Supermarkets play a crucial role in feeding their surrounding communities, providing a vast range of products that consumers rely on for their daily needs. However, in the complex world of supermarket operations, two terms often arise: “shrink” and “food waste.” While they might sound similar, these terms refer to different issues within the retail environment, both of which have a significant impact on a supermarket’s profitability, sustainability efforts and overall efficiency. Understanding the distinction between shrink and food waste, as well as how these issues are managed in supermarkets, is vital for improving operations and reducing inefficiencies. While shrink often calls for better controls and accountability, food waste demands better forecasting, production planning and inventory management.

Understanding Shrink: Causes, Impact and Prevention

In retail, “shrink” is a term used to describe the loss of inventory between the point of order and the point of sale. Shrink typically refers to any decrease in the value of goods due to theft, damage or administrative errors, rather than legitimate sales. In supermarkets, shrink is a major concern, as it directly impacts the bottom line and increases the cost of doing business.

Shrink can be caused by several factors:

  1. Shoplifting

One of the most common sources of shrink is theft, both by customers and employees. Shoplifting can occur in any form, from small-scale pilfering to more organized theft. Supermarkets often have security measures such as surveillance cameras, alarm tags on items, and security personnel to minimize this type of shrink.

  1. Employee Theft

Internal theft, or employee shrink, is another significant problem in supermarkets. Employees who steal products or cash can contribute to substantial losses. Retailers have implemented measures such as background checks, surveillance and inventory checks to curb this issue.

  1. Administrative Errors

Shrink can also occur due to mistakes in inventory management, such as incorrect stock counts, pricing errors and data entry mistakes. These errors may lead to products being unaccounted for or misplaced, contributing to shrink.

  1. Supplier Errors

Sometimes, products may arrive damaged or incorrect due to mistakes by suppliers, leading to shrink. These discrepancies can often go unnoticed until inventory audits are conducted.

  1. Damage or Spoilage

Products, especially perishable goods, can become damaged in storage or transportation. In supermarkets, items such as canned goods can become dented, and produce or dairy items may spoil before they can be sold. This can contribute to shrink if the damage or spoilage is not detected early.

The High Price of Loss: Shrink’s True Impact

Shrink not only leads to lost sales but also increases operational costs. Supermarkets must deal with the financial impact of lost inventory, increased security measures, and the labor required to track and resolve shrinkage. This loss of revenue can be passed on to customers in the form of higher prices.

From Lost to Controlled: Effective Shrink Reduction Strategies

While shrink is a persistent challenge in supermarket operations, retailers do have several effective ways to reduce it. Key strategies include:

  • Improving inventory accuracy through more frequent cycle counts
  • Using advanced loss prevention technology (e.g., surveillance systems) and analytics
  • Strengthening frontline accountability and training
  • Enhancing receiving and stockroom controls
  • Fostering a culture of ownership

Another critical piece is aligning labor planning with shrink-reduction goals. Understaffed departments are more prone to loss – whether from operational errors or lack of oversight. Labor planning tools that schedule coverage by task (such as receiving, stocking, prepping or markdowns) ensure key control points are staffed appropriately.

To reinforce accountability, stores should integrate shrink-related metrics into performance evaluations for both hourly associates and managers, making shrink prevention a shared, measurable responsibility across the team.

Understanding Food Waste: Causes, Impact and Prevention

Food waste in supermarkets is a specific type of waste that refers to edible food that is discarded rather than sold to consumers. Unlike shrink, which involves a loss in inventory value due to theft, damage or administrative errors, food waste is often the result of overstocking, spoilage and products that have passed their expiration date but may still be safe to consume.

Food waste in supermarkets can be broken down into several categories:

  1. Overstocking

Supermarkets must balance supply with consumer demand. Overstocking occurs when too much inventory is ordered, often due to inaccurate demand forecasting. When the extra products cannot be sold before their expiration date, they must be discarded as waste. This is particularly common with perishable items like fresh produce, meat, dairy and bakery goods.

  1. Expired Products

One of the primary causes of food waste in supermarkets is products reaching their expiration dates or “sell by” dates. While many of these items are still safe to eat, they are often discarded because they no longer meet the store’s standards or are unlikely to sell. This is especially problematic for supermarkets, as they are legally required to remove expired products from shelves.

  1. Spoiled Produce

Fresh produce – such as fruits and vegetables – has a short shelf life, and any product that is not sold within a few days may begin to spoil. Supermarkets face the challenge of maintaining stock levels that meet customer demand without allowing too much produce to spoil.

