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³Shrinkage´ can be defined as the loss that can be calculated between the total
³value´ of goods that you need to pay for to your supplier (less) the total ³value´
that can be received from the customers (minus your profit)

At over 95% of the times, the real reason for shrinkage is intentional, with its
origins at the ³Intent of the human mind´ of both the supplier and receiver at a
personal profit to both. These can be explained as follows:

    

In this case, the invoice is raised for 100 pcs of an item (say lotion bottles) and the
actual quantity delivered is 92 pcs (This is human intentional)

     
 
 
   

This is a µnon-intentional´ case where say, tins of tomato paste fall on the ground
and the store has to sell that to a known customer at a discount. However the
company loses profit in the same.

It should be taken care that the company should not pass on such damaged tins to
its own staff, since at a future date; such damages would become intentional by the
staff as they have the benefit of receiving (good) products for their home at a
discount.

     
 
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Speaking of point (2) above and extending it to glass bottles, where the damage is
non-reversible / permanent. Care should be further taken in supermarkets, where
these should not hurt children / customers. In some countries like Kenya, the
customer can go to the extent of suing the supermarket, which results in further
penalties / judiciary expenses.

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The above is self explanatory. As such, haberdashery, perfumes, cosmetics, razor

blades and even products which are small in size are easily stolen are always sold
from a counter, where you pay as you buy and the products are sealed in a bag to
be shown at the security.
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This is a case where your cashiers¶ friend often visits the store and goes to the same
cashier, without the knowledge of the manager. The cashier will quietly miss out on
2 / 3 (expensive) products and till the rest. Alternately you have a situation where
the customer goes through the big range of (say) carpets of 6¶ x 8¶ of Egyptian /
Iranian / Belgian origin. Since the price differential is large is each of these and the
sizes are the same, the sales person packs the Belgian / Iranian (most expensive)
variant and sticks the bill on these carpets of the Egyptian variant. Since the size of
each of them is the same, it normally goes un-noticed. Again for example you may
weight 262 gms of cheese for a customer buying 250 gms of the same.

It should be known that most shrinkage / stealing in a supermarket are done by the
staff themselves. Customers are known to steal about 20%, whereas your staff will
help up to 80%.

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Products like cheese lose weight due to moisture. Therefore you may buy say 10.0
K.g, but are able to sell only 9.75 k.g.

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There is a saying in Africa, which goes ³Whereas even animals share, humans steal.´
Even as animals share the steal, humans steal someone else¶s share.

It is also to be understood that shrinkage has its roots in the human mind. As such,
even in countries like Saudi Arabia, which has the severest of punishments on
stealing, there is shrinkage in supermarkets. As such, the remedies of shrinkage are
all related to closing in on the human aspect. To further elaborate on each of the
above.

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It always pays to employ an extra staff at the point of receiving. Take for example,
receiving milk pouches / packs. You need to check each and every tray / crate and
actually punch every piece to see if you are being delivered a punctured piece,
which may have already been consumed and kept there merely with air blown in. It
happens!! As such, spend time and more time; count each and every piece (UNDER
A CAMERA) to ensure. A second example could be companies in garments, to open
each and every roll of cloth and measure by the metre that is being consumed. Trust
me; this is the most important aspect.

Secondly, in companies with multi branches within a town, inter branch transfers
could be reduced to zero. This is the most dangerous, as you tend to trust your own
branches/ staff, the most of non-sense happens here. The companies bleed!!

In case you may find the above trivial, understand this. In a classic case of Gillette
blades, the company orders (say) 4 outers of 10 packs each. Whereas the company
may receive only one outer, the balance 3 outers are delivered on your behalf to the
receiving supervisors¶ private supermarket, just outside the town. It is known that
most receiving supervisors have their own small supermarkets, where most of the
goods are received free from these un-scrupulous buyers.

