The challenge

Shrinkage or shrink is used to describe a significant reduction in inventory. Causes can range from theft by staff or customers to process failures. Unlike waste, pinpointing the source of shrinkage can be extremely difficult.

The shrink percentage of Wrigley’s chewing gum in large-format stores at Tesco was 5.3% of sales. The on-shelf availability (OSA) was also poor with a loss of sales estimated at £5.5m per year.

The solution

IGD brought together a cross-functional trading partner team from Wrigley’s and Tesco to undertake a collaborative performance improvement programme. Their aim was to understand the causes of shrinkage and roll out a sustainable solution

Our experts led the team through an in-depth analysis of their supply chain. This allowed both companies to see firsthand when and how the product was susceptible to shrinkage and build a picture of reality on the ground. Through a rigorous process of gathering intel and workshopping findings, the group were able to identify significant process failures and formulate a plan of action to overcome these problems.

With IGD spearheading the group, the team implemented changes to the packaging, distribution network, security and storage and on-shelf fixtures for Wrigley’s chewing gum in Tesco stores.

Key results

• The shrinkage of chewing gum in large-format stores was driven down by 41%
• Deeper understanding of retail customers, the shopper, and the point of purchase
• On-shelf availability improved 0.3% above target and sales grew 4% year on year
• The installation of new fixtures in Extra stores reduced shrinkage by 21% while year on year sales grew by 6.7%