Scoping the contextual issues that influence shrinkage measurement

Abstract

Purpose

Measures and measurement systems must reflect the context to which they are applied, requiring that the contextual issues relating to retail shrinkage must be identified as a necessary precursor when measuring shrinkage. Without considering these issues any decision on which method of shrinkage measurement to employ will be uninformed, arbitrary and at best intuitive. The objective of this paper is to scope out and summarise the contextual issues surrounding retail shrinkage in Europe's grocery sector and to offer a view on the implications of these issues to shrinkage measurement.

Design/methodology/approach

The methodology adopted was a scoping study of the key issues that influence shrinkage measurement, drawing these from prior research and exposing these findings to the informed opinion of a review panel for critique and to highlight areas for further investigation.

Findings

The findings from the study were to identify a range of contextual issues relating to shrinkage and to summarise these issues into four categories, namely: stewardship and performance improvement; cost reduction and sales improvement; local effects of systemic issues; and the detailed nature of retailing.

Practical implications

The implications of these key issues are significant to the measurement of shrinkage in terms of the scope across the business from which shrinkage needs to be considered. This finding highlights the need to consider shrinkage as a systemic issue that extends across a business from design, through planning to operational execution. It also identifies the impact of shrinkage on increasing cost and depressing sales and considers the responsibility of management teams in addressing these matters.

Originality/value

This paper is theoretically original and thus of value to the academic community. It is also of value to the practitioner community in grocery retailing where shrinkage and its measurement is of worldwide strategic importance.

Citation

Chapman, P. and Templar, S. (2006), "Scoping the contextual issues that influence shrinkage measurement", International Journal of Retail & Distribution Management, Vol. 34 No. 11, pp. 860-872. https://doi.org/10.1108/09590550610710255