  1. Unsellable Packaging Damage

Sometimes, food products that are still safe to eat become unsellable because of damaged packaging. For instance, a can of beans may have a dent, or a carton of milk may have a cracked seal, making it impossible to sell legally. These items are then discarded, even though the contents are still edible.

  1. Customer Returns

Food waste can also result from returns made by customers, particularly in cases where perishable items are purchased in excess or opened and partially used. Though returns are not as significant a cause as other factors, they can contribute to waste.

Beyond the Trash Bin: The True Impact of Waste

Food waste is a significant concern in supermarkets, both from an ethical and financial standpoint. The environmental impact of discarding large amounts of food is immense, as it contributes to landfills and methane emissions. From a business perspective, food waste leads to a direct financial loss, as products are thrown away instead of sold to consumers. The supermarket must also deal with the costs associated with disposal and potential liability if expired products are sold mistakenly.

From Excess to Efficiency: Effective Food Waste Reduction Strategies

There are several strategies and technology solutions that significantly help retailers address and minimize food waste, including:

  • Accurate demand forecasting
  • Smarter production planning with task-level labor and demand integration to avoid overproduction and reduce unsellable surplus
  • Integrated fresh item management and inventory visibility
  • Improved inventory rotation and management
  • Partnering with food banks and charity programs to accept surplus product
  • Data-driven insights for continuous improvement

Waste isn’t a one-time problem – it’s a continuous improvement opportunity.

Lost vs. Wasted: A Snapshot Comparison

While shrink and food waste both involve losses in supermarket inventory, they differ in terms of their causes, impacts and management strategies.

  1. Cause
  • Shrink typically results from theft, employee error or damage, and often involves products that are lost before they ever reach the customer.
  • Food waste primarily arises from overstocking, spoilage, expiration or unsellable items, all of which involve products that were intended to be sold to customers but were discarded instead.
  1. Impact on Business
  • Shrink reduces the total number of products available for sale, directly affecting sales revenue. It is often viewed as a preventable loss through security measures and inventory management.
  • Food waste involves products that have already been stocked on shelves and have not been sold due to various factors. It represents lost revenue but is also a major issue from a sustainability perspective.
  1. Management Strategies
  • Shrink can be managed through improving security and surveillance, employee training, better inventory control and audits.
  • Food waste is typically managed through strategies including accurate demand forecasting, production planning and inventory management technology, improved stock rotation, partnerships with food banks or charities, and adjustments to shelf-life management.
  1. Legal and Ethical Considerations
  • Shrink involves financial losses due to theft or negligence but does not typically involve ethical concerns unless it is linked to internal theft or fraud.
  • Food waste, on the other hand, raises both ethical and environmental concerns. In response, some supermarkets have developed policies to donate unsold, edible food to charity or implement composting programs to reduce environmental impact.

Final Thoughts: Reducing Loss and Boosting Impact

Both shrink and food waste represent significant challenges for supermarkets, affecting their profitability, sustainability efforts and overall efficiency. While shrink is largely tied to theft and errors within the store, food waste is driven by the challenges of managing perishable inventory and the risks of overstocking. Addressing both issues requires an integrated approach, focusing on improving inventory management, reducing spoilage, preventing theft, and finding ways to donate or repurpose unsold goods.

As consumers become more conscious of sustainability, supermarkets are under increasing pressure to reduce food waste and ensure that the food they sell is used to its fullest potential. By leveraging technology, improving employee training and embracing sustainability initiatives, supermarkets can mitigate both shrink and food waste, benefiting their bottom line while contributing to a more sustainable food system.

In the fast-paced world of grocery retail, fresh departments play a pivotal role in attracting and retaining customers. These departments, which typically include produce, bakery, deli and prepared foods, offer an array of perishable products that require careful management to ensure quality, minimize waste and maximize profitability. A recipe management system (RMS) is one of the most impactful tools fresh departments can use today to boost operational efficiency and elevate customer satisfaction.

What Is a Recipe Management System?

A recipe management system is a single software solution used for recipe creation, management and execution within your retail store. It provides a centralized platform where retailers can store, organize and update recipes, along with associated ingredients, preparation methods, nutritional information and pricing details. This system is particularly advantageous for fresh departments, where product quality, consistency and nutritional transparency are paramount for brand delivery and customer expectations.

Help Your Fresh Departments Thrive with Key Benefits

1. Improve Product Consistency and Quality

Consistency is key in fresh departments, where customers expect the same high-quality experience with each visit. An RMS enables retailers to standardize recipes across multiple locations, ensuring that each item is prepared consistently according to predetermined specifications. This consistency not only enhances customer satisfaction but also builds trust in the freshness and reliability of the products offered.

