C-stores Need a Comprehensive Approach to Shrink
Traditionally speaking, when it comes to shrink, convenience stores worry mostly about retail crime, such as break-ins and criminals pocketing items or performing cash scams. For this reason, theft or damage to a physical location tend to headline their loss prevention strategies.
However, as c-stores look to improve their profit margins, many companies are expanding their view of shrink — broadening an approach to account for total retail loss. The thinking is, by shifting a company's loss prevention strategy toward a broader, holistic view of where loss is happening, retailers can close gaps due to food waste, expired products, supplier fraud and markdowns, and more.
Taking an all-encompassing approach to shrink changes how c-stores manage loss, but the effort can tighten profit margins — and technology can help to do this efficiently.
Violent Crime & Accounting for Comprehensive Coverage of Shrink
At a recent convenience industry event held in December 2024, several sessions focused on mitigating violent crime. C-stores understandably are concerned with the rising tide of organized retail crime (ORC) and attacks on stores.
In fact, the number of aggressive and violent shoplifting events has recently increased by more than a third, according to a survey of retail executives. The study went on to say that seven in 10 executives reported a rise in theft from repeat offenders, and four in 10 said they're seeing more violence in theft from juvenile offenders.
[CSN EXCLUSIVE: Tackling Retail Crime With Store Design]
No doubt, c-store retailers will continue to invest in strategies that help reduce theft. But, at the same time, retailers are broadening their approach to shrink to include more nontraditional ways of retail loss. The same industry event also addressed how c-stores are attacking total retail loss as stores explore a comprehensive approach.
Going beyond just theft and retail crime, retailers are leveraging solutions and internal strategies that analyze all areas where shrink is occurring.
Common Types of Nontraditional Retail Loss
Theft, fraudulent payments and physical damage to stores certainly trouble c-stores, but there are also a range of nontraditional ways of loss to consider. Artificial intelligence (AI) and retail analytics can help c-stores see where shrink is occurring from theft, but also other areas simultaneously.
Additional methods of loss include:
- Wasting freshly prepared food items that a store produces.
- Spoiling perishable goods like dairy and fruit from consumer packaged goods partners.
- Mismanaging fuel with pricing errors, outdated signage or operational issues.
- Forgetting to return product recalls or unsellable items from vendors to recover losses.
- Accidentally damaging products during stocking.
- Allowing consumers to abuse coupons and discounts.
- Making errors during administrative tasks.
- Operating higher cash transactions, increasing the risk of cash theft internally and externally.
- Experiencing fraud from suppliers that abuse markdowns.
When all the ways of shrink combine, c-stores can see thin profit margins quickly erode. Retail analytics, however, can merge the tactics together and drill down to identify key issues at each store location where loss is having the greatest impact.
Implementing a comprehensive solution can track how stores compare based on food waste, for example, uncovering potential supply chain issues. At the same time, retail analytics can spot if coupon abuse is happening across stores, getting out in front of an issue before it spreads too far, or link incidents of theft or crime happening across stores.
AI helps loss prevention teams analyze complex retail data to identify patterns, assist with investigations and identify areas of abuse.
Retail Loss Hits C-stores From All Sides
Retailers across categories are facing a serious shrink problem and it's hitting them in a multitude of ways. While c-stores traditionally witness incidents of theft and violent crime, other forms of fraud and abuse are impacting retail.
Digging into actual transaction data from 60 of the top 100 retailers, new research from Appriss Retail and Deloitte highlights the escalating risk of returns fraud. The report found 15.14% of all returns are fraudulent, and $103 billion was lost from fraudulent and abusive returns claims.
Of course, returns are only one way fraudsters take from retailers, and a tactic that c-stores don't deal with as much. Nonetheless, companies need to prepare for all areas of shrink.
Food waste, cash discrepancies at the register, damage to locations, gift card fraud and all the methods of loss squeeze a retailer's bottom line. Putting AI into the mix to monitor shrink from all sides can better protect retailers with speed and efficiency.
For c-stores, it's more than theft and retail crime. It's important to lean on technology to cover all the gaps.
Kathleen Garner is a strategic customer success manager at Appriss Retail. She previously spent more than 13 years in loss prevention leadership at Kmart and Sears.
Editor's note: The opinions expressed in this column are the author's and do not necessarily reflect the views of Convenience Store News.