Strategies to Reduce Produce Shrinkage

While it’s inevitable that some fruits and vegetables in a store’s inventory will go unsold, the financial impact of excessive shrinkage can be devastating to supermarket operators. Shrinkage is a significant challenge in produce merchandising, and addressing it effectively is crucial for maintaining profitability.

According to Jonathan Raduns, CEO of Merchandise Food Retail Consulting, the most efficient retailers typically experience shrink rates between 3% and 4%. However, smaller independent retailers often face much higher shrinkage rates, sometimes exceeding 10%, especially in struggling stores. This underscores the importance of controlling shrink in order to protect the store’s bottom line.

Produce shrinkage can be caused by various factors such as product spoilage, theft, and misshapen selections. Minimizing shrinkage is challenging due to a range of operational errors that can occur within a store. These include breakdowns in quality control during inventory receipt, ordering excess stock, overhandling of items, improper storage, and inefficient culling systems. Raduns also notes that excessively large case sizes can exacerbate the problem. One potential solution is to consider split cases or share case quantities with nearby stores for slower-moving items.

Climacteric fruits such as bananas, tomatoes, avocados, apples, and melons are particularly prone to shrinkage. These items continue to ripen in storage, which can lead retailers to display produce that is past its prime. This not only reduces the shelf life of the products but also diminishes customer confidence, ultimately straining sales.

Training staff to effectively manage shrink is essential, but it can be a challenge. Raduns points out that properly training employees to conduct culling, particularly those who are new to the industry or unfamiliar with the process, is often a significant hurdle. Since the produce department carries a wide variety of items, it requires careful training on what to look for in each specific commodity.

To address produce shrinkage, retailers can use forecasting and ordering technologies to align inventory with expected demand. Establishing and adhering to strong product standards is equally important to prevent over-ordering and excessive waste. Retailers can also minimize shrink by strategically placing the most vulnerable fruits and vegetables in visible, high-traffic areas, ensuring they are sold quickly before spoilage occurs. Regular cleaning of displays and storage areas can further reduce the risk of microbial growth and contamination.

By adopting these strategies to reduce produce shrinkage, retailers can effectively manage their inventory, lower waste, and boost profitability.