2. Minimize Waste and Optimize Inventory

Inventory management is critical in fresh departments to minimize product waste and control costs. An RMS provides real-time visibility into ingredient usage through recipe formulation. By accurately tracking inventory levels and consumption patterns, retailers can optimize purchasing decisions, reduce overstocking or understocking issues, and minimize the risk of perishable items going to waste.

3. Balance Costs and Quality

Controlling costs while maintaining quality is a perpetual challenge in grocery retail. An RMS helps fresh departments analyze the cost of each recipe by calculating ingredient costs, labor expenses and overheads. Armed with this data, retailers can adjust pricing strategies to maintain competitive margins while meeting profitability targets. Moreover, identifying high-cost ingredients or inefficient processes allows for informed decisions to optimize recipes without compromising quality.

4. Streamline Operations and Realize New Efficiencies

Manual recipe management processes are labor-intensive and prone to errors. An RMS automates many aspects of recipe creation, modification and production scheduling. It simplifies tasks such as ingredient scaling, batch production and kitchen workflows, freeing up staff to focus on customer service and product innovation. By streamlining operations, retailers can improve efficiency, reduce operational costs and enhance overall productivity in fresh departments.

5. Stay Compliant with Health and Safety Regulations

Fresh departments must adhere to stringent health and safety regulations governing food preparation and handling. An RMS includes features for nutritional analysis and allergen management, ensuring compliance with labeling requirements and customer safety. By maintaining accurate records of ingredients and their sources, retailers can quickly respond to inquiries and audits, demonstrating their commitment to food safety and regulatory compliance while building credibility with consumers.

6. Fuel Innovation with Creative New Recipes

In today’s competitive retail landscape, innovation is key to attracting and retaining customers. An RMS facilitates menu development and product innovation by providing insights into customer preferences and sales trends. Retailers can experiment with new recipes, seasonal offerings, and promotional items based on data-driven insights. This agility not only keeps the fresh departments relevant but also fosters a culture of culinary creativity and customer engagement.

7. Boost Customer Loyalty and Engagement

A well-executed fresh department can differentiate a grocery store from its competitors and drive customer loyalty. An RMS supports customer engagement initiatives by enabling personalized marketing based on purchase history and preferences. Retailers can highlight featured recipes, nutritional benefits and cooking tips through digital platforms or in-store promotions, enhancing the overall shopping experience and encouraging repeat visits.

8. Support Sustainability Goals

Reducing food waste and adopting sustainable practices are increasingly important for consumers and retailers alike. An RMS facilitates inventory management by optimizing ingredient usage and minimizing surplus inventory. By tracking waste metrics and implementing portion control measures, retailers can make informed decisions to reduce food waste, support sustainability goals, and contribute to a healthier environment.

Tips for Implementing a Recipe Management System

While the benefits of an RMS for fresh departments are clear, successful implementation requires careful planning and consideration of several factors:

  • Integration: Ensure compatibility with existing systems such as POS, inventory management and ERP systems.
  • Training: Provide comprehensive staff training on system usage and best practices for recipe management.
  • Scalability: Choose a system that can scale with business growth and accommodate future needs.
  • Security: Implement robust data security measures to protect sensitive information and comply with privacy regulations.

Are You Ready to Transform Your Recipe Management?

A recipe management system represents a transformative technology solution for fresh departments in grocery retail. By improving product consistency, enhancing inventory management, controlling costs and fostering innovation, an RMS not only streamlines operations but also enhances customer satisfaction and loyalty. As grocery retailers continue to adapt to changing consumer preferences and competitive pressures, investing in an RMS can provide a significant competitive advantage while supporting sustainability goals and regulatory compliance. Embracing technology-driven solutions like an RMS underscores a commitment to quality, efficiency and excellence in the dynamic world of fresh department management.

Discover Fresh Item Innovation

To find out more about the options available in this space, learn how Logile’s cutting-edge integrated Fresh Inventory Management suite – including recipe management – can deliver operational efficiency. This holistic system connects production planning, recipe and nutrition tools, enabling store teams to effortlessly access up-to-date information. Intuitive features, such as cookbook tools and guided instructions, ensure smooth execution and consistency across stores. Our new Scale Management Solution represents the latest innovation in this comprehensive portfolio.

The original convenience store (c-store) concept was a gas station add-on enabling consumers to grab a soda and pre-packaged snack while pumping fuel. Over the decades, it has grown into a complex retail environment serving multiple consumer needs. Modern convenience stores offer a range of products beyond fuel and snacks (see Part 2), including groceries, fresh cooked food, customizable sodas and coffees, alcohol, health and beauty products, and more.

