A successful loss prevention strategy is critical to a grocery store’s profitability. Data from 2020 shows that for grocers, retail shrink makes up 2 to 3 percent of an average grocer’s revenue, a significant share when profit margins are often very narrow.
Although margins are already slim, grocery retailers can often find sustainable, long-term profitability by improving their loss prevention efforts. In this guide to loss prevention in grocery, we will go over the unique LP landscape of a grocery store and our top strategies to reduce shrink in grocery stores.
Why Is Loss Prevention Different for Grocery Retailers?
Like any other industry, grocery retail faces some unique challenges when it comes to protecting assets and reducing loss, such as combating food waste. According to data from ReFED, retailers generate 10.5 million tons of surplus food, and nearly 35 percent of that goes in the trash. For many grocers, a significant portion of their LP strategy goes toward reducing inventory loss, caused by issues like food expiration and improper storage.
Grocery stores also need to determine exactly how to protect their merchandise, from fresh produce and meats to consumer packaged goods and cosmetics. Because their product range is so varied, go-to loss prevention methods like using anti-theft retail security tags are trickier to implement. Many retail LP systems use lightweight security tags and flat labels to protect all kinds of items, including packaged goods, produce, and even wine bottles.
Some LP systems are susceptible to environmental interference from liquids and metals, which can be found throughout a grocery store. Because interference can impact an LP system’s ability to detect nearby tags, grocers are often limited to fewer types of loss prevention technology. However, many retailers have successfully combined two or more technologies in one system, which is an ideal alternative for grocery retailers.
6 Loss Prevention Strategies for Grocery Stores
As loss prevention becomes both a higher priority and a bigger challenge in the age of digitization in retail, grocery stores should upgrade their LP strategy and proactively protect their profits. Here are our top 6 recommendations for an effective loss prevention strategy in grocery stores:
Train your employees to spot the signs of retail shrink
Well-trained employees are the most effective part of any grocer’s LP strategy. Although technology and data analytics play a huge role in loss prevention today, a grocery store can only go so far without a team that knows how to identify and prevent inventory loss and theft.
In grocery, employees should monitor stockrooms and inventory for expired goods that can’t be sold and maintain an accurate inventory to reduce internal loss, which is more in a grocer’s control than other sources of loss. Like any retail store, grocery stores also experience their share of shoplifting and more serious theft from organized retail crime.
Although profiling is strongly discouraged in loss prevention, it is still valuable to learn how to spot common shoplifting techniques. For example, shoplifters rarely work alone. They typically work together and have one or more accomplices who distract your employees while another steals your merchandise.
Other shoplifting methods include switching price tags, making fraudulent returns or removing security tags in the fitting room. Shoplifters will also often use bulky items such as strollers, umbrellas, backpacks, and large handbags to hide stolen goods.
Prioritize customer service
Paying attention to your customers not only makes them feel cared for but also deters thieves from shoplifting. Encourage your employees to keep an eye out and approach customers entering their department to ask if they need help. If they aren’t a shoplifter, this will just assure them that a store associate is available if they need anything.
However, shoplifters do not want any attention on them. Most shoplifters act out of opportunity after they realize no one is watching them so they are unlikely to get caught. Greeting them lets them know that a retailer is paying attention to what they’re doing, making them much less likely to steal something.
This technique also works on professional thieves, who often observe a retail store and its operations before stealing anything. If they notice that your store’s team is very aware of the store environment and their customers, then the thieves will move on to an “easier” target that is less likely to catch them in the act.
Identify any unique issues affecting your business
There is no one-size-fits-all solution to combat retail shrink, especially for grocery retailers that sell a broad range of products with their own asset protection needs. To develop an effective plan for loss prevention in your grocery store, you need relevant, timely, and accurate information, such as:
- Shrink rate: (Value of lost stock ÷ Total sales for the period) x 100
- Stock levels
- Expiration dates for food items and other perishable goods
- Supplier and vendor drop-off schedules
The financial department of your organization is likely to have most or all of the information you need as it is their responsibility to oversee areas like shortage and waste, workers’ compensation, general liability expenses and cash shortages. In grocery, managing your shortage and waste is extremely important as perishables may account for 60 percent of grocery store shrink.
By using accurate data to drive their decision-making, grocers can discover where and how they are losing product and come up with solutions customized to their operations.
Try benefit denial
Grocery stores often face the unique problem of products being consumed in their stores without being paid for. For example, some thieves go into a grocery store’s liquor section, open a bottle, drink straight from it and then put it back on the shelf. Not only did they not pay for the item, but that used product could pose a public health risk if it ends up being sold to a customer without anyone realizing what happened.
Some retail security solutions designed for grocery applications use benefit denial to deter and even prevent theft. For example, a tag designed to protect bottles covers the opening to prevent thieves from just opening the bottle in the store and will trigger an alarm if it’s not properly deactivated and removed.
Stay on top of system maintenance
Like most technology, a retail security system will require regular maintenance to continue providing high-performing theft detection. When shopping for an LP system, consider important variables such as warranty period, maintenance requirements, and repair costs. Many solutions providers also offer inclusive maintenance and repair services to simplify the process for retailers.