Page 205 - DMGT553_RETAIL_STORE_MANAGEMENT

Retail Store Management

Notes
The Retail Control Group approach to Profitable Selling and Store Shrink Reduction has
focused us on selling with optimal shrink control. It’s an excellent mindset. Our store
standards have definitely improved, formal shrink controls are firmly in place and moral
is at an all time high throughout the stores thanks to the Total Store Manager approach.
I definitely recommend the Retail Control Group and the Total Store Manager program
for reducing Store Shrink.
Source: http://www.retailcontrol.com/press-room/strack-and-van-til-reduces-store-shrink-and-
improves-profit-with-aggressive-store-operations-control-program/
11.2 Shrinkage

The difference between the perpetual book inventory and the physical inventory count is called
shrinkage. The book inventory is a record of what ought to be on hand in view of what has been
received, what has been sold and price changes. Physical inventory count is the volume and
value of all the goods actually on hand.

Did u know? Shortages can and will occur at every point where merchandise changes
hands or paperwork is created or processed.
Proper systems with built-in controls must be put in place to eliminate or reduce these shortages.
While there is not enough room to list all the specific causes of shrinkage, we will give several
examples of each of the three general causes: paperwork errors, internal theft and shoplifting.

11.2.1 Forms of Shrinkage

Shrink is a part of the business no one likes to talk about. However, shrink plays a huge part in
every retailer’s business. Shrink can take many forms, but here are the four most common. They
are employee theft, shoplifting, vendor theft and paperwork errors.
What has been your store’s shrinkage experience for the last two years? What will it be this year?
If it has not been as good as it should have been, now is the time to analyze the possible causes
and take steps to keep shrinkage in line this year.

Paperwork Errors

Paperwork errors can happen almost anywhere in the merchandising cycle. For example:

Marking goods at a price lower than the retail price recorded on the receiving record.
Failure to record all markdowns.

Miscounting physical inventory.
Clerical errors causing the book inventory to be higher than it should be.
Timing is of particular importance: When comparing the actual physical inventory count
to the perpetual book inventory, care must be taken to ensure that every invoice
representing goods that have been received before the physical inventory count is included
in the calculation of book inventory.

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