The Current Times
In the current status of the world, the grocery retail industry has been thriving, with the average increase of sales being 26.9% across the board. Although this is great news for the grocery retail industry, there is a popular saying that goes, “more money, more problems”. So as sales may increase for businesses across this sector, so will their shrink rate, extended queues at tills, staffing needs, etc.
In the grocery retail industry, shrinkage, or shrink, is the term used to describe a reduction in inventory due to shoplifting, employee theft, administrative/human errors such as unintentional/intentional record keeping, pricing, etc. A common misperception is that retailers simply absorb shrinkage as part of the cost of doing business. While retailers have to factor loss into their bottom line, this is still a costly problem for all.
According to the National Retail Federation (NRF), the average shrink rate in the retail industry is 1.38% of sales and some businesses have a shrink rate of up to 2%, which has stayed approximately the same since 2014. While that may not sound like a lot, consider that shrinkage cost retailers more than £39.7 billion in losses in 2018. Therefore, if your retail store earned £1 million in sales with 50% gross margins, your shrinkage at just 2% costs you £10,000, which is of course significant.
In the UK, surveys have revealed similar problems stating that one in five shoppers admit to regularly stealing when using the self-checkout — approximately £15 per month -, amounting to a staggering £1.6 billion worth of items every year. In fact, the extent to which this has become normalised has led some to suggest that the self-checkout machines themselves are criminogenic, turning otherwise honest customers into “a nation of shoplifters”.
Better Self Checkout
We at Edgify aim to reduce the money loss that many grocery businesses face year after year, intentional or not, by integrating our Edgify framework into your business. This has proved to deliver 99.98% accuracy with fresh produce scanned at the till. Which is unlike the standard self-checkout machines that operate within the 55–65% efficiency mark which leads to loss of money thus increasing your shrink rate. Here’s a quick video of our edge framework demonstrating our 99.98% accurate AI software in motion.
The Consumer Angle
Today’s consumers lead busy lives and have no time to waste. They are used to getting what they want instantly, with a click. And when they shop in-store, they expect to do it at their own pace. They may wish to take their time picking out items — but once they are done, they want to speed through checkout, and be on their way. Adding to grocery retailers shrink rate concerns is that, according to a survey by Box Technologies and Intel in the UK, 90% of shoppers actively avoid stores with long queues. 70% even said they might not go back to a store with long lines thus leading to loss in sales.
For Covid Times and Beyond
As self-checkout terminals tend to be more compact than traditional tills, shifting to this technology means retailers can replace a one manned till with multiple self-checkouts. It’s a smart way to reduce lines without having to increase the retail space. Especially with our unique AI software solution that aims to also improve your customer checkout experience (up to 90% increase in checkout speed as seen in one of our most recent case studies) what this means for your business is shorter lines and seeing more transactions per hour per square meter!
The current framework created by Edgify is not only great for managing your stores shrink rate (theft/fraud), retailers can also use it to help shoppers find the right item quickly, as the software can automatically detect products that do not possess a barcode such as fruits and vegetables. So why not do your shoppers/stores a favour and request a demo from Edgify today?
This blog was written by Ikemba Nlewedim. The Business Development Representative @ Edgify. Prior to Edgify, Ikemba has worked at various innovative technology focused companies and has been involved in technology sales for 5 years. A salesman by day and a writer by night. You can find Ikemba on LinkedIn