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Why a $62M multi-site retailer was losing 2.4 percent of sales to shrink, and how one standard across fourteen stores brought that to 1.4 and recovered about $600K a year. With fractional leadership, working the same routine in every location.
Sales were steady and margin was not. Inventory shrink was running at 2.4 percent of sales against a national average near 1.6, which on $62M is close to half a million dollars of unexplained difference every year.
Each location was effectively run as its own small business. Counting practice, back-door discipline and markdown authority all varied by store, so the head office could see the total and nothing underneath it. At about $50K a month it never presented as a crisis, which is exactly why it had run for two years.
One operating standard went into all fourteen stores, set by a fractional executive: the same opening and closing routine, the same cycle-count discipline, and one weekly number every manager was measured on.
The protection work ran beside it rather than after it, and it started with the two loss paths that accounted for most of the gap instead of all of them at once. Within two quarters the spread between the best and worst store had closed from 3.1 points of shrink to under one, which is the number that told the owner the standard had taken hold.
Client names are withheld under confidentiality.
Loss was counted by store and by path rather than in total. Two paths, back door receiving and markdown authority, accounted for most of the gap. Eleven of the fourteen stores had no written closing routine at all.
The standard went in store by store rather than by memo. Three stores had it running inside a fortnight. One took eleven weeks and a change of manager.
One weekly figure replaced the monthly total. The count rota was built by the store managers rather than issued to them, which is why the counts were actually done.
The two regional managers took the weekly review and the count rota. Head office stopped running either of them before the engagement ended.
No store has been back above two percent of sales since the regional managers took the review.
