Shrink reduction across the entire value chain
These are challenging times for traditional mid-tier grocers, who are fighting to maintain their margins in an ever-changing and increasingly competitive market. How can you maintain and improve EBITDA under these circumstances? The answer lies in the way you approach shrink.
It's time to reassess the way you manage your business to place greater emphasis on operating margin rather than gross merchandise margin. For traditional grocers, it's a painful transition to make and one that requires the in-house resources and capabilities to look beyond store operations at the entire value chain. To stop margin erosion, you need to quickly reduce shrink and optimize your grow-buy-move-distribute supply chain.
4 recurrent shrink themesIn our experience working with grocers, there are a number of recurrent shrink themes that need to be addressed:
1. The earlier in the value chain you fix a problem, the cheaper it becomes
2. Develop strategic procurement relationships with key suppliers
3. Constantly evaluate the best distribution option for you
4. Build consistent processes across the value chain, train effectively, measure always
For Maine Pointe's real-world insights into the EBITDA and cash benefits we have helped our clients to achieve, read our perspectives paper, From Farm to Home: Shrink reduction across the entire value chain.