![]() The new system provides real-time inventory status when an employee scans a product, as opposed to relying on sometimes day-old item counts. "It adds another layer of possible shrink," said Jeff McGill, Midwest regional sales manager for Northern Tool. ![]() That puts extra pressure on managers to have accurate views of their store inventory. Northern Tool's online sales now generate about a third of its business. It has significantly reduced even our own errors so it can include that shrink."ĭuring the pandemic, Northern Tool - which also offers same-day delivery - added curbside pickup. "An example is, it used to take 25 keystrokes to receive a truck into the system. "Now with enhanced technology, it allows our people to take care of inventory processes in a much simpler way," Krishna said during a tour of the Burnsville store near the company's headquarters. The Burnsville company - which has more than 100,000 tools on its shelves - is in the middle of a massive update of its internal point-of-sale and inventory-management systems. CEO Suresh Krishna said the shift was primarily to improve customer service, but with an added bonus of safeguarding against shrink. Northern Tool and Equipment is one of the retailers harnessing technology to better manage inventory. Retailers could also alter the way employees work or their store designs. Technological innovation is another avenue, like installing a new inventory management system or using radio frequency identification tags. This year, Amazon raised the order minimum for free Amazon Fresh grocery delivery for Prime members. Another option is to charge customers fees to offset some costs. Walmart has started removing some self-checkout lanes in New Mexico. Retailers can address these losses in many ways, like eliminating some points of sale. "When the floor is messy or stock in the back of the stores is messy, it's much easier to just lose things," he said. Retailers are also struggling to find workers, which makes improper store management and damaged items more likely, Saunders said. "The inventory is coming back in, but where is it actually going, and how am I selling it, and is it getting back on the shelf?" Pierre said.Įvery time a customer cancels or changes an order is another opportunity for misplacing, Pierre said. Some retailers still have different store and online item codes, leading to improper cataloguing for a purchase-return involving both channels. Returns lead to more shrink as well, said Brandon Pierre, vice president for customer success at Minneapolis-based supply-chain software company SPS Commerce. "I would unequivocally say that the workload being pushed into stores over the last three or four years is definitely a driver of the increased shrink," Walton said. ![]() Many retailers like Target also use their stores as mini-distribution centers to fulfill and ship online orders. The same thing happens with third-party pickers, the Instacarts, the Shipts, the DoorDashers of the world. "The wrong inventory can go out in the wrong bags. "Inventory can get misplaced," Walton said. Order pick-up and same-day delivery also increase the potential for human error. Self-checkout can lead to more opportunities for intentional or unintentional theft. Cutting lossesĪutomated or contactless retail services installed during the pandemic were meant to make shopping safer and more convenient, but they can also make inventory more difficult to track, said former Target executive Chris Walton, co-founder of retail blog and podcast Omni Talk. "What am I more likely to say on an earnings call: Is it theft that is a problem, and it's putting pressure on our profitability, or we are really screwed up internally, and we ordered too much stuff, and we couldn't find it?" Elverston said. But many retailers don't talk publicly about what they can do to proactively and internally manage these nontheft losses.īrand Elverston, an independent retail consultant who formerly helped lead asset protection at Walmart, said while retail theft has likely become more violent, the actual loss numbers are more murky than most retailers say. Loss-prevention experts believe about 34% of shrink is from a combination of operational errors and other unknown causes, close to the same amount attributed to external theft. It comes down to internal things the retailer is doing." a lot of shrink also comes down to operational issues. "People talk about shrink and it being this problem, and it's always linked to theft," said Neil Saunders, managing director of the retail division of consulting company GlobalData.
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