The National Supermarket Research Group's 2003 / 2004 Shrink Survey investigates the overall level shrink and causes for retail inventory loss in grocery stores. The study reports that overall supermarket shrink remains steady at 2.32 percent of retail sales in 2002. However, the composition of retail loss in supermarkets continued to evolve, with cashier-caused shrink rising to 35 percent, but shoplifting falling to 20 percent, the lowest recorded rate.
Highlights of Major Findings
- Overall supermarket shrink was 2.32 percent of retail sales
- Per-store supermarket loss to shrink was $452,446
- Conventional supermarket shrink was 2.13 percent of sales
- Superstores reported retail shrink at 2.39 percent of sales
- Employee-caused shrink was the largest category of shrink at 57 percent
- Shoplifting was the second largest category of shrink at 20 percent
- Back door receiving errors and dishonesty caused 11 percent of shrink
- Cashier dishonesty was the largest component of employee-caused shrink at 35 percent
- Cashier-caused loss was up 26 percent
- "Best in class" results occurred in companies that combined loss prevention technology and loss prevention practices
"Shrink continues to be a major source of loss for the supermarket industry," said Larry Miller, an NSRG Director. "As grocers operate in a traditionally low margin, highly competitive environment, this makes them particularly sensitive to such operating inefficiencies. Assuming an average net profit of 1.10 percent and a shrink rate of 2.32 percent, for every $1.10 a grocer makes in net profit it has already lost $2.32 to unknown shrink. Best-in-class supermarket operators have realized that shrink recovery can be their top profit source."
Endorsed by the National Grocers Association (N.G.A.), the survey was responded to by more than 100 supermarket companies representing nearly 9,000 chain and independent stores, making it one of the largest, most comprehensive industry representative studies on retail shrink.