October, 1991

From the Editor

Three Cheers For Shrink

This column is my clarion call for a national campaign to increase shrink in mass market floral departments. No, that wasn’t a misprint. As much as the mass market floral industry needs anything, it needs to throw out more flowers.

No, insanity hasn’t hit this journalist, and if I speak a bit tongue-in-cheek, it’s only because this is a very serious subject. In fact, the more retail operations I study, the more convinced I become that campaigns to reduce shrink almost always wind up costing operators both sales and profits. You see the problem is this: The best way to reduce shrink is to close the store. Then shrink drops to zero.

To one degree or another, all these shrink campaigns lead floral managers to get closer to this “closed store” ideal. The first thing managers do if told that they are being evaluated based on their ability to reduce shrink is that they cut back on orders. They reduce both the variety and the quantity of floral products in the stores. This leads to an immediate decline in sales and profits.

Of course the damage to our floral sales due to efforts to control shrink doesn’t start with a sudden campaign. The damage actually starts much earlier – with the very design of the store and the choices of cases. An awful lot of stores believe that the best way to merchandise flowers is in closed cases stuck in the back corner of the store.

These cases scream out to consumers, “don’t touch,” and work against the main goal of mass market floral departments: catching the impulse sale. It is obvious that open air cases are far more accessible and make pleasant what closed cases make difficult, picking up that “just because” bouquet.

The problem exists because too many mass market floral retailers are still using as a paradigm the set-up of small independent freestanding floral shops.

This is an enormous mistake. A flower shop is a floral destination, people go to them with something specific in mind, such as a funeral wreath, or flowers for a wedding, or some other special floral event. In any case, nobody just passes through a flower shop. By the time they get there, the customers have already decided they want flowers.

Floral shops almost inevitably will place a premium on reducing shrink. First of all most of a floral shop’s customers never enter the store, they call and order or the order comes over the wire service. As such the profit lies in reducing spoilage rather than showing flowers to consumers not there to see them. In addition, floral shop variety usually skews to a more expensive flower, which also increases the premium for reducing waste.

A mass market outlet is different. What makes it distinctive is that thousands of people pass by every week, the vast majority of which have no thought of buying flowers. So the key is in-store merchandising, including attractive, bountiful, accessible displays that persuade that passerbys to buy.

This perspective makes clear what we should be doing – increasing variety, increasing quantity, and increasing display accessibility.

Sure this will mean more shrink. So what? The key is to keep our attention on what is really important. Shrink isn’t important in and of itself. Gross margin isn’t important in and of itself. The bottom line is what is important, and in most cases, profits are increased in mass market floral outlets when shrink is increased due to larger, more variety-filled, more accessible displays.

So am I saying shrink doesn’t matter? Ignore it, forget about it? Of course not, but a concentration on shrink is almost certainly going to be counter-productive. The key to keeping shrink in line is forgetting about reducing shrink and concentrating on good solid operational procedures.

This is a situation where the whys make all the difference. If shrink is caused by open air displays, bucket displays, big variety, and bountiful quantities of product, it is probably “good shrink” helping you make money. If shrink is caused by poor operating procedures, flowers that aren’t moved off a hot loading dock, preservatives that aren’t used, product left out back and never put on a display, then this “bad shrink” can eat you alive.

But the solution to this is to declare war not on shrink but on bad operating practices. Otherwise you run the risk of throwing out the baby with the bathwater or, to put it another way, the bountiful profit-building floral display along with the box that was crushed negligently in the warehouse.