Wednesday 2 December 2015

Grazing Shrinkers and the Grape-test…

A new study reported in The Retail Bulletin has found that almost £3 billion worth of items are stolen annually through 27% of shoppers 'grazing' in supermarkets, and stealing £4 each per week.

Shoppers ‘grazing’ on grapes as they shop the store, can add up to a significant shrinkage problem for the retailer.  However, the issue can be further complicated by the fact that a shopper may not regard unauthorised snacking as thieving.

This presents an opportunity for the retailer in that as the grazing shopper makes little attempt at concealment, the ‘thief’ can be more easily apprehended.  However, when challenged, shoppers have been known to claim that they deserve a reward for buying, in that a £50 grocery purchase entitles them to a treat or discount.  Besides, active sampling at the Deli counter, specialist shops encouraging tasting, and continuous in-store recipe demonstrations can add to the ambiguity of the issue.

In-store grazing ‘condoned’ by the retailer and left unchecked, can lead to an escalation of the problem.  Regular shoppers, encouraged by fellow grazers and a seemingly tolerant environment, can then graduate from loose grapes to individually wrapped sweets and confectionery, and then move on to bars or countlines.  From these humble beginnings, razor blades and batteries may not seem like a big step.  There are obviously problems with apprehending a grazer in the store, in that in the first place the retailer is accusing an ‘innocent’ thief, who happens to be a regular customer.  Moreover the grazer may be a customer’s child, and young children, especially female, pose problems for male security guards, inside or outside the store.

An added complication is that, in law, a suspected shop-lifter cannot be accused until they have left the store, and then two witnesses are required in order to successfully press charges.  Apart from the fact that much of the evidence is edible, coupled with the inconvenience and potential waste of staff time, the retailer can be reluctant to take the matter as far as the courts.  However, it is essential that the retailer be seen to press charges and prosecute shoplifters.  For instance, a retailer making 2% net profit has to make incremental sales of £250 in order to recover £5 stolen in-store.

In reality, most shoppers probably stop at the grapes stage…but those that graduate to confectionery can pose a problem.  First there is the issue of ownership of the problem in that a grazer moving from grapes to confectionery may cause the retailer to attempt to shift some of the ‘blame’ for this aspect of shrinkage to the supply chain, in effect penalising the supplier for producing a product that is susceptible to above-average shrinkage.

Whilst grape shrinkage will always be regarded as wastage, escalating shrinkage can seriously damage sales of impulse confectionery.  For the consumer, this can mean reduced opportunities to buy resulting from restricted access to the product at point of purchase.  Inaccurate stock-counts can cause reduced availability and challenges to data credibility and insight, which in turn may sour supplier-retailer relationships.  Incidentally, a quick fix via selling on consignment merely shifts the cost i.e. the supplier delivers £100 and invoices £98, reflecting 2% shrinkage as the product passes through the checkout.

Attempting to measure the scale of the problem has to be a first step in order to justify the work involved in overcoming the political barriers that have prevented action in the past.  This means re-examining goods in/out relationships for sensitive categories and attempting to distinguish ‘genuine’ wastage from shrinkage arising from grazing.  Here suppliers and retailers have a vested interest in sharing the measurement burden, in order to ensure that the problem and associated costs remain in the appropriate part of the supply chain.  This objective exposure of the extent of the problem will help to legitimise the steps necessary for its reduction.

In order to begin to deal with grazing-shrinkage, it is important that retailers clarify to staff and shoppers, the distinction between legitimate sampling in-store, and unauthorised piecemeal snacking on the way to the checkout.  Then begins the slow process of re-educating shoppers (and their offspring) to the realisation that taking products without paying is wrong and carries a penalty…

Alternatively, why not encourage them to become shareholders, hoping that they will then see shrinkage of any kind as a reduction in their own profits, and not another form of dividend…

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