security Survey
Brazil: Reasons for Loss
- Internal: 7%
- External: 17%
- Other Losses
- Inventory errors: 12%
- Operational shrinkage: 39%
- Supplier’s failures: 7%
- Administrative errors: 11%
- Other: 7%
Source: 20th Brazilian Supermarket Retail Loss Assessment
Loss Prevention Solutions to Improve the Bottom Line
When supermarkets and grocery stores implement strategic and intentional loss prevention solutions within the company, the results are improved productivity and an increased bottom line. Loss prevention solutions help with:
- Measuring losses with operational routines
- Creating stock indicators to guarantee reliable data
- Reducing inventory losses
- Reducing out-of-stock inventory
Learn More about Your Loss Prevention Options
PPS focuses on filling in the gaps created by traditional loss prevention solutions. The PPS team can help you find loss prevention strategies to meet your goals. Our team will work with you to provide rapid, complete, custom, and technologically advanced solutions.
Contact the PPS team using the online form or by phone at 866-750-5744.