Inventory “Shrinkage” on the Rise

March 16, 2023

Retailers regularly conduct a physical count of their inventory and compare it to what is recorded on their books. The difference is known as shrinkage, a broad term that encompasses not just internal and external theft but also process failures that could lead to inventory being lost or recorded inaccurately.

Shoppers now face items locked in glass cabinets in NYC and other cities

Target just announced that it expected the shrinkage problem to reduce gross margins for the year by over $600 million. TJX and Macy’s also reported higher shrink rates. The shift in shoppers returning to stores after a surge in online buying during the pandemic is partly responsible, writes The Wall Street Journal (March 13, 2023). More theft happens in stores, as opposed to warehouses that fulfill online orders. But a never-seen-before jump in organized retail crime in certain U.S. cities is also a factor.

External theft, which includes organized retail crime in addition to regular shoplifting, has become a bigger piece of the pie. Organized retail crime, involving rings that steal from stores in bulk and then peddle the goods online, cost retailers $720,000 for every $1 billion in sales. Seven years ago, theft by employees was the largest category of loss by retailers. Now, it’s external theft.

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The Boarding Logjam

March 3, 2023

The glacial pace of boarding planes irritates frequent fliers and airline employees, writes The Wall Street Journal (March 3, 2023). Along with other preflight requirements, it also adds costly time on the ground for Southwest and other airlines, which regularly study ways to speed up boarding.

Southwest employees carry mobile devices to speed up processes such as checking bags.

Today, Southwest is on a mission to shave 5 minutes off the time a plane spends at the gate between flights. The average “turn’’ is now 40 minutes for its smaller Boeing 737s and 50 for the larger ones. “If you can collect up enough of these minutes in each turn, then you can start to squeeze out some more flying,’’ says Southwest’s COO.

Research shows boarding bottlenecks are the biggest detriment to turnaround times. Delays in seconds between passengers finding their seats, or sitting in the wrong seat, add up fast. Southwest is testing 11 concepts at four gates at the Atlanta airport. Signs tell passengers they are entering an “innovation zone.’’ The Atlanta project is a big component of Southwest’s 5-minute quest, with goals of saving 2-3 minutes on boarding per flight. Southwest hopes the rest of the time savings can come from efforts including bigger overhead bins, a possible increase in boarding planes from the front and back simultaneously, and paperless takeoff documents.

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