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As for matters of control, we can combine these two points. Depending on the
buying / consumer habits / trends, in order to reduce damage, you can.

a. Move products only in the original packing / cartons. Any lose pieces (say glass /
tinned jams, etc) can be stacked as a full carton on the shelf. In case there is not
enough space on the shelf for an entire carton, do not open the next carton. Do it
later, when the stocks have been sold out. Additionally, the top shelf in a
supermarket (over 6.5 feet) is always a storage area, where these cartons can be
stored for ease of stocking / stacking.

b. Secondly as for glass bottles, there are specialised shelves, which come with a
grill in the front for protection. In this, whereas the complete details of the product,
in terms of visibility and labelling are visible, the bottle cannot drop down, even in
case of a un-intentional push by a customer / during cleaning of shelves. This also
avoids any further legal issues that a company faces.

c. It is very important that such products with minor damages on them are not sold
to the staff. You rather donate them, since the staff ends up damaging more and
buying more and more at reduced prices. Alternatively you may have an
understanding with the supplier for accepting returns of such products.

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For customers¶ entertainment, we have L.C.D. screens all over our branches,
showing clippings of products, promotions. Intermittently it also connects to the
CCTV of our branch where customers shopping are shown. It is best to have
messages like ³SMILE ± YOU ARE ON CAMERA´ in a very decent message to tell the
customers that you are being watched.

As for all small, expensive products, which can easily be pocketed, right from screws
to nail polishes to razor blades etc, these products go on a serviced counter, where
you are supposed to choose and pay at the cashier counter alongside. The bags of
these products once paid for are sealed so that they cannot be tampered with or
other products cannot be stored inside these bags.

For expensive products on the shelf, it is advisable to use scan stickers. These are
stickers which are used on products (often stolen) like Baby food, Nescafe, Kiwi shoe
polish, Nivea Lotions. On payment at the counters, the stickers on these products
are de-activated by the cashier. In case the customer has not paid for these, the
alarm sounds at the point of exit, no matter where you may hide the product. Once
the customer is caught, you can take him to the supervisors room and have him pay
10 (ten) times the cost of the product or else alert the police for further
investigation. You may also take photographs and pin them on the board (within the
room). This certainly is a put ± off for the customer. In products like garments,
where it is possible that the customer just wears the product and tries to go out,
once again the alarm sounds. These are big / huge tags, with pins on the other side,
which are removed only with specialised machines at the payment counter.

The supermarket may also consider installing ³dummy´ podiums at the entrance
(the one¶s which ring off the alarm). These the professional thieves know are a
warning signal. In most supermarkets in Nairobi, these are covered with an
advertisement and a normal customer / thief does not know the real difference.
Further the retailer may hire plain clothed security personnel who essentially know
as to how people with an intention to steal are moving around in the supermarket.
They are usually well rewarded, just to remain motivated at all times, for any such
person who they are able to successfully catch hold of.

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In countries like South Africa, where the supermarket areas are large, all the
customers queue and just as you near the tills, the one that is now available will call
upon you. As such, you cannot chose the till you want to, even if you have a friend
there. This is indeed the best way. However, cameras are the best way to work
here. Secondly in countries where labour is cheap and you have packers who pack
the products once tilled by the cashier, is also made equally responsible.

Further we normally maintain a register of all expensive products like DVD¶s /

Televisions and have their serial numbers noted. In this case, the sales person
preparing the invoice (since these products are not bar-coded at the factory level)
and each of them is ticked by the manager as product sold with reference of the
final receipt number (tilled with the cashier) / sales persons name and signature for
all future reference. A similar procedure can be followed for carpets where the best
way is to check the back of the carpet where the origin / size and other details are
mentioned.

It is known today, that India leads the world in shrinkage at over 3.5 ± 4.0 percent.
I am very sure; no retailer does an actual physical stock take in India. They will be
in for a rude shock. While Retailers may be smart, thieves are smarter. It is wise to
account for upto 1% of your expenses towards shrinkage.