Shrink Reduction and Margin Recovery against a Headwind of Rising Shrink and Markdowns

Retailers today face a macroeconomic current driving rising shrink through internal and external loss. Compounding this pressure, we find ourselves in an environment of increased markdowns and promotions…..further eroding margin.

However there are immediate opportunities for every retailer to add 100 to 300 basis points of sustainable margin and bottom line improvement on your existing sales. Retails have the opportunity to stem “leakage” of significant dollars through identification and reduction of Sales Reducing Activities (SRA).

Statistics show that, across retail, SRA decrement retailers’ sales on average by 3-4% annually. Retail SRA include 7 core base measures. These transaction sets have 3 basic sources: legitimate transaction events, process breakdown events which can erode margin and cause shrink, and fraudulent activities which erode both margin and shrink as well as impact incremental sales capture:

• Refunds
• Voids
• Transaction Cancels
• Price Modifies
• Discounts
• Coupons
• Tax Removal

This broad view of SRA enables retailers to curtail losses well beyond the traditional areas of inventory shrink. Results hit the margin and income line as soon as 12 weeks after initiation of a program…..meaning you can impact your next quarter significantly. Advanced data mining, investigative, and operational execution methodology expands the reach of traditional LP measures and POS transaction monitoring to deliver a comprehensive, proactive and powerful solution that significantly reduces the impact of all forms of SRA.

The Shrink Reduction and Margin Recovery program utilizes your existing transactional and operational data, applying experience in retail operations management and LP along with proprietary analytical processes, to identify and deliver a series of transaction event foot prints with corresponding risk values for each transaction sequence. This risk-based prioritized list of transactions serves as the basis for research and investigations. The increased precision and productivity of investigations delivers a material increase in sales, margin and income.

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