Three Ways to Reduce Inventory Shrinkage from Expired Food Products

We’ve focused our recent posts on the topic of margin management — ways to help you minimize costs and maximize profits. We’ve provided tips, tricks and technologies retail grocers can use to insulate profit margins in the age of the dollar store and protect against the damage of product recalls, and even delved into the benefits of moving into the digital future with electronic shelf labels.

Today, we’ll talk about a different margin management strategy, one that can keep you from throwing away profits.

Inventory shrinkage in retail is a massive problem, accounting for $34 billion lost annually. One of the main causes of retail shrinkage is food waste, and according to a 2016 report by the U.S. Department of Agriculture, shrinkage continues to rise despite food technology advancements.

Shrinkage putting your grocery store profit margins in the dumpster? Learn how TRUNO can optimize your strategy.

Luckily, effective loss prevention can help you reduce shrinkage, improve your margins, and protect your bottom line. Here are three of the most effective ways to put a halt to shrink.

Better gauge demand using point of sale data

The likelihood of shrinkage goes up if you’re overestimating demand for food products, especially those having shorter shelf lives. The good news is this is an easy problem to solve.

Your point of sale system is brimming with data to indicate recent customer demand for these items, segmented by day of the week, month, and year, as well as the impact local events and seasonality can have on purchases. All of this can be used to enhance your visibility into your inventory and the likelihood of sales, so that you can make informed decisions and better plan retail inventory management on a per item basis.

To reduce shrinkage, retail grocers must record and maintain data at every level so they can optimize replenishment, keeping product shelf life in mind.

Optimize your cooler to reduce shrink

Problems with inventory management and shrinkage due to expired foods are often seen in the cooler first. Here are some ways to reduce shrinkage in the refrigerated foods aisle.

  • Decrease the risks by coding your cooler to display goods on a first in/first out basis.
  • Reduce prices, if necessary, to stimulate sales before products meet their expiration.
  • Use electronic shelf label solutions (ESL) that can monitor inventory to streamline ordering and check refrigeration levels to warn you when temperatures reach threatening levels.

Educate your customers and staff

Some foods simply have short shelf lives and are thus more prone to spoilage. Such items include exotic fruits, fresh meats, and imported or artisan cheeses. Too overcome this difficulty without eliminating variety, use signage to highlight novel items while educating customers and staff.

For example, you can provide a description and explain where the food came from along with ways to use it, which can enhance appeal for first-time buyers. A good way to do this is through digital signage, which allows you to position your products dynamically and engage shoppers.

Shrink can have a massive impact on profitability and cut deep into a business, especially for retail grocers with notoriously slim margins. Reducing shrinkage from expired or spoiled merchandise will help you save money, protect your margins, and ensure the food on your shelves goes to feed shoppers who have paid for it—instead of into the dumpster.

Ready to find out how margin management solutions can help you reduce shrinkage and protect retail profit margins? Find out how TRUNO can help you get started right away.



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