To accommodate new offerings, c-stores have grown their real estate footprint and the size of their workforce. Effectively managing a larger employee pool, in addition to navigating retail challenges including labor shortage, changing customer expectations and regulatory mandates like predictive scheduling, requires a sophisticated, data-driven approach to demand forecasting that supports accurate and effective labor planning, scheduling and execution.

Evolution of convenience retailing

Over the past three decades, consumer demand for convenience store shopping has exploded. The industry has grown to more than 152,000 stores in 2023, according to NACS. Where before most c-stores were single-store businesses, two decades of industry consolidation have resulted in many chains with dozens of stores and some that operate hundreds and even thousands of stores. In both the U.S. and the U.K., the larger chains have become increasingly dominant, setting the industry trends and shaping and adapting to consumer shopping preferences.

U.S. c-stores are becoming all-in-one shopping destinations where customers can pick up essential frozen, fresh and pantry groceries, fill up the tank, and grab takeout breakfast, lunch or dinner. Some c-stores prepare their own fresh food, others have incorporated fast-food franchises within the four walls of the store. Increasingly, convenience stores are popping up within interstate rest areas and mass transit stations.

The unique role of convenience stores opens new opportunities to meet consumer needs

Convenience stores offer consumers a unique value proposition. In terms of speed and ease of shopping, there’s no comparison between c-stores and traditional grocers or quick-service restaurants. NACS Speed Metrics Research revealed that customers come inside, choose items, pay for them and depart a convenience store in just three to four minutes. This short duration between entering the store and completing checkout means stores must be optimally staffed and prepared to deliver efficient customer service across a variety of areas.

Customers count on convenience stores for:

  • The first cup of coffee that carries them through their commute to work
  • A quick stop for fuel and a consistent food experience when they are traveling
  • A convenient place to pick up takeout dinner on a hectic day
  • The closest source of essential groceries in many rural towns and urban food deserts

As stores continue to level-up based on consumer demand for healthier fresh foods, a wider selection of mini-grocery offerings, barista-level coffee, and more, their operational complexities expand in parallel. These innovations provide important opportunities to grow the business and open new revenue streams, and c-stores are now competing directly against traditional grocers and quick-serve restaurants for a greater share of consumer spending. However, success with these expanded offerings requires that c-stores equip themselves with the ability to manage and schedule the additional people and activities needed to support them.

Leveling-up requires a new labor model

Offering new products and services means convenience stores must expand labor budgets and hire and train more employees. Beyond the traditional three employee tasks of stocking, cashiering and cleaning, the new model of expanded operations depends on an expanded staff trained in how to bake donuts, make pizzas and chicken tenders, tend to a coffee bar, and maintain food safety.

Traditionally, a small c-store might only need one or two employees per shift. Today’s operations might require several people during busy times, and managers need to match employees with the right skills to the tasks at hand. For example, you might only need cashiering and stocking at midnight on a Tuesday. Fast forward to 12 am Saturday in a college town with a home football game, and you may need a whole team of pizza and snack cooks to keep up with demand for late-night treats.

Accurate demand forecasting provides the foundation to effectively plan, schedule and execute store operations

C-stores must be able to forecast customer traffic as well as peak demand for fresh-cooked items with great precision. Better forecasting will ensure stores schedule the right team members at the right times to satisfy customer demand. It also helps avoid food waste by ensuring employees cook the right amount of food to fill customer demand quickly while avoiding spoilage.

Before creating a schedule, store managers need to forecast what will happen in the coming weeks. This includes predicting sales volumes at the item level and preparing for the associated workload at the task level. The accuracy of these forecasts will drive both inventory management and labor management for the store.

Advanced AI forecasting technology helps c-store operators optimize scheduling and contain labor costs while ensuring an excellent customer experience. The best solutions produce multi-dimensional, multi-layered forecasts that project demand based on historical sales and additional aspects like weather, holidays and seasonality that all impact foot traffic. With an understanding of demand and precisely what work needs to be done, a good forecasting solution works with labor modeling and labor standards inputs to understand how much time it takes to perform specific tasks, like stocking a shelf, preparing a pizza, refilling the soda machine, and baking the donuts, and how many people are required at what times for adequate coverage. The resulting forecast predicts the times of day and number of repetitions these tasks will take place.

