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10 Ways to Prevent Inventory Shrinkage Affecting Your C Store

Is Inventory Shrinkage Affecting Your C-Store Profit? Here are 10 Ways to Prevent Inventory Shrinkage

Jul 16, 2021
Reading time: 7 minutes 30 seconds
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Is inventory shrinkage affecting your c-store business? You’re not alone. Preventing shrinkage in a convenience store is a common issue many owners face daily. 

What Impact Can Shrinkage Have on Your C-Store Business?

Shrinkage is simply the loss of physical inventory at your c-store. Many factors cause shrinkage in retail stores, including employee or customer theft, multiple inventory management systems, poor recordkeeping, invoice errors, changes in your operations, fraudulent vendors, or misplaced store items. As you know, even moderate amounts of inventory shrinkage can harm your bottom line.  

Reality: The shrinkage statistics for retail stores may not surprise you. According to the National Retail Federation, shoplifting is the most likely cause of shrinkage in the retail industry at 35.7%. And second on the list is employee theft, making up 33.2% of total shrinkage in retail. 

Effects of Retail Shrinkage

Lack of shrinkage control can be detrimental to your c-store’s profitability. Here are just a few of the effects of shrinkage in retail stores: 

  • Lost revenue — if your register is coming up short regularly, or your merchandise is damaged or stolen, you will lose money and decrease your profit. 
  • Decreased purchasing power — lower revenue may lead to your inability to pay your accounts on time. Some vendors may decrease your spending capacity, require payment in advance of delivery, or cut it off all together. If that happens, you may not be able to keep sufficient stock in your c-store or invest in new technologies to improve customer service or loss prevention. Ultimately, that will lead to lost sales and lowering your revenue.   
  • Poor customer service — people go to your c-store to get specific items they need, so if they’re not available, you’ll lose business. And, over time, you’ll lose repeat business.  
  • Lost profit — with tight profit margins experienced by c-store owners, shrinkage can literally be the difference between making a profit or operating in the “red.” And any prolonged period of being unprofitable can not only negatively impact your operation, but it may cause other issues for you and your employees. 

Most important: While shrinkage can result in a significant loss to your c-store profit, all is not lost. You can prevent shrinkage in a convenience store without spending too much money. But it requires attention to detail, consistency, and determination to succeed.  

Here are 10 Ways to Prevent Shrinkage at Your C-Store: 

  1. Train employees to identify shoplifters. Because theft accounts for the most significant amount of your loss, it’s wise to train your employees to recognize shoplifting techniques, providing examples where possible. You should also encourage them to verbally greet customers so potential shoplifters know your employees have seen them in your c-store. 
  2. Practice smart product placement on your store shelves to prevent theft or damage. Keep expensive items locked in a case or move them toward the back of your c-store. Place heavier and more oversized items on bottom shelves, so they’re easier to reach or move around when needed.
  3. Assign employees to accept, open and distribute stock items to limit access to merchandise. These employees should be experienced and understand the general “ins and outs” of your c-store. To ensure accuracy, train them to compare items received to the order sheet, not the shipper’s packing list, to ensure accuracy. These employees will be your best resource if you have questions about your inventory.   
  4. Double-check all inventory counts to help prevent errors. That means you’ll need to verify purchase orders, invoices, shipping receipts, and packing lists before you file them. Often, mistakes occur during the receiving process or when you use multiple systems to manage your inventory, so take the time to double-check your processes.  

Smart idea: Use a single automated inventory management system, such as Petrosoft’s CStoreOffice® back-office software system, to reduce errors and manage your inventory more effectively — and in real-time. 

  1. Rotate your products to prevent spoilage. A comprehensive inventory tracking system will help you keep the right products on the right shelves at the right time. You’ll know which products are “hot” and which are not. And you can even adjust your sales strategy and pricing to prevent product spoilage.

Try this: Petrosoft’s CStoreOffice® back-office software system allows you to manage your inventory in real-time, 24/7, from any mobile device. You can then minimize shrinkage and spoilage while maximizing your profits.

  1. Review daily transactions in front of your employees. That way, they’ll know you’re paying attention to the details and may not be as likely to steal from your c-store. And if you find suspicious transactions, deal with issues quickly, so employees know you’re serious about monitoring and stopping employee theft. 
  2. Give employees a password or number for the register. Doing so allows you to see which employees may be stealing from you and which ones simply need more training. For example, you can monitor refunds or voids by employee number. Then, talk to the employee about the situation to determine whether it’s a mistake or it’s theft. 
  3. Install fire detection and other prevention systems anywhere your products are stored. And check these systems regularly to ensure they’re working correctly. You may need to hire a professional to ensure all the systems are connected appropriately and work as desired. 
  4. Invest in security systems to monitor employee and customer areas. You can simply install video cameras in strategic locations throughout your store, such as over the cash register, facing the customer at the counter (or lottery counter), in the stock room, or employee break room — and monitor them carefully. But if you integrate these video cameras with your point-of-sale (POS) analytics, you’ll have real-time, factual data to help you spot theft and identify employee training needs. Plus, you can also use this information to validate all age-specific transactions, such as tobacco and alcohol.  

Strategy: Integrate Petrosoft’s Loss Prevention Analytics system with CStoreOffice® to help prevent customer and employee theft and provide verifiable proof when required by local law enforcement. Plus, you can easily monitor your c-store 24/7 using our FREE CStoreOffice® Mobile app on your mobile device.  

  1.  Issue access control cards instead of keys to your employees. You can easily track the use of access control cards — plus, they cannot be duplicated. Just be sure to deactivate any missing, lost, or stolen cards immediately. And limit the use of these cards to employees only — all contractors or cleaning services should sign out and return cards each day. And make sure only essential personnel have access to your stock room.  

The Bottom Line

Following these tips will help shrinkage control and give you the peace of mind you need to manage your store confidently. You’ll experience improved profit margins over time, allowing you to focus on the things that matter most and find unique new ways to drive profitable relationships with your customers.  

Do You Know How to Calculate Shrinkage? 

What is your shrinkage? We have discussed the effects of shrinkage and ways to prevent shrinkage in a convenience store, but how do you know if you have a problem? Follow these steps to get started: 

  1. Divide the value of your physical inventory by the value of your suggested inventory (or what you have on record). 
  1. Multiply this number by 100.  
  1. Subtract this number from 100. 
  1. That is the percentage of shrinkage your c-store is experiencing. 

The final step: Compare your shrinkage statistics over time to see how they change – positively or negatively. Once you know where you stand, you can make the necessary changes to reduce your shrinkage and improve your bottom line. 

Case Study: See how c-store owners used Petrosoft’s Loss Prevention System to stop theft, improve employee training, and limit inventory errors. Download our case study.