A store manager once called me in a panic. “Please get out here as soon as you can,” he said. “My produce department came in four points below average, and his shrink is too high. I think it’s due to not marking down enough distressed product.”
I wasn’t surprised, I thought as I made my way to meet with him and his produce manager. The store showed a history of increasing shrink since the new produce manager began just a few months prior.
It was the manager’s first store. His crew was not well seasoned, and the month prior was August — historically the highest-shrink month in the produce aisle.
Also, as good as store managers are, and this was a good one, they often don’t have any produce experience. Hence the call.
I told him, “Focusing on a produce manager marking down enough produce to fix shrink is like suggesting to an auto mechanic that, because a car is backfiring and belching smoke, there must be something wrong with the tailpipe.
The problem is in the engine, not in the tailpipe.
It’s the same thing with the sputtering produce department. The problem is in the engine of the department — within the critical control points, which determines the successful outcome of sales, gross profit margin, stock levels, and of course, keeping shrink in check.
Among these points are:
- Ordering — This is the single-biggest control point to focus on to minimize shrink. Order only what you need until you receive your next delivery. Sales are important, but take caution to have only minimal safety stock on hand above your usual sales projections. It’s easy to overorder, which creates shrink. So, don’t. Keep the inventory tight!
- Maintaining the cold chain — Never allow a new load to sit idle on a warm dock. Break down the load upon arrival. Keep the cold items cold and the ambient-temperature items separate. If items need refrigeration, do everything you can to store and merchandise to protect your investment. Keep the wet rack misters adjusted properly.
- Rotation — Follow the FIFO (first in, first out) philosophy. Rotate produce in the cooler and backroom daily and ensure that, as much as possible, every stocking includes a plan to rotate and cull carefully.
- Training — Consider training as a constant endeavor. Teach your charges to process and stock produce correctly to minimize damage, prevent overtrimming and stress careful product handling. Check off your receiving invoices and report any discrepancies. Divert distressed produce to your salad bar or to outlying departments while still usable. The object is to ensure that produce leaves the store intact in a shopper’s cart.
- Merchandising and space allocation — Spreading out is always better than stacking high, which can create shrink. Allocate according to selling power and seasonality so that each display can turn, or completely sell through, at least once daily.
Follow these steps, and you’ll have more produce sold at regular price with a minimum to rework or sell at a reduced rate.
August is the highest-shrink month for produce, due to many factors: excessive heat, mature fruit, overordering, overstocking. As one director once said, “It’s the busiest time of the year, and with vacations to cover, it’s often staffed by the least-experienced clerks.”
You can’t eliminate all shrink, but by keeping an eye on the critical control points, you can at least minimize the impact.
Armand Lobato works for the Idaho Potato Commission. His 40 years of experience in the produce business span a range of foodservice and retail positions.
Related: More insight from The Produce Aisle