STORES Magazine - May 2011 - (Page 100)

LOSS PREVENTION / SHRINK Perish the Thought Strack & Van Til cut inventory losses and boosted profits with new solution BY FRED MINNICK D ave Wilkinson remembers how he calculated shrink in the old days. “We didn’t,” says the president and CEO of Highland, Ind.-based grocery chain Strack & Van Til, which also operates stores under the names of Ultra Foods and Town & Country Markets. When Wilkinson started with the full-service grocery in 1975, it had three stores and no systems in place to track associate error, theft, over-ordering or lost inventory due to spoilage. But as the grocery grew, inventory evolved to the point that shrinkage had to be accounted for. Managers grouped all products together and estimated shrink, but they had no clue as to the specific shrink percentages for oranges, onions, bananas or other perishable items. “We had more of the scatter effect approach,” Wilkinson says. Fast forward to 2009, when the economy was collapsing and increased competition posed a growing threat to Strack & Van Til. The grocery needed to squeeze a little more profit out of its oranges. Wilkinson consulted with the Retail Control Group, whose founder Larry Miller created ShrinkTrax and the National Shrink Survey. Miller offered a pre-audit of a store. “We didn’t tell our managers they were coming,” Wilkinson says. “They showed us some things that opened our eyes.” Starting with the fact that managers were overbuying. “They would carry the same item for four days into the following week, and the only thing it was doing was just aging,” Wilkinson says. Miller says he’s never walked into a retail situation without opening eyes, as he did with Strack & Van Til. He believes all retail executives want to get more profit out of stores, but they don’t know where their shrink is coming from. “Is it caused by bad inventory control? Is it caused by shoplifting and theft?” he says. “They don’t know.” And all stores are not the same, so improving shrink takes a precise approach. “One store may have great back door receiving … One store may have great backroom receiving discipline at the store, but the sheer blueprint organization of its backroom is leading to an inefficient, shrink-causing, profit-reducing condition,” Miller says. “We have The Total Store Manager program helped reduce inventory by $1.8 million, produce department shrink by 27 percent and deli shrink by 18 percent. to look at every store uniquely. That’s what our audit’s about. We determine where the problems are.” The boring basics The Retail Control Group conducted a detailed audit, watching store workers and managers every day, observing behaviors and habits. They checked shoplifting, employee theft controls and door locks. “I call that the boring basics,” Miller says. “What we’re looking at is, what are all the profit-producing conditions in the store and how much money are they leaving on the table?” Once a retailer buys in, the 100 STORES / MAY 2011 WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - May 2011

STORES Magazine - May 2011
Editor’s Page
President’s Page
Retail People
Supply Chain
Getting Closer to Customers
Workforce Management
Customer Satisfaction
Customer Rewards
Human Resources
2011 Software Sourcebook Guide
Website Security
Divisional Update
NRF News
Point of View
Retail Industry Calendar
End Cap

STORES Magazine - May 2011