Leadership

Many of my readers are in the retail business.  Retail businesses sell things, whether it’s shoes, clothes, food, gifts, etc.  The idea is to buy items at cost and sell at a mark-up thus generating a profit.

If you’re in the retail business, then without question, you know what ‘shrink‘ is.  If you don’t have shrink, then don’t waste your time reading this article.  For the rest, by all means, take time to read and digest what is said here.

A few weeks ago, I was asked to define shrink.  What is shrink?  Without hesitation, I answered:  “Shrink is missing money.  Shrink is the dollar amount of the products that you bought, haven’t sold, and don’t have in your store.”

Now there will always be a certain amount of shrink in a retail business.  Shrink is caused by, among other things:

• Breakage:  a product is broken in the store.  This could be a glass jar or gift that is dropped by a worker or customer.
• Spoilage: in the retail food business, most items have an expiration date.  If the items is not used or sold by that date, the item is tossed.
• Invoices:  products are invoiced at the wrong price and the error is not caught.
• Theft:  be it internal (employees) or external (customers).

Steps must be taken to minimize the occurrence of all these items.  However,  in my 36 years in retail, I have discovered what I believe to be an absolute.  “If you have a shrink problem, you have a morale problem.” Employee morale is the biggest contributing factor!

Shocker?  Let me explain.

Who causes shrink?  Look at the above items and answer: “Who causes shrink?”  The answer is you (the owner or business manager), employees and customers.  I certainly hope that you, the owner or manager, is not causing shrink.  You don’t break things, you order properly and rotate properly to prevent spoilage or overstock, you thoroughly check every invoice, and are not stealing.

So therefore it boils down to employees and customers.  Let me tell you, if you are treating employees right in every manner, then they are rooting for you.  You root for them and they root for you.  They want to win and want you to win!

Employees can and will prevent shrink!

• They will work carefully to prevent breakage and, if it happens, will tell you immediately.
• They will check and rotate stock to ensure there is no spoilage.
• If they are in charge of ordering product, they will order accurately or discuss the order with you.
• They will not steal, and if they see someone stealing, they’ll prevent it or inform you immediately!

Treat your employees as if they were your #1 customer and they will be your #1 leader against shrink!

If you aren’t sure how to implement this leadership technique, or if you want help with controlling shrink, write to me using the Contact Form and I will help you develop and implement a plan!