3 modern & practical ways to reduce shrinkage in grocery stores

Chelsea Larkin

When it comes to shrinkage, no one wins. Shrink is the difference between the inventory you have on paper and the inventory you actually sell - somewhere along the way, items disappear and the store's inventory "shrinks". This means the retailer loses out on profits, and the customer loses out on the overall value proposition. The shrink rate remains at an astonishing high of 1.62%, according to the NRF*. Some studies report that shrinkage costs 3.1% of a supermarket’s revenue**.

Retailers have been considering shrinkage solutions for decades. They've had to wait for technology to catch up to the problem – and invested heavily in less efficient solutions in the meantime.  

Tiliter provides a modern solution for grocery shrinkage with innovative computer vision. Here’s how.

1. Solve shrinkage with data analytics  

Shrinkage is defined by a simple algorithm - but solved by a complex one. Data analytics is emerging as a fundamental solution for shrinkage, able to better track inventory shrinkage and see where shrinkage is occurring. This is particularly significant when the cause of 6.8% of shrinkage is unknown and unaccounted for. Data analytics is the first step to deeper insights into this statistic.

A robust POS (point of sale) system is one of the number one recommendations for preventing shrinkage. Of the systems available, it’s best to future proof – go for an AI-powered, smart checkout system, which makes item identification much more accurate.  

2. Remove errors from both sides of the checkout

We get it – an organic potato looks a lot like a non-organic potato. However, customers who fail to differentiate between organic and non-organic items can seriously impact shrinkage and impair inventory management. Remove the chance of this error occurring by using smarter tech that doesn’t rely on shoppers scrolling through menus but can automatically identify items with AI. When it comes to removing friction and reducing errors, automation is your friend.

Errors aren’t just on the shopper side, either. Around 30.0% of shrinkage is linked to employees (error, intentional and unintentional damage or loss) and 21.3% is linked to administrative error. Both of these issues are significantly reduced by smart computer vision - for example, cashiers may struggle to remember PLU codes or enter them accurately. A modernised retail solution can remove the need to memorise PLU codes, while helping to monitor inventory more efficiently and accurately.

3. Upgrade your store associates with AI assistance

Computer vision has hidden benefits to help shrinkage. Automation lowers employee costs and free up cashier staff focus on other areas of operation, like customer assistance and customer service. This means supermarkets have more wiggle room to increase wages and training, which can significantly lessen employee theft and turnover.

Smart tech can also help store members who are tasked with monitoring multiple self-checkouts for fraud. The latest AI can be set up to send a notification to a staff member if a shopper overrides a prediction and adds the incorrect item to their shopping cart. These new POS solutions reduce the burden on staff, freeing them up to provide more targeted assistance and detection.

Future proof your business from shrinkage

With computer vision and AI assisting your checkouts, everyone wins. Retailers that invest in long-term shrinkage solutions and technology will be positioned to pro-actively fight this issue and protect their bottom line, while becoming more competitive in an increasingly complex market.

Tiliter AI Scales and AI Checkout Solutions are helping retailers fight the shrinkage problem everyday - to see how our retail tech could help you,

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Chelsea is a content writer at Tiliter who’s grown up in tech. Her specialities include UX writing, technical writing, AI conversational writing, and anything else cool that the word “writing” can go behind.

Chelsea Larkin

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