Submitted by Stephen O'Keefe
Vice President, Operations
Retail Council of Canada

We’ve all had those moments when we were trying to get a stakeholder excited about a shrinkage issue. And likely we’ve all fallen into the same argument with that reluctant stakeholder, and also let our emotions get the better of us...and they just don’t see it the way we do. "The shrink rate is (e.g.,) 1.3%!!! ...don’t you get it? We can't continue like this..."


The reality is, that stakeholder is hearing you like the infamous teacher’s voice from Charlie Brown and they are doing the rough calculation, and accepting the risk, because it just doesn’t seem like that big of a deal...and you walk away frustrated and feeling like you’re on your own mumbling under your breath that they just don’t get it.

So here’s my thought...several years ago I walked into a colleague’s office only to find on his wall, a map of the world with Canada at the bottom and Argentina at the top. Nothing was where it was supposed to be, it was all upside down. It wasn’t right, but the caption on the top made me question if perhaps it was right, or at least to question who is right... "It’s All just a matter of Perspective – we don’t all see things the same way."

Who says north is the top? We live on a ball floating in space, of which there is no defined top and bottom. We look at a map with north on the top only because we have been conditioned to understand north to be up – so that we can all relate and see things the same way. That map made me think, and I am glad that I saw it because it changed my views on a lot of things.

Now back to the discussion on shrinkage. We are conditioned to speak to the shrink rate in terms of its relation to sales i.e. 1.3%. It’s the industry standard for reporting shrinkage.

But you see, this argument took place at a retailer bringing in 3% net profit. Without shrinking, the profit would have been about 4% (factoring in the cost element)... so try inverting your map... and remove the emotion... "our shrink has taken 25% of our profitability away, is this fiscally responsible?"... try it – you might find a world of difference in the reaction of the reluctant stakeholder. Try to appeal to the way they think rather than assuming everyone sees things the same way.

Just a thought.