Integrated with state-of-the-art scheduling capabilities containing advanced AI logic driving compliance with rules, availability, priorities and more culminates in a schedule with the right amount of task coverage by people with the documented skills to perform those tasks. And to meet the expectations of today’s connected workforce, communicating both schedules and tasks to staff through a mobile interactive employee portal that provides work assignments, task guidance and enables self-service activities like changing availability, bidding on or swapping shifts further facilitates both operational effectiveness and employee satisfaction.

A demand forecasting solution that produces a reliably accurate baseline forecast weeks in advance and subsequently refines that forecast via continuous reforecasting over time based on real-time information not only improves operational results, but can also ultimately translate into better recruiting and retention results by helping c-stores offer more flexible and predictable schedules. Pinpointing the number of people and skills needed for any shift well in advance facilitates schedule building and advance communication of employee schedules to help comply with Fair Work regulations and predictive scheduling rules. Automated scheduling and self-service further enable stores’ ability to generate highly accurate task-level schedules while streamlining and honoring employee preferences, communication with managers and peers, shift changes, job resources and more.

In closing

Convenience stores have come a long way since their pared-down origins, and their expanded breadth of offerings has translated into more complicated staffing and operational needs. An expanded labor model and sophisticated AI demand forecasting integrated with powerful AI scheduling logic and task management capabilities set the foundation to optimize operations and create positive employee and customer experiences. As convenience stores continue to evolve, successful operators will leverage these advanced technologies to streamline labor planning, scheduling, tasks and store execution while enhancing profitability and competitive edge.

In your local food store, departments like bakery, deli and meat prepare, process, package and serve the store’s fresh signature foods. In these operations the scale management system, the scales, and the labeling equipment are important tools that store associates have to rely on.

In my 30+ years in the grocery business dealing with scales, I have witnessed a lot of interesting practices – both good and bad. One memorable example of a less-than-ideal technique includes attempts to calibrate a scale with a gallon of water. As mundane as the scale might seem, it is essential in enabling accurate pricing and labeling of in-store packaged and prepared products. In the spirit of improved scale management practices to keep this important asset properly performing…

Consider the following do’s and don’ts:

  • Don’t spray down the scale with a hose. They are sealed but not watertight.
  • Do clean the scale daily by wiping it down with a mild cleaner. Clean out the label area as well.
  • Don’t use a sharp object like a knife to remove a gummy label wrapped around the rubber roller and stuck to the print head.
  • Do open the print head latch and use a dull object wrapped with a towel soaked in a cleaning solution like rubbing alcohol. It is always best to follow the manufacturer’s instructions.
  • Don’t use scales as a place to stack product when the scale is not in use. Most grocery scales have a weight limit of 30 pounds and are not intended for use as a storage surface.
  • Do keep your scales clean, always powered on, and out of dirty areas like the back-door rollup. Keeping the scales plugged in and turned on will ensure they receive updates and won’t drop their settings due to a weak internal battery.
  • Don’t stand on scales to hang signs or reach shelves. I have seen footprints on platters and load cells destroyed, making the scale inoperable with costly repairs.
  • Do use a ladder when the task calls for it.
  • Don’t plug scales into the same power circuit as parking lot lights. If you do, when the store opens and the parking lot lights turn off, so will your scales.
  • Do use a clean power circuit preferably connected to a generator.
  • Don’t take a scale to another store since they must be placed in service by a certified installer.
  • Do consider certifying an in-house technician to legally place a scale in service with calibration as allowed by your state’s particular guidelines or restrictions.
  • Don’t paste price look-up (PLU) lists right on the scale.
  • Do take advantage of speed keys (presets) with the highest movers on the first page to keep your employees as efficient as possible.

Beyond the physical scale

While working scales and printers are important physical assets to a store, the intelligence behind the scenes is critical as well. Data delivered through your scale management including item descriptions, ingredients, nutritional summary, allergens, pricing data, product expiration date, etc. converges with the configured label formats. Getting all this information to and from the scales is important. Scale management integration to the host systems of record must ensure all label fields are populated with current, accurate information.

Look for a scale management solution provider with significant practical experience managing these assets within stores. The best solutions feature next-generation enhancements supporting seamless real-time data exchange to and from the scales, and automated alerts for streamlining corporate administration and support. Data from the scales flowing back through scale management is vital to maintain accurate, real-time perpetual inventory on fresh items where production is optimized through an effective inventory management system.

Tight integration and automation in your scale management ecosystem delivers the right information to your scales and labels to meet customer expectations and regulatory compliance while providing essential data back to your inventory management system. Smart do’s and don’ts for store-level management of scale assets ensures this infrastructure provides your associates with reliable tools to efficiently sell great products and run great stores.